<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 7, 1999.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NORTHERN BORDER PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
TEXAS 486210 74-2684967
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
<TABLE>
<S> <C>
JANET K. PLACE, ESQ.
1111 SOUTH 103RD STREET GENERAL COUNSEL
OMAHA, NEBRASKA 68124-1000 1111 SOUTH 103RD STREET
(402) 398-7700 OMAHA, NEBRASKA 68124-1000
(Address, including zip code, and (402) 398-7886
telephone number, including area code, (Name, address, including zip code, and telephone
of Registrant's principal executive offices) number, including area code, of agent for service)
</TABLE>
Copies of communications to:
STEVEN L. CLARK
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603-4006
(312) 845-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable following the effectiveness of this registration statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER NEW NOTE PRICE REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
7.75% Senior Notes due 2009,
Series A............................. $200,000,000 100% $200,000,000 $55,600
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</TABLE>
(1) Calculated in accordance with Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE AMENDED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL NOR IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 7, 1999
$200,000,000
NORTHERN BORDER PIPELINE COMPANY
OFFER TO EXCHANGE
UP TO $200,000,000 7.75% SENIOR NOTES DUE 2009, SERIES A
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ANY AND ALL OUTSTANDING 7.75% SENIOR NOTES DUE 2009
We are offering to exchange up to $200,000,000 aggregate principal amount
of our new 7.75% Senior Notes due 2009, Series A for any and all of our existing
7.75% Senior Notes due 2009. The existing notes were issued on August 17, 1999.
The terms of the new notes are substantially identical to the terms of the
existing notes, except that we have registered the new notes with the Securities
and Exchange Commission. Because we have registered the new notes, the new notes
will not be subject to certain transfer restrictions and will not be entitled to
registration rights. The existing notes and new notes are collectively referred
to in this prospectus as the "notes."
YOU SHOULD CAREFULLY CONSIDER "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 13
OF THIS PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
THE NEW NOTES:
- The new notes will mature on September 1, 2009.
- We will pay interest on the new notes semiannually on March 1 and
September 1 of each year beginning March 1, 2000 at the rate of 7.75% per
annum.
- We may redeem the new notes, in whole, at any time, or in part, from time
to time, if we pay noteholders a redemption price which includes a
make-whole premium. There is no sinking fund for the notes.
THE EXCHANGE OFFER:
- Subject to certain customary conditions, which we may waive, the exchange
offer is not conditioned upon a minimum aggregate principal amount of
existing notes being tendered.
- Our offer to exchange existing notes for new notes will be open until
5:00 p.m., New York City time, on , 2000, unless we
extend the expiration date.
- You should carefully review the procedures for tendering the existing
notes in this prospectus.
- You may withdraw your tender of existing notes at any time prior to the
expiration of the exchange offer, unless we have already accepted your
existing notes for exchange.
- If you fail to tender your existing notes, you will continue to hold
unregistered securities and your ability to transfer them could be
adversely affected.
- The exchange of existing notes for new notes in the exchange offer will
not be a taxable event for U.S. federal income tax purposes.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
, 1999
<PAGE> 3
The information contained in this prospectus was obtained from us and other
sources believed by us to be reliable.
You should rely only on the information contained in this document or any
supplement and any information incorporated by reference in this document or any
supplement. We have not authorized anyone to provide you with any information
that is different. If you receive any unauthorized information, you must not
rely on it. You should disregard anything we said in an earlier document that is
inconsistent with what is in this prospectus.
You should not assume that the information in this document or any
supplement is current as of any date other than the date on the front page of
this prospectus. This document is not an offer to sell nor is it seeking an
offer to buy these securities in any state or jurisdiction where the offer or
sale is not permitted.
3
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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<S> <C>
Forward Looking Statements.................................. 5
Summary..................................................... 6
Summary Financial and Operating Data........................ 12
Investment Considerations................................... 13
Use of Proceeds............................................. 18
Capitalization.............................................. 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 29
Management.................................................. 37
Beneficial Ownership of Partnership Interests............... 37
Certain Relationships and Related Transactions.............. 38
The Exchange Offer.......................................... 39
Description of the Notes.................................... 47
United States Federal Tax Considerations.................... 59
Northern Border Pipeline Company Partnership Agreement...... 62
Plan of Distribution........................................ 66
Legal Matters............................................... 67
Experts..................................................... 67
Where You Can Find Additional Information................... 67
Index to Financial Statements............................... F-1
</TABLE>
4
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FORWARD LOOKING STATEMENTS
Statements in this prospectus that are not historical information are
forward looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward
looking statements include:
- the discussions under "Business -- Competition" and elsewhere regarding
our efforts to pursue opportunities to further increase the capacity of
our pipeline system;
- the discussion under "Business -- Shippers" regarding potential contract
extensions;
- the discussion under "Business -- FERC Regulation -- Cost of service
tariff" regarding a project cost containment mechanism related to The
Chicago Project; and
- the discussion in "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
Although we believe that our expectations regarding future events are based
on reasonable assumptions within the bounds of our knowledge of our business, we
can give no assurance that our goals will be achieved or that our expectations
regarding future developments will be realized. Important factors that could
cause actual results to differ materially from those in the forward looking
statements include:
- future demand for natural gas;
- availability of economic western Canadian natural gas;
- industry conditions;
- natural gas, political and regulatory developments that impact FERC
proceedings;
- our success in sustaining our positions in such proceedings, or the
success of intervenors in opposing our positions;
- our ability to replace our rate base as it is depreciated and amortized;
- competitive developments by Canadian and U.S. natural gas transmission
companies;
- political and regulatory developments in the U.S. and Canada;
- conditions of the capital markets and equity markets; and
- our ability to successfully implement our plan for addressing Year 2000
issues during the periods covered by the forward looking statements.
5
<PAGE> 6
SUMMARY
The summary highlights information contained elsewhere in this prospectus.
It does not contain all of the information that you should consider. You should
read the entire prospectus carefully, including the "Investment Considerations"
section and the financial statements and related notes, and should consider
consulting with your own legal and tax advisors. References in this prospectus
to "we," "us," "our," or "our company" refer to Northern Border Pipeline
Company.
NORTHERN BORDER PIPELINE COMPANY
We own a 1,214-mile United States interstate pipeline system that
transports natural gas from the Montana-Saskatchewan border to natural gas
markets in the midwestern United States. Our pipeline system connects with
multiple pipelines, which allow shippers to access the various natural gas
markets served by those pipelines.
Our pipeline system was initially constructed in 1982 and was expanded
and/or extended in 1991, 1992 and 1998. The most recent expansion and extension,
called The Chicago Project, was completed in late 1998, and increased our
pipeline system's ability to receive natural gas by 42% to its current capacity
of 2,373 million cubic feet per day. The amount of natural gas that can be
transported in the pipeline is referred to as "capacity" and is measured in
cubic feet per day. In the first half of 1999, we estimate that we transported
approximately 24% of the total amount of natural gas imported from Canada to the
United States. Over the same period, approximately 91% of the natural gas we
transported was produced in the western Canadian sedimentary basin located in
the provinces of Alberta, British Columbia and Saskatchewan.
We transport natural gas for shippers under a tariff regulated by the
Federal Energy Regulatory Commission. The tariff allows us an opportunity to
recover from our shippers our cost of service, including operations and
maintenance costs, taxes other than income taxes, interest, depreciation and
amortization, an allowance for income taxes and a regulated return on equity.
Shippers contract to pay for a proportionate share of those costs by way of a
mileage-based charge for the amount of capacity contracted. The shippers are
obligated to pay the charge regardless of the amount of natural gas they
transport. We do not own the natural gas that we transport and therefore we do
not assume any natural gas commodity price risk. As of June 30, 1999,
approximately 97% of our pipeline capacity was contractually committed through
mid-September 2003 and the weighted average contract life, based on annual cost
of service obligations, was over seven years. Our pipeline system serves more
than 40 shippers with diverse operating and financial profiles.
Northern Border Pipeline Company is a general partnership formed in 1978.
The general partners are Northern Border Partners, L.P. and TC PipeLines, LP,
both of which are publicly traded partnerships. Each of Northern Border Partners
and TC PipeLines holds its interest, 70% and 30% of voting power, respectively,
through a subsidiary limited partnership. The general partners of Northern
Border Partners are two subsidiaries of Enron Corp. and one subsidiary of The
Williams Companies, Inc. The general partner of TC PipeLines is a subsidiary of
TransCanada PipeLines Limited.
Our pipeline system is operated by Northern Plains Natural Gas Company, a
wholly-owned subsidiary of Enron. Our management is overseen by a four-member
management committee. Three representatives are designated by Northern Border
Partners, with each of its general partners selecting one representative; one
representative is designated by TC PipeLines. For a discussion of specific
relationships with affiliates, refer to "Certain Relationships and Related
Transactions."
Our principal executive offices are located at 1111 South 103rd Street,
Omaha, Nebraska 68124-1000. Our telephone number is (402) 398-7700.
THE EXCHANGE OFFER
On August 17, 1999, we completed the private offering of $200,000,000 of
our 7.75% Senior Notes due 2009. We entered into a registration rights agreement
with the initial purchasers in the private offering of the existing notes in
which we agreed, among other things, to use our reasonable best efforts to
ensure that the
6
<PAGE> 7
registration statement registering new notes, of which this prospectus forms a
part, becomes effective no later than February 13, 2000, or 180 days after the
original issuance of the existing notes. This exchange offer entitles you to
exchange your existing notes for new notes with identical terms that are
registered with the SEC. You should read the discussion below and under the
heading "Description of the Notes" for further information regarding the new
notes.
We believe that the new notes that will be issued in this exchange offer
may be resold by you without compliance with the registration and prospectus
delivery provisions of the Securities Act, subject to certain conditions. You
should read the discussion under the heading "The Exchange Offer" for further
information regarding this exchange offer and resale of the new notes. In
addition, you should also read "Description of the Notes" for a more complete
description of the new notes.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
Securities to be
Exchanged.................. On August 17, 1999, we issued $200,000,000
aggregate principal amount of existing notes to the
initial purchasers in a transaction exempt from the
registration requirements of the Securities Act.
The terms of the new notes and the existing notes
are substantially the same in all material
respects, except that (1) the new notes will be
freely transferable by the holders except as
otherwise provided in this prospectus; (2) holders
of new notes will have no registration rights; and
(3) the new notes will contain no provisions for an
increase in their stated interest rate.
The Exchange Offer......... We are offering to exchange up to $200,000,000 of
the new notes for up to $200,000,000 of the
existing notes. Existing notes may be exchanged
only in $1,000 increments. The new notes will
evidence the same debt as the existing notes, and
the existing notes and the new notes will be
governed by the same indenture.
The new notes are described in detail under the
heading "Description of the Notes."
Resale..................... We believe that the new notes issued in the
exchange offer may be offered for resale, resold
and otherwise transferred by you without compliance
with the registration and prospectus delivery
provisions of the Securities Act, provided that:
- the new notes are being acquired in the ordinary
course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate, in
the distribution of the new notes issued to you
in the exchange offer; and
- you are not an "affiliate" of ours.
If any of these conditions are not satisfied and
you transfer any new notes issued to you in the
exchange offer without delivering a prospectus
meeting the requirements of the Securities Act or
without an exemption from registration of your new
notes from such requirements, you may incur
liability under the Securities Act. We do not
assume or indemnify you against any such liability.
Each broker-dealer that is issued new notes in the
exchange offer for its own account in exchange for
notes which were acquired by such broker-dealer as
a result of market-making or other trading
activities must
7
<PAGE> 8
acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of the new notes. A
broker-dealer may use this prospectus for an offer
to resell, resale or other retransfer of the new
notes issued to it in the exchange offer.
Record Date................ We mailed this prospectus and the related exchange
offer documents to registered holders of existing
notes on , 1999.
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, , 2000 or a later date
and time if we extend it.
Withdrawal................. You may withdraw the tender of your existing notes
pursuant to the exchange offer at any time prior to
5:00 p.m., New York City time, on the expiration
date. To withdraw, the exchange agent must receive
a notice of withdrawal at its address indicated
under "The Exchange Offer -- Exchange Agent" before
5:00 p.m., New York City time, on the expiration
date. We will return, as promptly as practicable
after the expiration or termination of the exchange
offer, any existing notes not accepted for exchange
for any reason without expense to you.
Conditions to the Exchange
Offer...................... The exchange offer is subject to customary
conditions, some of which may be waived by us. See
"The Exchange Offer -- Conditions of the Exchange
Offer."
Procedures for Tendering
Existing Notes............. If you wish to accept the exchange offer, you must
complete, sign and date the accompanying letter of
transmittal in accordance with the instructions in
the letter of transmittal, and deliver the letter
of transmittal, along with the existing notes
(unless you hold your existing notes through DTC,
the Euroclear System -- "Euroclear" -- , or Cedel
Bank, Societe Anonyme -- "CEDEL") and any other
required documentation, to the exchange agent. By
executing the letter of transmittal, you will
represent to us that, among other things:
- any new notes you receive will be acquired in the
ordinary course of business; and
- you have no arrangement with any person to
participate in the distribution of the new notes,
and you are not an affiliate of ours or, if you
are an affiliate, you will comply with the
registration and prospectus delivery requirements
of the Securities Act to the extent applicable.
If you hold your existing notes through DTC,
Euroclear or CEDEL, by participating in the
exchange offer, you will agree to be bound by the
letter of transmittal as though you had executed
such letter of transmittal.
We will accept for exchange any and all existing
notes which are properly tendered (and not
withdrawn) in the exchange offer prior to the
expiration date. The new notes issued pursuant to
the exchange offer will be delivered promptly
following the expiration date. See "The Exchange
Offer -- Acceptance of Existing Notes for
Exchange."
Effect of Not Tendering.... Existing notes that are not tendered or that are
tendered but not accepted will, following the
completion of the exchange offer, continue to be
subject to the existing restrictions upon transfer
thereof. We will have no
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<PAGE> 9
further obligation to provide for the registration
under the Securities Act of such existing notes.
Special Procedures for
Beneficial Owners.......... If you are the beneficial owner of book-entry
interests and your name does not appear on a
security position listing of DTC, Euroclear or
CEDEL as the holder of such book-entry interests or
if you are a beneficial owner of existing notes
that are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee and you wish to tender such book-entry
interest or existing notes in the exchange offer,
you should contact the registered holder promptly
and instruct such person to tender on your behalf.
Guaranteed Delivery
Procedures................. If you wish to tender your existing notes, you may
do so according to the guaranteed delivery
procedures set forth elsewhere in this prospectus
under "The Exchange Offer -- Procedures for
Tendering Existing Notes -- Guaranteed Delivery."
Registration Rights
Agreement.................. We sold the existing notes on August 17, 1999 to
the initial purchasers in a private placement in
reliance on Regulation D, Rule 144A and Regulation
S under the Securities Act. In connection with the
sale, we entered into a registration rights
agreement with the initial purchasers which grants
the holders of the existing notes exchange and
registration rights. This exchange offer satisfies
those rights, which terminate upon consummation of
the exchange offer. You will not be entitled to any
exchange or registration rights with respect to the
new notes.
Federal Tax
Considerations............. Exchanging your existing notes for new notes
pursuant to the exchange offer will not constitute
a sale or an exchange for federal income tax
purposes. See "United States Federal Tax
Considerations."
Use of Proceeds............ We will not receive any proceeds from the exchange
of notes pursuant to the exchange offer.
Exchange Agent............. We have appointed Bank One Trust Company, NA, as
the exchange agent for the exchange offer. The
mailing address and telephone number of the
exchange agent are 153 West 51st Street, Fifth
Floor, New York, New York 10019, phone: (212)
373-1184. See "The Exchange Offer -- Exchange
Agent."
SUMMARY OF THE TERMS OF THE NEW NOTES
You should read "Description of the Notes" for a more complete description of
the new notes.
New Notes Offered.......... $200,000,000 principal amount of 7.75% Senior Notes
due 2009, Series A.
Interest Rate.............. 7.75% per annum.
Interest Payment Dates..... Interest will be paid on March 1 and September 1 of
each year, beginning March 1, 2000.
Maturity................... September 1, 2009.
Use of Proceeds............ We will not receive any cash proceeds from the
exchange offer.
Ratings.................... The following ratings have been obtained on the
notes: A3 by Moody's Investors Service, Inc., A- by
Standard & Poor's Ratings Services and
9
<PAGE> 10
A- by Duff & Phelps Credit Rating Co. These ratings
have been obtained with the understanding that the
rating agencies will continue to monitor our credit
ratings, and will make future adjustments when they
feel it is necessary. A rating reflects only the
view of a rating agency. It is not a recommendation
to buy, sell or hold the notes. Any rating can be
revised upward or downward or withdrawn at any time
by a rating agency if it decides the circumstances
warrant such a change.
Ranking.................... The new notes will be senior unsecured and
unsubordinated obligations and will rank equally
with all our other existing and future unsecured
and unsubordinated indebtedness.
The indenture does not limit the amount of
unsecured debt we may incur. The indenture contains
restrictions on our ability to incur secured
indebtedness unless the same security is also
provided for the benefit of holders of the new
notes.
Certain Covenants and
Events of Default.......... We will issue the new notes under an indenture with
Bank One Trust Company, NA, successor to The First
National Bank of Chicago, as trustee. The indenture
includes certain covenants, including:
- limitation on liens;
- restrictions on incurrence of secured
indebtedness; and
- limitation on sale-leaseback transactions.
The indenture provides for events of default,
including default on other significant
indebtedness.
Optional Redemption........ Upon 30 days' notification to noteholders, we may
redeem the new notes in whole, at any time, or in
part, from time to time, prior to maturity, at a
redemption price which includes a make-whole
premium.
Form and Denomination...... The new notes will be represented by one or more
global notes. The global notes will be deposited
with Bank One Trust Company, NA, as book-entry
depositary, for the benefit of DTC and its
participants.
Initially, you will not receive new notes in
certificated form. However, subject to the
provisions of the indenture described under the
heading "Description of the Notes -- Depositary
Procedures," you may elect to receive certificated
notes.
The book-entry depositary will issue to DTC one or
more certificateless book-entry interests
representing each global note. DTC will operate a
system of dealing in the book-entry interests by
maintaining records of interests of DTC
participants in book-entry interests.
The global notes will be shown on, and transfers of
such notes will be effected only through, records
maintained in book-entry form by DTC and its direct
and indirect participants, including depositaries
for Euroclear and CEDEL.
Notes issued or transferred will be in minimum
principal amounts of $1,000 and multiples thereof.
Same-day Settlement........ The new notes will trade in DTC's Same-day Funds
Settlement System until maturity or redemption.
Therefore, secondary market trading activity in the
notes will be settled in immediately available
funds.
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Trustee, Registrar and
Transfer Agent............. Bank One Trust Company, NA, successor to The First
National Bank of Chicago.
Governing Law.............. The notes and the indenture relating to the notes
will be governed by, and construed in accordance
with, the laws of the State of New York.
Investment
Considerations............. See "Investment Considerations" for a discussion of
factors you should carefully consider before
deciding to invest in the new notes.
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SUMMARY FINANCIAL AND OPERATING DATA
The summary financial information as of and for the years ended December
31, 1998, 1997, 1996, 1995 and 1994 is derived from our audited financial
statements, and the summary financial information as of and for the six months
ended June 30, 1999 and 1998 is derived from our unaudited financial statements.
The operating data for all periods presented is derived from our records. The
Summary Financial and Operating Data should be read in conjunction with our
financial statements and related notes, and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- -------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS TO FIXED CHARGES AND OPERATING DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues, net........ $ 146,657 $ 96,355 $ 196,600 $ 186,050 $201,943 $ 206,497 $ 211,580
Operations and maintenance..... 18,052 14,444 29,447 28,522 26,974 25,573 27,682
Depreciation and
amortization................. 25,680 19,788 40,989 38,708 46,979 47,081 41,959
Taxes other than income........ 14,866 11,905 21,381 22,393 24,390 23,886 24,438
Regulatory credit.............. -- (2,230) (8,878) -- -- -- --
---------- ---------- ---------- ---------- -------- ---------- ----------
Operating income......... 88,059 52,448 113,661 96,427 103,600 109,957 117,501
Interest expense, net.......... (28,949) (12,469) (25,541) (29,360) (32,670) (35,106) (38,375)
Other income (expense)......... 138 5,127 12,111 5,705 2,913 (316) (1,968)
---------- ---------- ---------- ---------- -------- ---------- ----------
Net income to partners... $ 59,248 $ 45,106 $ 100,231 $ 72,772 $ 73,843 $ 74,535 $ 77,158
========== ========== ========== ========== ======== ========== ==========
CASH FLOW DATA:
Net cash provided by operating
activities................... $ 83,255 $ 54,724 $ 103,777 $ 115,328 $136,808 $ 127,429 $ 121,679
Capital expenditures........... 76,958 298,935 651,169 152,070 18,597 8,310 3,086
Distributions to partners...... 67,773 32,915 61,205 99,322 102,845 98,517 87,509
BALANCE SHEET DATA (AT PERIOD
END):
Net property, plant and
equipment.................... $1,744,721 $1,386,568 $1,714,523 $1,100,890 $937,859 $ 957,587 $ 983,843
Total assets................... 1,813,212 1,443,880 1,790,889 1,147,120 974,137 1,011,361 1,063,210
Long-term debt, including
current maturities........... 912,000 549,000 862,000 459,000 377,500 410,000 445,000
Partners' capital.............. 834,913 790,603 843,438 581,412 526,962 555,964 579,946
OTHER FINANCIAL DATA:
EBITDA(1)...................... $ 113,832 $ 70,620 $ 147,646 $ 139,440 $153,096 $ 156,632 $ 157,450
Earnings to fixed charges(2)... 3.0 3.4 3.2 3.2 3.2 3.1 3.0
OPERATING DATA (UNAUDITED):
Natural gas delivered (millions
of cubic feet)............... 411,935 304,109 619,669 633,280 633,908 615,133 597,898
Average throughput (millions of
cubic feet per day).......... 2,342 1,715 1,737 1,770 1,764 1,720 1,663
</TABLE>
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(1) We have calculated EBITDA by taking net income; adding interest expense on
long-term debt and depreciation and amortization; and subtracting the
impacts of the allowances for funds used during construction (debt and
equity) and regulatory credits. EBITDA is not intended to represent cash
flows for the periods in accordance with generally accepted accounting
principles.
(2) "Earnings" means the sum of (a) pre-tax income from continuing operations;
and (b) fixed charges. "Fixed charges" means the sum of (a) interest
expensed and capitalized; (b) amortized premiums, discounts and capitalized
expenses related to indebtedness; and (c) an estimate of the interest within
rental expenses.
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INVESTMENT CONSIDERATIONS
You should consider the following investment considerations together with
all of the other information included in this prospectus in evaluating an
investment in the notes offered.
A DECLINE IN THE AVAILABILITY OF ECONOMIC WESTERN CANADIAN NATURAL GAS MAY
REDUCE THE NEED FOR SHIPPERS TO CONTRACT FOR CAPACITY ON OUR PIPELINE SYSTEM.
Our long-term financial condition is dependent on the continued
availability of economic western Canadian natural gas for import into the United
States. We believe that substantial additional natural gas reserves remain to be
discovered, developed and produced in western Canada. These natural gas reserve
prospects, as well as previously discovered reserves, may require significant
capital expenditures by others for exploration and development drilling and the
installation of production, gathering, storage, transportation and other
facilities that permit natural gas to be produced and delivered to pipelines
that interconnect with our pipeline system. Low prices for natural gas,
regulatory limitations or the lack of available capital for these projects could
adversely affect the development of additional reserves and production,
gathering, storage and pipeline transmission and import and export of natural
gas supplies. Additional pipeline export capacity also could accelerate
depletion of these reserves.
As of June 30, 1999, approximately 97% of our pipeline capacity was
contractually committed through mid-September 2003 and the weighted average
contract life, based on annual cost of service obligations, was over seven
years. If the availability of western Canadian natural gas were to decline over
this period, existing shippers may be unlikely to extend their contracts or we
may be unable to find replacement shippers for that capacity. We cannot give you
any assurances as to the timing of discovery or development of additional
natural gas reserves or their availability to interconnect with our pipeline
system, or the economic competitiveness of such supplies in the markets we
serve.
IF DEMAND FOR WESTERN CANADIAN NATURAL GAS DECREASES, SHIPPERS MAY NOT ENTER
INTO OR RENEW CONTRACTS.
Our business depends in part on the level of demand for western Canadian
natural gas in the markets our pipeline system serves. The volumes of natural
gas delivered to these markets from other sources affect the demand for both
western Canadian natural gas and use of our pipeline system. Demand for western
Canadian natural gas also influences the ability and willingness of shippers to
use our pipeline system to meet demand.
A variety of factors could cause the demand for natural gas to fall in the
markets that our pipeline system serves. These factors include:
- economic conditions;
- fuel conservation measures;
- alternative energy requirements and prices;
- climatic conditions;
- government regulation; and
- technological advances in fuel economy and energy generation devices.
We cannot predict whether these or other factors will have an adverse effect on
demand for use of our pipeline system or how significant that adverse effect
could be.
OUR OPERATIONS ARE REGULATED EXTENSIVELY BY THE FERC AND ANY MATERIAL ADVERSE
CHANGES IN THE FERC REGULATORY ENVIRONMENT MAY HAVE A NEGATIVE IMPACT ON OUR
FINANCIAL POSITION, RESULTS OF OPERATIONS AND CASH FLOWS.
We are subject to extensive regulation by the FERC. FERC's regulatory
authority extends to matters including:
- the tariff structure;
- allowed rate of return on equity;
- the services that we are permitted to perform or abandon;
- the ability to seek recovery of various categories of costs; and
- the acquisition, construction and disposition of pipeline facilities.
Under FERC regulations, customers generally are allowed to contest our
rates or rate structure and
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terms and conditions of service. Our operating revenue could be reduced as a
result of such action by:
- a reduction in the current FERC-allowed rate of return on equity; or
- any other adverse change to our rates, rate structure and terms and
conditions of service.
We filed a rate proceeding with the FERC on May 28, 1999 for a
redetermination of our allowed equity rate of return. In this proceeding, we
proposed, among other things, to increase our allowed equity rate of return. The
total annual cost of service increase due to our proposed changes is
approximately $30 million. A number of our shippers and competing pipelines have
filed interventions and protests. In June 1999, the FERC issued an order in
which the proposed changes were suspended until December 1, 1999, after which
they will be implemented with subsequent billings subject to refund. The order
set for hearing not only our proposed changes but also several issues raised by
intervenors including the appropriateness of the cost of service tariff, our
depreciation schedule and our creditworthiness standards.
Several parties, including ourselves, asked for clarification or rehearing
of various aspects of the June order. On August 31, 1999, the FERC issued an
order that provided that the issue of rolled-in rate treatment of The Chicago
Project may be examined in this proceeding. Also, since the amount of The
Chicago Project costs to be included in rate base is governed by the settlement
in our previous rate case, the FERC consolidated that proceeding with this case
and directed that the presiding Administrative Law Judge conduct any further
proceedings that may be appropriate. While we had not proposed in this case to
change the depreciation rates approved in our last rate case, the order also
provided that we have the burden of proving that our depreciation rates are just
and reasonable. A procedural schedule has been established which calls for the
hearing to commence in July 2000. At this time, we can give no assurance as to
the outcome on any of these issues.
Given the extent of regulation by the FERC and potential changes to
regulations, we cannot give you any assurance regarding:
- the likely federal regulations under which we will operate in the future;
or
- the effect that regulation will have on our financial position, results
of operations and cash flows.
IF ANY SHIPPER FAILS TO PERFORM ITS CONTRACTUAL OBLIGATIONS, OUR FINANCIAL
POSITION, RESULTS OF OPERATIONS AND CASH FLOWS COULD BE ADVERSELY IMPACTED.
We have a limited number of major shippers. If one of these shippers fails
to perform its contractual obligation and we are unable to recontract its
capacity, our financial position could by adversely impacted.
Based on their proportionate shares of our cost of service, as of June 30,
1999, the five largest shippers are: Pan-Alberta Gas (U.S.) Inc. (26.5%),
TransCanada PipeLines Limited (10.8%), PanCanadian Energy Services Inc. (7.0%),
Enron Capital & Trade Resources Corp. (5.2%) and PetroCanada Hydrocarbons Inc.
(4.1%). The 20 largest shippers, in total, are responsible for an estimated
88.0% of our cost of service.
OUR POLICY GOVERNING CASH DISTRIBUTIONS TO OUR GENERAL PARTNERS IS AT THE
DISCRETION OF OUR MANAGEMENT COMMITTEE AND MAY NEGATIVELY IMPACT OUR ABILITY TO
REPAY LONG-TERM INDEBTEDNESS.
Our cash distribution policy as currently approved by our management
committee provides that distributions are to be made quarterly in an amount
equal to the previous quarter's sum, if positive, of the following, determined
on a regulatory basis of accounting:
(1) 100% of net income generated during the quarter, excluding specific
noncash items, plus
(2) 100% of the current portion of any allowance for income taxes for that
quarter, plus
(3) an amount equal to 35% of the sum of deferred income tax expense,
depreciation expense, amortization of regulatory assets, or minus, in
the case of amortization of
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regulatory liabilities, for that quarter, each as computed under our
tariff, minus
(4) an amount equal to 35% of maintenance capital expenditures for that
quarter.
If an amount determined by this formula is negative, then the negative
amount is carried forward and subtracted in the calculation for the next
quarter. Decisions made by our management committee regarding cash distributions
could inhibit our ability to repay long-term indebtedness.
IF WE DO NOT MAINTAIN OR INCREASE OUR RATE BASE BY SUCCESSFULLY COMPLETING
FERC-APPROVED PROJECTS, THE AMOUNT OF REVENUE ATTRIBUTABLE TO THE RETURN ON THE
RATE BASE WE COLLECT FROM OUR SHIPPERS WILL DECREASE OVER TIME.
The cost of our pipeline system is reflected in our financial records in
various accounts collectively referred to as "rate base." We are generally
allowed to collect from our customers a return on the rate base as reflected in
our financial records as well as recover that rate base through depreciation.
Under our cost of service tariff, the amount we may collect from customers
decreases monthly as the rate base declines as a result of, among other things,
monthly depreciation and amortization. In order to avoid a reduction in the
level of our earnings, we must maintain or increase our rate base through
projects that maintain or add to existing pipeline facilities. These projects
will depend upon many factors, including:
- sufficient demand for natural gas;
- an adequate supply of economic natural gas reserves;
- available capacity on pipelines that connect with our pipeline system;
- the execution of natural gas transportation contracts;
- the approval of any expansion or extension of the system by the
management committee, or in some cases, a ruling from an arbitrator, see
"Northern Border Pipeline Company Partnership Agreement;"
- obtaining financing for these projects; and
- receipt and acceptance of necessary regulatory approvals.
Our ability to complete these projects is also subject to numerous
business, economic, regulatory, competitive and political uncertainties that are
beyond our control, and we cannot assure you that these projects will be
completed.
BECAUSE OF THE HIGHLY COMPETITIVE NATURE OF THE NATURAL GAS TRANSMISSION
BUSINESS, WE MAY NOT BE ABLE TO MAINTAIN EXISTING CUSTOMERS OR ACQUIRE NEW
CUSTOMERS WHEN THE CURRENT SHIPPER CONTRACTS EXPIRE.
We cannot give any assurances that we will be able to renew or replace our
current shipper contracts, 97% of which have terms ending in or after September
2003. The renewal or replacement of the existing long-term contracts with our
customers at rates sufficient to recover our cost of service depends on a number
of factors beyond our control, including:
- the reserves of natural gas in Canada and the ability to expand
production of those reserves to fill the then-available pipeline
capacity;
- competition from alternative sources of supply in the United States;
- competition from other pipelines; and
- the price of, and demand for, natural gas in markets served.
Other pipeline systems that transport natural gas serve the same markets
served by our pipeline system. As a result, we face competition from other
pipeline systems.
The Alliance Pipeline has received regulatory approval and has begun
construction. Upon its completion (expected in late 2000), we will compete
directly with the Alliance Pipeline in the transportation of natural gas from
the western Canadian sedimentary basin to markets in the midwest United States.
Williams has a minority interest in the Alliance Pipeline.
TransCanada and other unaffiliated companies own and operate pipeline
systems which transport natural gas from the same natural gas reserves in
western Canada that are used by our customers.
Natural gas is also produced in the United States and transported by
competing pipeline systems to the same markets that are served by our pipeline
system.
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LITIGATION OR GOVERNMENTAL REGULATION RELATING TO ENVIRONMENTAL PROTECTION AND
OPERATIONAL SAFETY MAY RESULT IN SUBSTANTIAL COSTS AND LIABILITIES.
Our operations are subject to federal and state laws and regulations
relating to environmental protection and operational safety. We believe that our
operations comply in all material respects with applicable environmental and
safety regulations. However, risks of substantial costs and liabilities are
inherent in pipeline operations and we cannot give you any assurance that these
costs and liabilities will not be incurred. Possible future developments,
including stricter environmental and safety laws, regulations and enforcement
policies and claims for personal or property damages resulting from our
operations, could result in substantial costs and liabilities.
IF THE FERC DOES NOT ALLOW US TO INCLUDE A PORTION OF THE COSTS OF THE CHICAGO
PROJECT IN OUR RATE BASE, OUR FINANCIAL POSITION, RESULTS OF OPERATIONS AND CASH
FLOWS MAY BE NEGATIVELY IMPACTED.
The FERC may not permit us to include a portion of the costs associated
with construction of The Chicago Project in our rate base. If that were to
happen, we would not be able to recover those costs from our shippers and our
financial position, results of operations and cash flows would be adversely
affected.
As part of the settlement of our 1995 rate case with the FERC, a project
cost containment mechanism was implemented to limit our ability to include cost
overruns on The Chicago Project and to provide incentives for cost underruns.
The project cost containment mechanism amount is determined by comparing the
final cost of The Chicago Project to the budgeted cost.
The settlement agreement required the budgeted cost for The Chicago
Project, which had been filed with the FERC for approximately $839 million, to
be adjusted for the effects of inflation and for costs attributable to changes
in project scope, as defined by the agreement. We have determined the budgeted
cost of The Chicago Project, as adjusted for the effects of inflation and
project scope changes, to be $897 million with the final construction cost
estimated to be $894 million. Our notification to the FERC and our shippers in
June 1999 in our final report reflects the conclusion that there will be a $3
million addition to rate base related to the project cost containment mechanism.
Under the order issued August 31, 1999 in our pending rate case, we were
required to file our final report in that proceeding.
Although we believe that the computations in the final report have been
completed under the terms of the settlement agreement, we are unable to predict
at this time whether any adjustments will be required. Later developments may
prevent recovery of amounts originally calculated under the project cost
containment mechanism, which may result in a non-cash charge to write down the
balance sheet transmission plant line item, and that charge could be material to
our operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Settlement of 1995 FERC Rate Case and
Project Cost Containment Mechanism."
WE MAY ENCOUNTER PROBLEMS AS A RESULT OF THE YEAR 2000 ISSUE AND OUR RELIANCE ON
INFORMATION SYSTEMS TECHNOLOGY.
We have developed a plan, which will be modified as events warrant, to
address Year 2000 problems. At this time, all of our mission-critical systems
are Year 2000 ready. However, we cannot assure you that there will not be
circumstances under which we may face severe issues as a result of the Year
2000. For detailed information regarding our plan and its status, refer to
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Year 2000."
IF YOU DO NOT PROPERLY TENDER YOUR EXISTING NOTES, YOU WILL CONTINUE TO HOLD
UNREGISTERED EXISTING NOTES AND YOUR ABILITY TO TRANSFER EXISTING NOTES WILL BE
ADVERSELY AFFECTED.
We will only issue new notes in exchange for existing notes that are timely
received by the exchange agent together with all required documents, including a
properly completed and signed letter of transmittal. Therefore, you should allow
sufficient time to ensure timely delivery of the existing notes and you should
carefully follow the instructions on how to tender your existing notes. Neither
we nor the exchange agent are required to tell you of any defects or
irregularities with respect to your tender of the existing notes. If you do not
tender your existing notes or if we do not accept your existing notes because
you did not tender your existing notes properly, then, after we
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<PAGE> 17
consummate the exchange offer, you may continue to hold existing notes that are
subject to the existing transfer restrictions.
In addition, if you tender your existing notes for the purpose of
participating in a distribution of the new notes, you will be required to comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the new notes. If you are a broker-dealer that
receives new notes for your own account in exchange for existing notes that you
acquired as a result of market-making activities or any other trading
activities, you will be required to acknowledge that you will deliver a
prospectus in connection with any resale of such new notes. After the exchange
offer is consummated, if you continue to hold any existing notes, you may have
difficulty selling them because there will be less existing notes outstanding.
THERE IS NO PUBLIC MARKET FOR THE NOTES.
Before the offering of the notes, there has been no public market for the
notes and we do not intend to apply for the listing of the notes on any
securities exchange or for quotation of the notes on the Nasdaq National Market.
We have been advised by the initial purchasers that they presently intend to
make a market in the new notes, as permitted by applicable laws and regulations.
The initial purchasers are not obligated, however, to make a market in the new
notes and any market making activity may be discontinued at any time without
notice at the sole discretion of each initial purchaser. This market-making
activity will be restricted by limitations imposed by the Securities Act and the
Exchange Act, and may be limited during our exchange offer for the new notes. We
cannot assure you as to the liquidity of the public market for the new notes or
that an active public market for the new notes will develop. If an active public
market does not develop, the market price and liquidity of the new notes may be
adversely affected. See "Plan of Distribution."
THE ISSUANCE OF THE NEW NOTES MAY ADVERSELY AFFECT THE MARKET FOR THE EXISTING
NOTES.
If existing notes are tendered for exchange and accepted in the exchange
offer, the trading market for the untendered and tendered but unaccepted
existing notes could be adversely affected.
YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE
CONSEQUENCES.
The existing notes were not registered under the Securities Act or under
the securities laws of any state and you may not resell them, offer them for
resale or otherwise transfer them unless they are subsequently registered or
resold under an exemption from the registration requirements of the Securities
Act and applicable state securities laws. If you do not exchange your existing
notes for new notes pursuant to this exchange offer, or if you do not properly
tender your existing notes in this exchange offer, you will not be able to
resell, offer to resell or otherwise transfer the existing notes unless they are
registered under the Securities Act or unless you resell them, offer to resell
or otherwise transfer them under an exemption from the registration requirements
of, or in a transaction not subject to, the Securities Act. Moreover, the
exchange offer satisfies the registration rights you received in connection with
the existing notes and those rights terminate upon consummation of the exchange
offer.
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USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes in
exchange for the existing notes. We are making this exchange solely to satisfy
our obligations under our registration rights agreement. In consideration for
issuing the new notes, we will receive existing notes in aggregate principal
amount equal to the aggregate principal amount of the new notes.
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CAPITALIZATION
The following table sets forth our capitalization as of June 30, 1999, and
as adjusted to give effect to the sale of the existing notes after deducting the
fees of the initial purchasers and other estimated expenses. This table is
derived from and should be read in conjunction with our financial statements and
related notes.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Existing senior notes..................................... $ 250,000 $ 250,000
Credit agreement.......................................... 662,000 464,974
7.75% Senior Notes due 2009............................... -- 200,000
---------- ----------
Total long-term debt.............................. 912,000 914,974
Partners' capital........................................... 834,913 834,913
---------- ----------
Total capitalization........................................ $1,746,913 $1,749,887
========== ==========
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of operations should be read in
conjunction with our financial statements and related notes.
RESULTS OF OPERATIONS
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
Operating revenues increased $50.3 million (52%) for the first half of
1999, as compared to the same period in 1998, due primarily to additional
revenue from the operation of The Chicago Project facilities. New firm
transportation agreements with 27 shippers provided for additional receipt
capacity of 700 million cubic feet per day, a 42% increase. Our FERC tariff
provides an opportunity to recover operations and maintenance costs of the
pipeline, taxes other than income taxes, interest, depreciation and
amortization, an allowance for income taxes and a regulated return on equity. We
are generally allowed an opportunity to collect from our shippers a return on
unrecovered rate base as well as recover that rate base through depreciation and
amortization. The return amount we collect from our shippers declines as the
rate base is recovered. The Chicago Project increased our rate base, which
increased our return, for the first half of 1999. Also reflected in the increase
in 1999 revenues are recoveries of increased pipeline operating expenses due to
the new facilities.
Operations and maintenance expense increased $3.6 million (25%) for the
first half of 1999, from the comparable period in 1998, due primarily to
operations and maintenance expenses for The Chicago Project facilities recorded
in 1999 and increased administrative expenses.
Depreciation and amortization expense increased $5.9 million (30%) for the
first half of 1999, as compared to the same period in 1998, due primarily to the
placing of The Chicago Project facilities into service. The impact of the
additional facilities on depreciation and amortization expense was partially
offset by a decrease in the depreciation rate applied to transmission plant from
2.5% to 2.0%. We agreed to reduce the depreciation rate at the time The Chicago
Project was placed into service as part of a previous rate case settlement.
Taxes other than income increased $3.0 million (25%) for the first half of
1999, as compared to the same period in 1998, due primarily to ad valorem taxes
attributable to the facilities placed into service for The Chicago Project.
For the first half of 1998, we recorded a regulatory credit of $2.2
million. During the construction of The Chicago Project, we placed certain new
facilities into service in advance of the December 1998 in-service date to
maintain gas flow at firm contracted capacity while existing facilities were
being modified. The regulatory credit deferred the cost of service of these new
facilities. We are allowed to recover from our shippers the regulatory asset
that resulted from the cost of service deferral over a ten-year period
commencing with the in-service date of The Chicago Project.
Interest expense, net increased $16.5 million (132%) for the first half of
1999, as compared to the same period in 1998, due to an increase in interest
expense of $10.3 million and a decrease in interest expense capitalized of $6.2
million. Interest expense increased due primarily to an increase in average debt
outstanding, reflecting amounts borrowed to finance a portion of the capital
expenditures for The Chicago Project. The impact of the increased borrowings on
interest expense was partially offset by a decrease in average interest rates
between 1998 and 1999. The decrease in interest expense capitalized is due to
the completion of construction of The Chicago Project in December 1998.
Other income (expense) decreased $5.0 million (97%) for the first half of
1999, as compared to the same period in 1998, primarily due to a decrease in the
allowance for equity funds used during construction. The decrease in the
allowance for equity funds used during construction is due to the completion of
construction of The Chicago Project in December 1998.
1998 Compared to 1997
Operating revenues, net increased $10.5 million (6%) for the year ended
December 31, 1998, as compared to the results for 1997 due primarily to returns
on higher levels of invested equity. As a result of placing the facilities for
The Chicago Project into service, we added approximately $840 million to our gas
plant in service in 1998.
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Depreciation and amortization expense increased $2.3 million (6%) for the
year ended December 31, 1998, as compared to 1997, primarily due to facilities
that were placed in service in 1998.
For the year ended December 31, 1998, we recorded a regulatory credit of
approximately $8.9 million. During the construction of The Chicago Project, we
placed certain new facilities into service in advance of the December 1998
in-service date to maintain gas flow at firm contracted capacity while existing
facilities were being modified. The regulatory credit results in deferral of the
cost of service of these new facilities. We are allowed to recover from our
shippers the regulatory asset that resulted from the cost of service deferral
over a ten-year period commencing with the in-service date of The Chicago
Project.
Interest expense, net decreased $3.8 million (13%) for the year ended
December 31, 1998, as compared to the results for 1997, due to an increase in
interest expense of $11.5 million offset by an increase in the amount of
interest expense capitalized of $15.3 million. The increase in interest expense
was due primarily to an increase in average debt outstanding, reflecting amounts
borrowed to finance a portion of the capital expenditures for The Chicago
Project. The increase in interest expense capitalized primarily relates to
expenditures for The Chicago Project.
Other income increased $6.4 million (112%) for the year ended December 31,
1998, as compared to 1997. The increase was primarily due to an $8.8 million
increase in the allowance for equity funds used during construction. The
increase in the allowance for equity funds used during construction primarily
relates to expenditures for The Chicago Project.
Other income for 1997 included $4.8 million received for vacating certain
microwave frequency bands. We employ a microwave system that used the 2Ghz. band
of radio frequencies for transmitting operational data of the pipeline. This
bandwidth was subsequently reserved by the Federal Communications Commission for
personal communications services. As a result, we vacated 21 of the 39 segments
of the microwave system and received payments during 1997. The remaining 18
segments of our microwave system are located in sparsely populated areas. The
payments related to the vacated segments received during 1997 were a one-time
occurrence and we do not expect to receive any material payments for vacating
microwave frequency bands in the future.
1997 Compared to 1996
Operating revenues, net decreased $15.9 million (8%) for the year ended
December 31, 1997, as compared to the results for 1996 due primarily to lower
depreciation and amortization expense, taxes other than income and return on a
lower rate base. These lower recoveries were partially offset by higher
operations and maintenance expense recoveries. Additionally, in accordance with
the stipulation and agreement approved by the FERC to settle our November 1995
rate case, the allowed equity rate of return was 12.75% through September 30,
1996 and 12.0% thereafter.
Operations and maintenance expense increased $1.5 million (6%) for the year
ended December 31, 1997, from 1996 due primarily to higher administrative
expenses.
Depreciation and amortization expense decreased $8.3 million (18%) for the
year ended December 31, 1997, as compared to 1996. In accordance with the terms
of the stipulation, filed with the FERC in 1996 and approved in August 1997, the
depreciation rate applied to our gross transmission plant was 2.5% for 1997. The
average depreciation rate applied to gross transmission plant for the year ended
December 31, 1996 was 3.1%.
Taxes other than income decreased $2.0 million (8%) for the year ended
December 31, 1997, as compared to 1996, due primarily to lower property tax
assessments received in various states where our pipeline system operates.
Interest expense, net decreased $3.3 million (10%) for the year ended
December 31, 1997, as compared to 1996, due to an increase in the amount of
interest capitalized. This increase primarily relates to expenditures for The
Chicago Project.
Other income increased $2.8 million (96%) for the year ended December 31,
1997, as compared to 1996. The increase was primarily due to $4.8 million
received in 1997 for vacating certain microwave frequency bands. This increase
was partially offset by the reversal into income of $2.2 million of previously
established reserves for regulatory issues in 1996.
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LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities
Cash flows provided by operating activities increased $28.6 million to
$83.3 million for the first half of 1999, as compared to the same period in
1998, primarily attributed to The Chicago Project facilities placed into service
in late December 1998.
Cash flows provided by operating activities decreased $11.5 million to
$103.8 million for the year ended December 31, 1998 as compared to 1997
primarily related to a $25.4 million reduction for changes in accounts payable,
exclusive of accruals for The Chicago Project. In addition, for the year ended
December 31, 1998, there was a $7.4 million reduction for changes in over/under
recovered cost of service. These reductions were partially offset by the effect
of the refund activity of 1997 discussed below. The over/under recovered cost of
service is the difference between estimated billings to our shippers, which are
determined on a six-month cycle, and the actual cost of service determined in
accordance with the FERC tariff. The difference is either billed to or credited
back to the shippers' accounts. Cash flows provided by operating activities for
the year ended December 31, 1997 reflected a $52.6 million refund in October
1997 in accordance with the stipulation approved by the FERC to settle the
November 1995 rate case. During 1997, we collected $40.4 million subject to
refund as a result of our rate case.
Cash flows from investing activities
Capital expenditures of $77.0 million for the first half of 1999 include
$70.4 million for The Chicago Project. The remaining capital expenditures for
the first half of 1999 are primarily related to renewals and replacements of
existing facilities. For the comparable period in 1998, capital expenditures
were $298.9 million, which included $286.7 million for The Chicago Project and
$10.0 million for linepack gas purchased from our shippers. Linepack gas is the
natural gas required to fill our pipeline system. The cost of the linepack is
included in our rate base.
Capital expenditures of $651.2 million for the year ended December 31,
1998, included $638.7 million for The Chicago Project and $11.7 million for
linepack gas. The remaining $0.8 million of capital expenditures for 1998 is
primarily related to renewals and replacements of existing facilities.
Capital expenditures of $152.1 million for the year ended December 31,
1997, included $135.7 million for The Chicago Project. The remaining $16.4
million of capital expenditures for 1997 is primarily related to renewals and
replacements of existing facilities.
Total capital expenditures for 1999 are estimated to be $117 million
including $11 million for Project 2000 and $87 million for The Chicago Project.
Approximately $37 million of the capital expenditures for The Chicago Project is
for construction completed in 1998. An additional $19 million of 1999 capital
expenditures is planned for renewals and replacements of the existing
facilities. We currently anticipate funding our 1999 capital expenditures
primarily by borrowing under our credit agreement and using internal resources.
See "-- Description of Existing Indebtedness -- Description of bank credit
facility."
Cash flows from financing activities
Cash flows used in financing activities were $17.8 million for the first
half of 1999, as compared to cash flows provided by financing activities of
$254.1 million for the first half of 1998. During the first half of 1998, our
general partners contributed $197.0 million to finance a portion of the capital
expenditures for The Chicago Project. Distributions paid to the general partners
increased $34.9 million to $67.8 million for the first half of 1999 as compared
to the same period of 1998. The distribution for the first half of 1999 was
impacted by increased earnings and included distributions for seven months
activity, rather than six months, resulting from a change in the timing of
distribution payments. The distribution for the first half of 1998 was impacted
by a rate case refund during the fourth quarter of 1997. Advances under our
credit agreement, which were used to finance a portion of the capital
expenditures for The Chicago Project, were $65 million for the first half of
1999 as compared to advances of $90 million for the same period in 1998.
Payments on our credit agreement were $15 million for the first half of 1999.
Cash flows provided by financing activities increased $512.4 million to
$564.8 million for the year ended December 31, 1998, as compared to the same
period in 1997. Financing activities for 1998
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include borrowings under our credit agreement of $403.0 million and were used
primarily for construction expenditures related to The Chicago Project.
Contributions received from our general partners increased $142.0 million to
$223.0 million and were used to fund a portion of our capital expenditures.
Distributions to the general partners decreased $38.1 million to $61.2 million
primarily due to a change in the timing of distribution payments.
Cash flows provided by financing activities were $52.4 million for the year
ended December 31, 1997, as compared to cash flows used in financing activities
of $125.3 million for the year ended December 31, 1996. In 1997, sources of
funds from financing activities included contributions from our general partners
of $81.0 million. Borrowings under our credit agreement totaled $209 million and
were used primarily to retire amounts related to existing bank loan agreements
of $137.5 million and for construction expenditures related to The Chicago
Project.
DESCRIPTION OF EXISTING INDEBTEDNESS
Description of existing notes
For a description of the existing notes, refer to "Description of the
Notes."
Description of existing senior notes
The following is a summary of the material terms of $250 million aggregate
principal amount of notes we issued in a private placement under a note purchase
agreement dated as of July 15, 1992, amended by a supplemental agreement dated
as of June 1, 1995.
Our obligations under the note purchase agreement and supplemental
agreement are unsecured and non-recourse to the general partners. The note
purchase agreement and supplemental agreement provide for four series of notes
with varying interest rates and maturity dates. The Series A Notes in a total
principal amount of $66 million bear interest at an annual rate of 8.26%,
payable semiannually, and mature in August 2000. The Series B Notes in a total
principal amount of $41 million bear interest at an annual rate of 8.38%,
payable semiannually, and mature in August 2001. The Series C Notes in a total
principal amount of $78 million bear interest at an annual rate of 8.49%,
payable semiannually, and mature in August 2002. The Series D Notes in a total
principal amount of $65 million bear interest at an annual rate of 8.57%,
payable semiannually, and mature in August 2003.
We may at any time, at our option and on written notice, prepay the notes
of one or more series in whole or in part. Prepayment must be in a minimum
amount of, and otherwise in multiples of, $1.0 million. Optional prepayments
will be payable with accrued interest plus any make-whole amount (as defined in
the note purchase agreement) premium.
The note purchase agreement contains various restrictive and affirmative
covenants, including:
- requirement that the ratio of total indebtedness to partners' capital (as
defined in the note purchase agreement) not exceed 2.3 to 1 on a
consolidated basis. As of June 30, 1999, the ratio was 1.73 to 1 on a
consolidated basis;
- requirement that Northern Plains or another person approved by a majority
of the holders of the notes outstanding at the time of selection by the
management committee be our operator;
- restrictions on specific liens, investments, lines of business, mergers,
consolidations or sales of assets;
- restrictions on amendments, modification or cancellation of any
controlled service agreement or related support agreement (as defined in
the note purchase agreement), subject to some exceptions; and
- restrictions on transactions with affiliates except on an arm's-length
basis.
Under the note purchase agreement, so long as no default or event of
default (as defined in the note purchase agreement) exists or would result, we
are permitted to make cash distributions to our partners if the total amount of
cash distributions made from January 1, 1992 to the date of the proposed cash
distribution (the computation period, as defined in the note purchase agreement)
would
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not exceed $20 million plus (or minus in case of a
negative amount) the sum of:
- consolidated net income (as defined in the note purchase agreement) for
the computation period;
- an amount equal to the total net cash proceeds received during the
computation period from the sale of partnership interests or from capital
contributions treated as equity in accordance with required accounting
principles (as defined in the note purchase agreement);
- an amount equal to current taxes (as defined in the note purchase
agreement) for the computation period and interest payable in respect of
any income tax deficiencies (to the extent recovered under the FERC
tariff during the computation period);
- an amount equal to 35% of deferred income taxes (as defined in the note
purchase agreement) during the computation period; and
- an amount equal to 35% of depreciation (as defined in the note purchase
agreement) during the computation period.
Under the most restrictive debt covenant, the amount of partners' capital that
could have been distributed as of June 30, 1999 was approximately $132 million.
If an event of default (as defined in the note purchase agreement) exists,
the holders of notes may accelerate the maturity of the notes and exercise other
rights and remedies.
Description of bank credit facility
We entered into a credit agreement, dated as of June 16, 1997 with several
financial institutions to borrow up to a total principal amount of $750 million.
The following is a summary of the material terms of our credit agreement.
Our obligations under the credit agreement are unsecured obligations, rank
equally with the existing senior notes and are non-recourse to the general
partners. The credit agreement is comprised of a $200 million five-year
revolving credit facility maturing in June 2002 to be used for the retirement of
prior credit facilities and for general business purposes and a $550 million
three-year revolving credit facility maturing in June 2000 to be used for the
construction of The Chicago Project. Effective March 31, 1999, the three-year
revolving credit facility converted to a term loan maturing in June 2002. The
credit agreement permits us to choose among various interest rate options, to
specify the portion of the borrowings to be covered by specific interest rate
options and to specify the interest rate period, subject to specific parameters.
We may borrow under either facility at (1) fixed interest rates or a margin
added or subtracted from a London Interbank Offered Rate index and further
adjusted based on our leverage ratio or credit rating or (2) under an auction
procedure set forth in the credit agreement. We are required to pay a facility
fee on the total principal amount of $749.5 million. As of June 30, 1999, $549.5
million had been borrowed on the term loan and $112.5 million had been borrowed
on the five-year revolving credit facility. In August 1999, the proceeds from
the sale of the existing notes were used to reduce the existing indebtedness
under this credit agreement.
The credit agreement contains various restrictive covenants, including
restrictions on liens, additional indebtedness, investments, mergers,
consolidations, sales of assets, guarantees, entering into transactions with
affiliates, allowing final judgments in excess of $25 million to remain
undischarged or unbonded, maintaining or contributing to any ERISA Plan without
obtaining the prior written consent of the majority banks (as defined in the
credit agreement), and not permitting the ratio of our indebtedness to the sum
of its general partners' capital plus indebtedness to exceed 0.65 to 1 on a
consolidated basis. As of June 30, 1999, the ratio was 0.52 to 1 on a
consolidated basis.
The credit agreement also contains various affirmative covenants, customary
for this type of facility, including a covenant that we will use our best
efforts to cause our tariff to remain effective at all times, use our best
efforts to maintain existing service agreements and support agreements (as
defined in the credit agreement), and that we will require that all shippers
meet certain credit worthiness standards.
If an event of default (as defined in the credit agreement) occurs under
the credit agreement, the lending banks may accelerate the maturity of the
amounts due thereunder and exercise other rights and remedies.
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SETTLEMENT OF 1995 FERC RATE CASE AND PROJECT COST CONTAINMENT MECHANISM
In connection with the rate case filed with the FERC in November 1995, we
reached a settlement that was filed in a stipulation and agreement. Although the
stipulation was contested, it was approved by the FERC in August 1997. As agreed
to in the settlement, we implemented a new depreciation schedule with an
extended depreciable life, a $31 million settlement adjustment mechanism that
effectively reduces the allowed return on rate base and The Chicago Project cost
containment mechanism. The purpose of the project cost containment mechanism was
to limit our ability to include cost overruns for The Chicago Project in rate
base and to provide incentives for cost underruns. The settlement agreement
required the budgeted cost for The Chicago Project, which had been initially
filed with the FERC for approximately $839 million, to be adjusted for the
effects of inflation and for costs attributable to changes in project scope, as
defined in the settlement agreement.
In the determination of The Chicago Project cost containment mechanism, the
actual cost of the project is compared to the budgeted cost. If there is a cost
overrun of $6 million or less, the shippers will bear the actual cost of the
project through its inclusion in our rate base. If there is a cost savings of $6
million or less, the full budgeted cost will be included in the rate base. If
there is a cost overrun or cost savings of more than $6 million but less than 5%
of the budgeted cost, the $6 million plus 50% of the excess will be included in
our rate base. All cost overruns exceeding 5% of the budgeted cost are excluded
from the rate base.
We have determined the budgeted cost of The Chicago Project, as adjusted
for the effects of inflation and project scope changes, to be $897 million, with
the final construction cost estimated to be $894 million. Our notification to
the FERC and our shippers in June 1999 in our final report reflects the
conclusion that there will be a $3 million addition to rate base related to the
project cost containment mechanism.
The stipulation requires the calculation of the project cost containment
mechanism to be reviewed by an independent national accounting firm. Several
parties to the stipulation advised the FERC that they may have questions and
desire further information about the report, and may wish to test it and its
conclusions at an appropriate proceeding in the future. The parties also stated
that if it is determined that we are not permitted to include some claimed costs
for The Chicago Project in our rate base, they reserve their rights to seek
refunds, with interest, of any overcollections. Under the order issued August
31, 1999 by the FERC in our pending rate case, we are required to file our final
report in that proceeding.
Although we believe that the computations in the final report have been
properly completed under the terms of the stipulation, we are unable to predict
at this time whether any adjustments will be required. Later developments may
prevent recovery of amounts originally calculated under the project cost
containment mechanism, which may result in a non-cash charge to write down our
balance sheet transmission plant line item, and that charge could be material to
our operating results.
AMORTIZATION OF INCENTIVE RATE OF RETURN
Our rate base includes, as an additional amount, a one-time ratemaking
adjustment to reflect the receipt of a financial incentive on the original
construction of the pipeline. Since inception, the rate base adjustment, called
an incentive rate of return, has been amortized through monthly additions to the
cost of service. The amortization continues until November 2001 when the
incentive rate of return is fully amortized. See "Business -- FERC
Regulation -- Cost of service tariff."
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our interest rate exposure results from variable rate borrowings from
commercial banks. To mitigate potential fluctuations in interest rates, we
attempt to maintain a significant portion of our debt portfolio in fixed rate
debt (currently, approximately 55% of our debt portfolio). We also use interest
rate swap agreements to increase the portion of fixed rate debt.
If interest rates average one percentage point more than rates in effect as
of December 31, 1998, our annual interest expense would increase by
approximately $5.2 million. This amount has been determined by considering the
impact of the hypothetical interest rates on our variable rate borrowings and
interest rate swap agreements outstanding as of December 31, 1998. Our tariff
provides the pipeline an opportunity to recover,
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among other items, interest expense. We believe that we would be allowed to
recover any increase in interest expense, and that there would not be any
material impact on our annual earnings and cash flow from a hypothetical one
percentage point increase in interest rates. As of June 30, 1999, there has not
been any material change to our interest rate exposure as compared to December
31, 1998.
YEAR 2000
Similar to most businesses, we rely heavily on information systems
technology to operate in an efficient and effective manner. Much of this
technology takes the form of computers and associated hardware for data
processing and analysis. In addition, a great deal of information processing
technology is embedded in microelectronic devices.
The Year 2000 problem results from the use in computer hardware and
software of two digits rather than four digits to define the applicable year. As
a result, computer programs that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000.
If not corrected, many computer applications could fail or create erroneous
results. The effects of the Year 2000 problem are compounded because of the
interdependence of computer and telecommunication systems in the United States
and throughout the world. This interdependence is true for us and our suppliers
and customers.
We have developed a plan, which will be modified as events warrant, to
address Year 2000 problems. This plan is designed to take reasonable steps to
prevent mission-critical functions from being impaired due to the Year 2000
problem. Mission-critical functions are pipeline operations conducted in a
manner that is safe for personnel and the public. Pipeline operations include:
- the flow of natural gas through the pipeline with the operation of
thirteen natural gas fired compressor stations;
- two electric powered compressor stations;
- measurement stations for receipt and delivery of gas; and
- the supervisory control and data acquisition computer system.
We are committed to allocating the resources necessary to implement this
plan. A core team of individuals has been established to implement and complete
the plan. The plan includes:
- developing a comprehensive component inventory of computer hardware,
software, embedded chips and third-party interfaces;
- assessing the risk of non-compliance of each component;
- identifying the impact of any component failure;
- assessing Year 2000 compliance of each component;
- identifying and implementing solutions for non-compliance of components;
- testing of solutions implemented; and
- developing contingency plans for critical components and systems.
As of June 1999, we have identified, inventoried and assessed computer
software, hardware, embedded chips and third-party interfaces. Where necessary,
remediation, replacement or adequate workarounds have been identified and
implemented or are in the process of being implemented. The workaround we have
employed in very limited instances is to turn the system clocks back to a past
date so that the systems will not rollover to the year 2000 for several years.
System clocks have been turned back at two compressor stations that have an
older control system that has not been upgraded. We believe that there is
limited risk involved with turning the clocks back on these computer systems
because all functions are local to the station and their operations are not
dependent on knowing the exact date. This strategy allows the computers to
continue to function until replaced.
At this time, all of our mission-critical systems are Year 2000 ready. As
far as non-mission-critical systems, the systems are over 95% Year 2000 ready,
based on the work effort involved. Additional work remaining consists primarily
of completing upgrades of certain off-the-shelf software.
Our plan recognizes that the computer, telecommunications and other systems
of outside entities have the potential for major, mission-critical, adverse
effects on the conduct of our business. We do not have control of these outside
systems. However, our plan includes an
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ongoing process of identifying and contacting outside entities whose systems
have or may have a substantial effect on our ability to continue to conduct the
mission-critical aspects of our businesses without disruption from Year 2000
problems. The plan requires us to attempt to inventory and assess the extent to
which these outside systems may not be Year 2000 compatible. Our Year 2000 team
will reasonably attempt to coordinate with these outside entities in an ongoing
effort to obtain assurances that these outside systems will be Year 2000
compatible well before January 1, 2000.
A listing of critical outside entities has been developed which includes
shippers, electrical suppliers and interconnecting pipelines. Our Year 2000 team
has contacted these entities to determine their Year 2000 readiness and the
extent to which joint testing or mutual contingency planning is required. All
critical outside entities contacted have Year 2000 readiness programs underway
and they expect to be Year 2000 ready before the end of the year. The assessment
of the Year 2000 readiness of critical outside entities is an important factor
in the internal contingency planning process.
The processes of inventorying, assessing, analyzing, remediating through
replacement or adequate workarounds, testing, and developing contingency plans
for mission-critical functions in anticipation of the Year 2000 are necessarily
iterative processes. That is, the steps are repeated as our Year 2000 team
learns more about the Year 2000 problem and its effects on internal systems and
on outside systems, and about the effects that embedded chips may have on our
systems and outside systems. As the steps are repeated, it is likely that new
problems will be identified and addressed. We presently do not know of any of
our pipeline systems that are susceptible to problems that can only be
identified after January 1, 2000.
We have in place a Year 2000 contingency plan designed to address specific
Year 2000 related problems including loss of all commercial electrical power,
loss of all commercial telecommunications and unforeseen failures in critical
systems. In the event of loss of commercial power, all of our critical pipeline
facilities have back-up power sources including auxiliary generators and battery
back-up except for the two electric powered compressor stations. We have our own
internal, private communications systems for voice, data and the supervisory
control and data acquisition computer system traffic. All of the communications
sites have back-up power sources. We also have a redundant back-up site for
critical operation and systems functions. All compressor facilities will be
manned at year end so that unforeseen issues can be dealt with immediately.
We have not incurred material costs associated with the Year 2000 issues.
Further, we believe that our future costs of implementing the plan will not be
material. Although we believe our estimates are reasonable, there can be no
assurance, for the reasons stated below, that the actual costs of implementing
the plan will not differ materially from the estimated costs or that we will not
be adversely affected by Year 2000 issues.
The extent and magnitude of the Year 2000 problem as it may affect our
operations is difficult to predict or quantify for a number of reasons. Among
the most important is the potential complexity of locating embedded
microprocessors that may be in a great variety of hardware used for process or
flow control, environmental, transportation, access, communications and other
systems. We believe that we will be able to identify and remediate
mission-critical systems containing embedded microprocessors.
Other important difficulties relate to:
- the lack of control over and difficulty inventorying, assessing,
remediating, verifying and testing outside systems;
- the complexity of evaluating all software (computer code) internal to our
operations that may not be Year 2000 compatible; and
- the potential limited availability of certain necessary internal or
external resources, including but not limited to trained hardware and
software engineers, technicians and other personnel to perform adequate
remediation, verification and testing of internal systems or outside
systems.
Year 2000 costs are difficult to estimate accurately because of
unanticipated vendor delays, technical difficulties, the impact of tests of
outside systems, and similar events. There can be no assurance for example that
all outside systems will be adequately remediated so that they are Year 2000
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ready by January 1, 2000, or by some earlier date, so as not to create a
material disruption to business. If, despite diligent, prudent efforts under the
plan, there are Year 2000-related failures that create substantial disruptions
to our business, the adverse impact could be material. Moreover, the estimated
costs of pursuing the current course of action do not take into account the
costs, if any, that might be incurred as a result of Year 2000-related failures
that occur despite implementation of the plan, as it may be modified over time.
In a recent SEC release regarding Year 2000 disclosures, the SEC stated
that public companies must disclose the most reasonably likely worst case Year
2000 scenario. Analysis of the most reasonably likely worst case scenarios we
may face leads to contemplation of the following possibilities:
- widespread failure of electrical, gas, and similar supplies by utilities
serving us;
- widespread disruption of the services of communications common carriers;
- similar disruption to means and modes of transportation for us and our
contractors, suppliers and customers;
- significant disruption to our ability to gain access to, and remain
working in, office buildings and other facilities; and
- the failure of outside systems, the effects of which would have a
cumulative material adverse impact on our mission-critical systems.
Among other things, we could face substantial claims due to:
- service interruptions;
- inability to fulfill contractual obligations;
- inability to account for certain revenues or obligations or to bill
shippers accurately and on a timely basis; and
- increased expenses associated with litigation, stabilization of
operations following mission-critical failures, and the execution of
contingency plans.
We could also experience an inability by shippers to pay, on a timely basis
or at all, obligations owed to us. Under these circumstances, the adverse effect
on our operations, and the diminution of our revenues, would be material,
although not quantifiable at this time. We will continue to monitor business
conditions to assess and quantify material adverse effects, if any, that result
or may result from the Year 2000 problem.
This discussion under the heading "Year 2000" constitutes year 2000
readiness disclosure under the Year 2000 Information and Readiness Disclosure
Act. Compliance with the Year 2000 Information and Readiness Disclosure Act does
not limit or otherwise affect any claims or actions under the federal securities
laws.
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BUSINESS
STRUCTURE
Northern Border Pipeline Company is a general partnership formed in 1978.
The general partners are Northern Border Partners, L.P. and TC PipeLines, LP,
both of which are publicly traded partnerships. Each of Northern Border Partners
and TC PipeLines holds its interest, 70% and 30% of voting power, respectively,
through a subsidiary limited partnership.
A four-member management committee oversees our management. Northern Border
Partners controls 70% of the voting power of the management committee and
designates three members. TC PipeLines controls 30% of the voting power of the
management committee and designates one member. See "Management."
Under our partnership agreement, each of Northern Plains Natural Gas
Company, Pan Border Gas Company and Northwest Border Pipeline Company has the
right to select one of Northern Border Partners' representatives on the
management committee. Voting power on the management committee is presently
allocated among Northern Border Partners' three representatives in proportion to
their general partner interests in Northern Border Partners. As a result, the
70% voting power of Northern Border Partners' three representatives on the
management committee is allocated as follows: 35% to the representative
designated by Northern Plains, 22.75% to the representative designated by Pan
Border and 12.25% to the representative designated by Northwest Border. Northern
Plains and Pan Border are subsidiaries of Enron Corp. Therefore, Enron controls
57.75% of the voting power of the management committee and has the right to
select two of the members of the management committee. Northwest Border is a
subsidiary of The Williams Companies, Inc.
Our pipeline system is operated by Northern Plains under an operating
agreement. As of December 31, 1998, Northern Plains employed approximately 190
individuals located at its headquarters in Omaha, Nebraska and at locations
along the pipeline route. Northern Plains' employees are not represented by any
labor union and are not covered by any collective bargaining agreements.
GENERAL
We generate revenues from the receipt and delivery of natural gas at points
along our pipeline system according to individual transportation contracts with
our shippers.
The FERC-regulated tariff specifies the calculation of amounts to be paid
by shippers and the general terms and conditions of transportation service on
our pipeline system. The tariff provides an opportunity to recover:
- operations and maintenance costs of the pipeline;
- taxes other than income taxes;
- interest;
- depreciation and amortization;
- an allowance for income taxes; and
- a regulated return on equity.
We are generally allowed to collect from our shippers a return on rate base
as well as recover that rate base through depreciation and amortization.
Under the present form of tariff, in the absence of additions to the rate
base, the amount received under our regulated return on equity decreases as the
rate base is recovered.
Billings for firm transportation agreements are based on contracted
capacity to determine the proportionate share of the cost of service and are not
dependent upon the percentage of available capacity actually used.
We do not own the natural gas that we transport and therefore we do not
assume any natural gas commodity price risk.
THE NORTHERN BORDER
PIPELINE SYSTEM
With the completion of The Chicago Project in December 1998, we own a
1,214-mile United States interstate pipeline system that transports natural gas
from the Montana-Saskatchewan border near Port of Morgan, Montana, to
interconnecting pipelines in the upper Midwest of the United States.
Construction of our pipeline was initially completed in 1982. Our pipeline was
expanded and/or extended in 1991, 1992 and 1998.
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Our pipeline system has pipeline access to natural gas reserves in the
western Canadian sedimentary basin in the provinces of Alberta, British Columbia
and Saskatchewan in Canada, as well as the Williston Basin in the United States.
Our pipeline system also has access to synthetic gas produced at the Dakota
Gasification plant in North Dakota.
Our pipeline system consists of 822 miles of 42-inch diameter pipe designed
to transport 2,373 million cubic feet per day from the Canadian border to
Ventura, Iowa; 30-inch diameter pipe and 36-inch diameter pipe, each
approximately 147 miles in length, designed to transport 1,300 million cubic
feet per day in total from Ventura, Iowa to Harper, Iowa; and 226 miles of
36-inch diameter pipe and 19 miles of 30-inch diameter pipe designed to
transport 645 million cubic feet per day from Harper, Iowa to a terminus near
Manhattan, Illinois (Chicago area). Along the pipeline there are 15 compressor
stations with total rated horsepower of 476,500 and measurement facilities to
support the receipt and delivery of gas at various points. Other facilities
include four field offices and a microwave communication system with 51 tower
sites.
At its northern end, our pipeline system is connected to TransCanada's
majority-owned Foothills Pipe Lines (Sask.) Ltd. system in Canada, which is
connected to the Alberta system owned by TransCanada and Transgas Limited in
Saskatchewan. The Alberta system gathers and transports a substantial portion of
Canadian natural gas production. Our pipeline system also connects with
facilities of Williston Basin Interstate Pipeline at Glen Ullin and Buford,
North Dakota, facilities of Amerada Hess Corporation at Watford City, North
Dakota and facilities of Dakota Gasification Company at Hebron, North Dakota in
the northern portion of the system.
INTERCONNECTS
Our pipeline system connects with multiple pipelines which allows our
shippers to access the various natural gas markets served by those pipelines.
Our pipeline system interconnects with pipeline facilities of:
- Northern Natural Gas Company, an Enron subsidiary, at Ventura, Iowa as
well as multiple smaller interconnections in South Dakota, Minnesota and
Iowa;
- Natural Gas Pipeline Company of America at Harper, Iowa;
- MidAmerican Energy Company at Iowa City and Davenport, Iowa;
- Alliant Power Company at Prophetstown, Illinois;
- Northern Illinois Gas Company at Troy Grove and Minooka, Illinois;
- Midwestern Gas Transmission Company near Channahon, Illinois;
- ANR Pipeline Company near Manhattan, Illinois; and
- The Peoples Gas Light and Coke Company near Manhattan, Illinois at the
terminus of our pipeline system.
The Ventura, Iowa interconnect with Northern Natural Gas Company functions
as a large market center, where natural gas transported on our pipeline system
is sold, traded and received for transport to significant consuming markets in
the Midwest and to interconnecting pipeline facilities destined for other
markets.
PROJECT 2000
In October 1998, we applied to the FERC for approval of Project 2000 to
expand and extend our pipeline system into Indiana by November 2000. If approved
and constructed, Project 2000 will strategically position us to move natural gas
east of Chicago and will place us in direct contact with major industrial
natural gas consumers. Project 2000 would afford shippers on the extended
pipeline system access to the northern Indiana industrial zone, including
Northern Indiana Public Service Company, a major midwest local distribution
company with a large industrial load requirement.
Permanent releases of capacity have been negotiated between several
existing and project shippers originally included in the October 1998
application. On March 25, 1999, we amended our application to the FERC to
reflect these changes. Numerous parties have filed to intervene in this
proceeding. Several parties have protested this application asking that the FERC
deny our request for rolled-in rate treatment for the new facilities and that we
be required to solicit indications of interest from existing shippers for
capacity releases
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that would possibly eliminate the construction of certain new facilities.
Project 2000 revised capital expenditures are estimated to be $126 million.
Proposed facilities will include approximately 34.4 miles of 36-inch pipeline
and a total net increase of 22,500 compressor horsepower at three compressor
stations, one meter station and related facilities.
As a result of the proposed revised expansion, our pipeline system will
have the ability to transport 1,484 million cubic feet per day from Ventura to
Harper, Iowa, 844 million cubic feet per day from Harper to Manhattan, Illinois,
and 544 million cubic feet per day on the new extension from Manhattan to North
Hayden, Indiana.
Five project shippers have agreed to take all of the transportation
capacity, subject to the satisfaction of specific conditions including receipt
of FERC and other regulatory approvals by specific dates. The Project 2000
shippers are: Bethlehem Steel Corporation, El Paso Energy Marketing Company,
Northern Indiana Public Service Company, Peoples Energy Services Corporation and
The Peoples Gas Light and Coke Company.
The proposed pipeline extension will interconnect with Northern Indiana
Public Service Company at the terminus near North Hayden, Indiana. Northern
Indiana Public Service has confirmed to us that the interconnect will be able to
receive the required capacity.
On September 15, 1999, the FERC issued a policy statement on certification
and pricing of new construction projects. The policy statement announces a
preference for pricing new construction incrementally. This reverses the
existing presumption in favor of rolled-in pricing when the impact of the new
capacity is not more than a 5% increase to existing rates and results in
system-wide benefits. As set forth above, our amended application to construct
facilities to expand our system was filed based upon rolled-in rate treatment.
We are uncertain at this time how implementation of this policy may impact
Project 2000.
COMPETITION
We compete with other pipeline companies that transport natural gas from
the western Canadian sedimentary basin or that transport natural gas to markets
in the midwestern United States. Our competitive position is affected by the
availability of Canadian natural gas for export, the prices of natural gas in
alternative markets, the cost of producing natural gas in Canada, and demand for
natural gas in the United States. Shippers of natural gas from the western
Canadian sedimentary basin have other options to transport Canadian natural gas
to the United States, including transportation on pipelines eastward in Canada
or to markets on the west coast of the United States.
The Alliance Pipeline recently received Canadian and United States
regulatory approvals and has begun construction. Its sponsors have announced
their plans for the Alliance Pipeline to be in service by late 2000. Upon its
completion, we would compete directly with the Alliance Pipeline. The Alliance
Pipeline would transport natural gas from the western Canadian sedimentary basin
to the midwestern United States.
We expect that the Alliance Pipeline would transport for its shippers
liquids-rich gas. Further, deliveries of natural gas by Alliance without the
liquids-rich element would require facilities to extract the natural gas
liquids. We understand that a natural gas liquids extraction plant is being
constructed near the Alliance Pipeline's terminus in Chicago.
As a consequence of the Alliance Pipeline, there may be a large increase in
natural gas moving from the western Canadian sedimentary basin to Chicago. There
are several additional projects proposed to transport natural gas from the
Chicago area to growing eastern markets. The proposed projects currently being
pursued by third parties and TransCanada are targeting markets in eastern Canada
and the northeast United States. These proposed projects are in various stages
of regulatory approval; none have commenced construction.
Williams has a minority interest in the Alliance Pipeline. TransCanada and
other unaffiliated companies own and operate pipeline systems which transport
natural gas from the same natural gas reserves in western Canada that supply our
customers.
Natural gas is also produced in the United States and transported by
competing pipeline systems to the same destinations as our pipeline system.
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SHIPPERS
Our pipeline system serves more than 40 shippers with diverse operating and
financial profiles. Based upon shippers' cost of service obligations, as of June
30, 1999, 93% of the firm capacity is contracted by producers and marketers. The
remaining firm capacity is contracted to local distribution companies (5%) and
interstate pipelines (2%). As of June 30, 1999, the termination dates of these
contracts ranged from October 31, 2001 to December 21, 2013 and the weighted
average contract life, based upon annual cost of service obligations was over
seven years with at least 97% of capacity contracted through mid-September 2003.
Based on their proportionate shares of the cost of service, as of June 30,
1999, the five largest shippers are: Pan-Alberta Gas (U.S.) Inc. (26.5%),
TransCanada PipeLines Limited (10.8%), PanCanadian Energy Services Inc (7.0%),
Enron Capital & Trade Resources Corp. (5.2%) and PetroCanada Hydrocarbons Inc.
(4.1%). The 20 largest shippers, in total, are responsible for an estimated
88.0% of our cost of service.
As of June 30, 1999, our largest shipper, Pan-Alberta holds 707 million
cubic feet per day under three contracts with terms to October 31, 2003. An
affiliate of Enron provides guaranties for 300 million cubic feet per day of
Pan-Alberta's contractual obligations through October 31, 2001. In addition,
Pan-Alberta's remaining capacity is supported by various credit support
arrangements, including, among others, a letter of credit, a guaranty from an
interstate pipeline company through October 31, 2001 for 150 million cubic feet
per day, an escrow account and an upstream capacity transfer agreement.
Some of our shippers are affiliated with the general partners of Northern
Border Partners and TC PipeLines. TransCanada holds contracts representing 10.8%
of the cost of service. Enron Capital & Trade Resources Corp., a subsidiary of
Enron, holds contracts representing 5.2% of the cost of service.
Transcontinental Gas Pipe Line Corporation, a subsidiary of Williams, holds a
contract representing 0.8% of the cost of service. See "Certain Relationships
and Related Transactions."
Order 636, as discussed below under "FERC Regulation -- Open access
regulation," has created a secondary market in existing capacity. There have
been temporary releases of capacity where the releasing party receives credit
against amounts due under its firm transportation contract for revenues received
by us as a result of the temporary release of the contractually committed
capacity to third parties. The releasing party is not relieved of its
obligations under its contract. In addition to the temporary releases, several
shippers have permanently released a portion of their capacity to other shippers
who have agreed to comply with the underlying contractual and regulatory
obligations associated with that capacity.
FERC REGULATION
General
We are subject to extensive regulation by the FERC as a "natural gas
company" under the Natural Gas Act. Under the Natural Gas Act and the Natural
Gas Policy Act, the FERC has jurisdiction with respect to virtually all aspects
of our business, including:
- transportation of natural gas;
- rates and charges;
- construction of new facilities;
- extension or abandonment of service and facilities;
- accounts and records;
- depreciation and amortization policies;
- the acquisition and disposition of facilities; and
- the initiation and discontinuation of services.
Where required, we hold certificates of public convenience and necessity
issued by the FERC covering our facilities, activities and services. Under
Section 8 of the Natural Gas Act, the FERC has the power to prescribe the
accounting treatment for items for regulatory purposes. Our books and records
are periodically audited under Section 8.
The FERC regulates our rates and charges for transportation in interstate
commerce. Natural gas companies may not charge rates exceeding rates judged just
and reasonable by the FERC. In addition, the FERC prohibits natural gas
companies from unduly preferring or unreasonably
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discriminating against any person with respect to pipeline rates or terms and
conditions of service. Some types of rates may be discounted without further
FERC authorization.
Cost of service tariff
Our firm transportation shippers contract to pay for a proportionate share
of the pipeline system's cost of service. During any given month, all these
shippers pay a uniform mileage-based charge for the amount of capacity
contracted, calculated under a cost of service tariff. The shippers are
obligated to pay their proportionate share of the cost of service regardless of
the amount of natural gas they actually transport. The cost of service tariff is
regulated by the FERC and provides an opportunity to recover operations and
maintenance costs of our pipeline system, taxes other than income taxes,
interest, depreciation and amortization, an allowance for income taxes and a
return on equity approved by the FERC. We may not charge or collect more than
our cost of service under our tariff on file with the FERC.
Our investment in our pipeline system is reflected in various accounts
referred to collectively as our regulated "rate base." The cost of service
includes a return, with related income taxes, on the rate base. Over time, the
rate base declines as a result of, among other things, monthly depreciation and
amortization. Our rate base currently includes, as an additional amount, a
one-time ratemaking adjustment to reflect the receipt of a financial incentive
on the original construction of the pipeline. Since inception, the rate base
adjustment, called an incentive rate of return, has been amortized through
monthly additions to the cost of service. The amortization continues until
November 2001 when the incentive rate of return is fully amortized.
We bill the cost of service on an estimated basis for a six month cycle.
Any net excess or deficiency between the cost of service determined for that
period according to the FERC tariff and the estimated billing is accumulated,
including carrying charges. This amount is then either billed to or credited
back to the shippers' accounts.
We also provide interruptible transportation service. Interruptible
transportation service is transportation in circumstances when surplus capacity
is available after satisfying firm service requests. The maximum rate charged to
interruptible shippers is calculated from cost of service estimates on the basis
of contracted capacity. Except for certain limited situations, we credit all
revenue from the interruptible transportation service to the cost of service for
the benefit of our firm shippers.
In our 1995 rate case, we reached a settlement that was filed in a
stipulation and agreement. Although it was contested, it was approved by the
FERC on August 1, 1997. In the settlement, the depreciation rate was established
at 2.5% from January 1, 1997 through the in-service date of The Chicago Project
and, at that time, it was reduced to 2.0%. Starting in the year 2000, the
depreciation rate is scheduled to increase gradually on an annual basis until it
reaches 3.2% in 2002.
The settlement also determined several other cost of service parameters. In
accordance with the effective tariff, our allowed equity rate of return is
12.0%. For at least seven years from the date The Chicago Project was completed,
under the terms of the settlement, we may continue to calculate our allowance
for income taxes as a part of our cost of service in the manner we have
historically used. In addition, a settlement adjustment mechanism of $31 million
was implemented, which effectively reduces the allowed return on rate base.
Also as agreed to in the settlement, we implemented a capital project cost
containment mechanism for The Chicago Project. For further discussion of the
capital project cost containment mechanism, refer to "Management's Discussion
and Analysis of Financial Conditions and Results of Operations -- Settlement of
1995 FERC Rate Cases and Project Cost Containment Mechanism."
In May 1999, we filed a rate case wherein we proposed, among other things,
to increase our allowed equity rate of return. The total annual cost of service
increase due to our proposed changes is approximately $30 million. A number of
our shippers and competing pipelines have filed interventions and protests. In
June 1999, the FERC issued an order in which the proposed changes were suspended
until December 1, 1999, after which they will be implemented with subsequent
billings subject to refund. The order set for hearing not only our proposed
changes but also several issues raised by intervenors including the
appropriateness of the cost of service tariff, our depreciation schedule and our
creditworthiness standards. Several parties, including ourselves, asked for
clarification or
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rehearing of various aspects of the June order. On August 31, 1999, the FERC
issued an order that provided that the issue of rolled-in rate treatment of The
Chicago Project may be examined in this proceeding. Also, since the amount of
The Chicago Project costs to be included in rate base is governed by the
settlement in our previous rate case, the FERC consolidated that proceeding with
this case and directed that the presiding Administrative Law Judge conduct any
further proceedings that may be appropriate. While we had not proposed in this
case to change the depreciation rates approved in our last rate case, the order
also provided that we have the burden of proving that our depreciation rates are
just and reasonable. A procedural schedule has been established which calls for
the hearing to commence in July 2000. At this time, we can give no assurance as
to the outcome on any of these issues.
Open access regulation
Beginning on April 8, 1992, the FERC issued a series of orders, known as
Order 636, designed to restructure the way that pipelines deliver transportation
services. Among other things, Order 636 required companies to unbundle their
services and offer sales, transportation, storage, gathering and other services
separately; to permanently assign their capacity on upstream pipelines to other
shippers; and to provide all transportation services on a basis that is equal in
quality for all shippers.
Order 636 adopted "right of first refusal" procedures, imposed by the FERC
as a condition to the pipeline's right to abandon long-term transportation
service, to govern a shipper's continuing rights to transportation services when
its contract with the pipeline expires. The FERC's rules require existing
shippers to match any bid of up to five years in order to renew those contracts.
In a Notice of Proposed Rulemaking issued by the FERC on July 20, 1998, the FERC
has proposed to eliminate the requirement that shippers match any bid up to five
years from the right of first refusal and indicated that it is considering
whether the right of first refusal should be eliminated entirely. The effect of
the FERC's proposals to revise right of first refusal procedures on our ability
to renew or recontract long-term service agreements once existing agreements
expire cannot be determined.
Beginning in 1996, the FERC issued a series of orders, referred to together
as Order 587, amending its open access regulations to standardize business
practices and procedures governing transactions between interstate natural gas
pipelines, their customers, and others doing business with the pipelines. These
business standards, developed by the Gas Industry Standards Board, govern
important business practices including shipper supplied service nominations,
allocation of available capacity, accounting and invoicing of transportation
service, standardized internet business transactions and capacity release. We
have implemented changes to our tariff and internal systems so we can fully
comply with the business standards as required by these orders.
In 1998, the FERC initiated a number of proceedings to further amend its
open access regulations. In a Notice of Proposed Rulemaking issued on July 20,
1998, the FERC proposed changes to its regulations governing short-term
transportation services. Among the proposals considered in the proposed
rulemaking are auctions for short-term capacity, removal of price caps for
secondary market transactions, revisions to reporting requirements, revisions to
tariff provisions governing imbalances, and negotiated services. In a companion
Notice of Inquiry issued the same day, the FERC has requested industry comment
on its pricing policies in the existing long-term market for transportation
services and its pricing policies for new capacity.
On September 15, 1999, the FERC issued a policy statement on certification
and pricing of new construction projects. The policy statement announces a
preference for pricing new construction incrementally. This reverses the
existing presumption in favor of rolled-in pricing when the impact of the new
capacity is not more than a 5% increase to existing rates and results in
system-wide benefits. Also, in examining new projects, the FERC will evaluate
the efforts by the applicant to minimize adverse impact to its existing
customers, to competitor pipelines and their captive customers and to landowners
and communities affected by the proposed route of the pipeline. If the public
benefits outweigh any residual adverse effects, the FERC will proceed with the
environmental analysis of the project. This policy is to be applied on a
case-by-case basis.
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On September 30, 1998, the FERC issued a Notice of Proposed Rulemaking that
would give applicants seeking to construct, operate or abandon natural gas
services or facilities the option of using a pre-filing collaborative process to
resolve significant issues among parties and the pipeline. The proposed
rulemaking also proposes that a significant portion of the environmental review
process could be completed as part of the collaborative process. As part of the
proposed rulemaking, the FERC intends to examine existing landowner notification
policies related to pipeline construction and environmental and pipeline
construction issues. A final rule issued on September 15, 1999 adopting
procedural regulations defining a new voluntary collaborative filing process.
These regulations permit an applicant to obtain the assistance of the FERC staff
in preparing its application and beginning the environmental review in the
pre-filing state.
The impact on any final rules adopted by the FERC as a result of the
proceedings discussed in the prior two paragraphs cannot be assessed at this
time.
On two other proceedings, FERC has issued final rules amending its
regulations governing issuance of pipeline construction certificates and
procedures under which shippers or others may have complaints considered by
FERC. We do not currently believe that these rules will be adverse to our
operations.
ENVIRONMENTAL AND SAFETY MATTERS
Our operations are subject to federal, state and local laws and regulations
relating to safety and the protection of the environment which include the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, the Compensation and Liability Act of 1980, the Clean Air Act, the
Clean Water Act, the Natural Gas Pipeline Safety Act of 1969, and the Pipeline
Safety Act of 1992. Although we believe that our operations and facilities
comply in all material respects with applicable environmental and safety
regulations, risks of substantial costs and liabilities are inherent in pipeline
operations, and we cannot provide any assurances that we will not incur these
costs and liabilities. We have ongoing environmental and safety audit programs.
PROPERTIES
We hold the right, title and interest in our pipeline system. We own all of
our material equipment and personal property and lease office space in Omaha,
Nebraska. With respect to real property, our pipeline system falls into two
basic categories: (a) parcels which we own in fee, including nearly all of the
compressor stations, measurement stations and pipeline field office sites; and
(b) parcels where our interest derives from leases, easements, rights-of-way,
permits or licenses from landowners or governmental authorities permitting the
use of the land for the construction and operation of our pipeline system. The
right to construct and operate the pipeline across some property was obtained
through exercise of the power of eminent domain. We continue to have the power
of eminent domain in each of the states in which we operate our pipeline system,
although we may not have the power of eminent domain with respect to Native
American tribal lands.
Approximately 90 miles of the pipeline is located on fee, allotted and
tribal lands within the exterior boundaries of the Fort Peck Indian Reservation
in Montana. Tribal lands are lands owned in trust by the United States for the
Fort Peck Tribes and allotted lands are lands owned in trust by the United
States for an individual Indian or Indians. While it is unclear if we have the
right of eminent domain over tribal lands, we have the right of eminent domain
over allotted lands.
In 1980, we entered into a pipeline right-of-way lease with the Fort Peck
Tribal Executive Board, for and on behalf of the Assiniboine and Sioux Tribes of
the Fort Peck Indian Reservation. This pipeline right-of-way lease, which was
approved by the Department of the Interior in 1981, granted the right and
privilege to construct and operate our pipeline on some tribal lands, for a term
of 15 years, renewable for an additional 15-year term at our option without
additional rental. We continue to operate this portion of the pipeline located
on tribal lands in accordance with our renewal rights.
In conjunction with obtaining a pipeline right-of-way lease across tribal
lands located within the exterior boundaries of the Fort Peck Indian
Reservation, we also obtained a right-of-way across allotted lands located
within the reservation boundaries. This right-of-way, granted by the Bureau of
Indian Affairs on March 25, 1981, for
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and on behalf of individual Indian owners, expired on March 31, 1996. Before the
termination date, we undertook efforts to obtain voluntary consents from
individual Indian owners for a new right-of-way, and we filed applications with
the Bureau of Indian Affairs for new right-of-way grants across those tracts of
allotted lands where a sufficient number of consents from the Indian owners had
been obtained. To date, the Bureau of Indian Affairs has not issued a formal
right-of-way grant for those tracts for which sufficient landowners consents
were obtained. However, we are continuing to negotiate with the parties involved
in order to reach a positive resolution. Also, a condemnation action was filed
in Federal Court in the District of Montana concerning those remaining tracts of
allotted land for which a majority of consents were not timely received. An
order was entered on March 18, 1999 condemning permanent easements in our favor
on the tracts in question.
LITIGATION
In addition to the condemnation actions and matters related to FERC
regulation, various legal actions that have arisen in the ordinary course of
business are pending. In our opinion, none of these proceedings would reasonably
be expected to have a material adverse impact on our financial position, results
of operations or cash flows.
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MANAGEMENT
Northern Border Pipeline Company is overseen by the management committee,
which is composed of the following individuals:
Larry L. DeRoin, Chairman(1)
Stanley C. Horton(1)
Paul F. MacGregor(2)
Brian E. O'Neill(1)
- ---------------
(1) Designated by Northern Border Partners.
(2) Designated by TC PipeLines.
Larry L. DeRoin (57) has been a member of our management committee since
1985 and has been Chairman since 1988. Mr. DeRoin was named Chief Executive
Officer of Northern Border Partners in July 1993. Mr. DeRoin has been the
President and a director of Northern Plains, an Enron subsidiary and our
operator, since 1985.
Stanley C. Horton (49) has been a member of our management committee since
December 1998. Mr. Horton is the Chairman and Chief Executive Officer of the Gas
Pipeline Group of Enron Corp. and has held that position since January 1997.
Prior to that, Mr. Horton served as Co-Chairman and Chief Operating Officer of
Enron Operations Corp. (1996-1997) and President and Chief Operating Officer of
Enron Pipeline and Liquids Group (1993-1996).
Paul F. MacGregor (42) has been a member of our management committee since
September 1999. Mr. MacGregor has been Vice President, North American Pipeline
Investments for TransCanada's energy transmission business unit since July 1998.
Prior to that time and since 1997, Mr. MacGregor has been a Vice President of
Alberta Natural Gas Company Ltd, a subsidiary of TransCanada. In 1996, Mr.
MacGregor was Director of Field Operations for TransCanada. From 1993 to 1995,
Mr. MacGregor was Regional Manager, Field Operations for TransCanada in North
Bay, Ontario. Since 1981, Mr. MacGregor has held various positions with
TransCanada in the Facilities Planning and Evaluations, Finance and Operations
groups.
Brian E. O'Neill (61) has served on our management committee since April
1993. Mr. O'Neill has been President and Chief Executive Officer of Williams Gas
Pipeline Company since 1997. He also serves as President and Chief Executive
Officer of Kern River Acquisition Corporation (since 1996), Northwest Pipeline
Corporation (since 1994), Williams Western Pipeline Company (since 1994),
Williams Gas Pipelines Central, Inc. (since 1988), Transcontinental Gas Pipe
Line Corporation and Texas Gas Transmission Corporation (since 1995). Mr.
O'Neill has announced his retirement effective January 1, 2000.
Day-to-day management and operations are the responsibility of the
operator, Northern Plains, as set forth in the operating agreement. We have no
employees or executive officers. Officers and employees of Northern Plains
provide services to our operations and we reimburse Northern Plains for such
costs.
There is also an audit and compensation committee composed of specific
members of the management committee. The audit and compensation committee,
consisting of Messrs. MacGregor and O'Neill, oversees the annual audit process
and confers with Arthur Andersen LLP, our independent public accountants. The
committee is also responsible for setting up guidelines for compensation to be
paid to the executive officers of Northern Plains, each of whom spends at least
a portion of his or her time on our operations, for which Northern Plains is
reimbursed as indicated above. Currently, there is one vacancy on the committee.
BENEFICIAL OWNERSHIP OF PARTNERSHIP INTERESTS
The following table sets forth the beneficial ownership of general
partnership interests of Northern Border Pipeline Company. There are no limited
partnership interests.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER GENERAL PARTNERSHIP INTEREST
------------------------ ----------------------------
<S> <C>
Northern Border Partners, L.P.(1)........................... 70%
TC PipeLines, LP(2)......................................... 30%
</TABLE>
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- ---------------
(1) The address of Northern Border Partners, L.P. is 1400 Smith Street, Houston,
Texas 77002. Northern Border Partners holds its 70% general partnership
interest through Northern Border Intermediate Limited Partnership, a
subsidiary limited partnership. Northern Border Partners has three general
partners: Northern Plains Natural Gas Company, Pan Border Gas Company and
Northwest Border Pipeline Company. Northern Plains and Pan Border are
wholly-owned subsidiaries of Enron Corp. and Northwest Border is a
wholly-owned subsidiary of The Williams Companies, Inc.
(2) The address of TC PipeLines is Four Greenspoint Plaza, 16945 Northchase
Drive, Houston, Texas 77060. TC PipeLines holds its 30% general partnership
interest through TC PipeLines Intermediate Limited Partnership, a subsidiary
limited partnership. TC PipeLines has one general partner: TC PipeLines GP,
Inc., a wholly-owned subsidiary of TransCanada PipeLines Limited.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have extensive ongoing relationships with our general partners and
certain of their affiliates. Since 1980, Northern Plains, an affiliate of Enron,
has acted and will continue to act as the operator of our pipeline system
pursuant to the terms of the operating agreement with Northern Plains. Enron
Engineering & Construction Company, an affiliate of Enron, provided project
management for the construction of The Chicago Project pursuant to the terms of
a project management agreement between Northern Plains and Enron Engineering. In
addition, as of June 30, 1999;
- Enron Capital & Trade Resources Corp., an affiliate of Enron, is one of
our transportation customers, and is obligated to pay 5.2% of our annual
cost of service;
- TransCanada Gas Services, an affiliate of TransCanada PipeLines Limited,
is one of our transportation customers and is currently obligated to pay
10.8% of our annual cost of service pursuant to a transportation contract
wherein TransCanada Gas Services acts as the agent of its parent,
TransCanada;
- Transco, an affiliate of Williams, is one of our transportation customers
and is currently obligated to pay 0.8% of our annual cost of service; and
- Northern Natural Gas Company, an affiliate of Enron, provides a financial
guaranty for a portion of the transportation capacity held by Pan-Alberta
Gas, which currently represents 10.5% of our annual cost of service.
Our interests could conflict with the interests of our general partners or
their affiliates, and in such case the members of our management committee will
generally have a fiduciary duty to resolve such conflicts in a manner that is in
our best interest.
Unless otherwise provided for in a partnership agreement, the laws of Texas
generally require a general partner of a partnership to adhere to fiduciary duty
standards under which it owes its partners the highest duties of good faith,
fairness and loyalty. These rules apply to our management committee. Because of
the competing interests identified above, the Northern Border Pipeline Company
Partnership Agreement contains provisions that modify certain of these fiduciary
duties. For example:
- The partnership agreement provides that we indemnify the members of our
management committee and Northern Plains, as the operator, against all
actions if such actions were in good faith and within the scope of their
authority in the course of our business. It also provides that such
persons will not be liable for any liabilities incurred by us as a result
of such acts.
- The partnership agreement states that our general partners will not be
liable to third persons for our losses, deficits, liabilities or
obligations (unless our assets have been exhausted).
- The partnership agreement requires that any contract entered into on our
behalf must contain a provision limiting the claims of persons to our
assets and expressly waiving any rights of such persons to proceed
against our general partners individually.
- The partnership agreement relieves Northern Border Partners and TC
PipeLines, their
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affiliates and their transferees from any duty to offer business
opportunities to us, with certain exceptions.
Our policy regarding cash distributions to our partners is set by our
management committee. See "Northern Border Pipeline Company Partnership
Agreement -- Cash Distribution Policy."
THE EXCHANGE OFFER
EXCHANGE TERMS
An aggregate of $200,000,000 principal amount of existing notes are
currently issued and outstanding. The maximum principal amount of new notes that
will be issued in exchange for existing notes is $200,000,000. The terms of the
new notes and the existing notes are substantially the same in all material
respects, except that the new notes will be freely transferable by the holders,
other than as provided in this prospectus.
The new notes will bear interest at a rate of 7.75% per year, payable
semiannually on March 1 and September 1 of each year, beginning on March 1,
2000. Holders of new notes will receive interest from the date of the original
issuance of the existing notes or from the date of the last payment of interest
on the existing notes, whichever is later. Holders of new notes will not receive
any interest on existing notes tendered and accepted for exchange. In order to
exchange your existing notes for transferable new notes in the exchange offer,
you will be required to make the following representations:
- any new notes will be acquired in the ordinary course of your business;
- you have no arrangement with any person to participate in the
distribution of the new notes; and
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or if you are our affiliate, you will comply with the applicable
registration and prospectus delivery requirements of the Securities Act.
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any existing notes
properly tendered in the exchange offer, and the exchange agent will deliver the
new notes promptly after the expiration date (as defined below) of the exchange
offer. We expressly reserve the right to delay acceptance of any of the tendered
existing notes or terminate the exchange offer and not accept for exchange any
tendered existing notes not already accepted if any conditions set forth below
under "-- Conditions of the Exchange Offer" have not been satisfied or waived by
us or do not comply, in whole or in part, with any applicable law.
If you tender your existing notes, you will not be required to pay
brokerage commissions or fees or, subject to the instructions in the letter of
transmittal, transfer taxes with respect to the exchange of the existing notes.
We will pay all charges, expenses and transfer taxes in connection with the
exchange offer, other than certain taxes described below under "-- Transfer
Taxes."
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The exchange offer will expire at 5:00 p.m., New York City time, on
, 2000, the "expiration date," unless extended by us. We expressly
reserve the right to extend the exchange offer on a daily basis or for such
period or periods as we may determine in our sole discretion from time to time
by giving oral, confirmed in writing, or written notice to the exchange agent
and by making a public announcement by press release to the Dow Jones News
Service prior to 9:00 a.m., New York City time, on the first business day
following the previously scheduled expiration date. During any extension of the
exchange offer, all existing notes previously tendered, not validly withdrawn
and not accepted for exchange will remain subject to the exchange offer and may
be accepted for exchange by us.
To the extent we are legally permitted to do so, we expressly reserve the
absolute right, in our sole discretion, to:
- waive any condition to the exchange offer; and
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- amend any of the terms of the exchange offer.
Any waiver or amendment to the exchange offer will apply to all existing
notes tendered, regardless of when or in what order the existing notes were
tendered. If we make a material change in the terms of the exchange offer or if
we waive a material condition of the exchange offer, we will disseminate
additional exchange offer materials, and we will extend the exchange offer to
the extent required by law.
We expressly reserve the right, in our sole discretion, to terminate the
exchange offer if any of the conditions set forth under "-- Conditions of the
Exchange Offer" exist. Any such termination will be followed promptly by a
public announcement. In the event we terminate the exchange offer, we will give
immediate notice to the exchange agent, and all existing notes previously
tendered and not accepted for payment will be returned promptly to the tendering
holders.
In the event that the exchange offer is withdrawn or otherwise not
completed, new notes will not be given to holders of existing notes who have
tendered their existing notes.
RESALE OF NEW NOTES
Based on interpretations of the SEC staff set forth in no action letters
issued to third parties, we believe that new notes issued under the exchange
offer in exchange for existing notes may be offered for resale, resold and
otherwise transferred by you without compliance with the registration and
prospectus delivery provisions of the Securities Act, if:
- you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act;
- you are acquiring new notes in the ordinary course of your business; and
- you do not intend to participate in the distribution of the new notes.
If you tender existing notes in the exchange offer with the intention of
participating in any manner in a distribution of the new notes:
- you cannot rely on those interpretations by the SEC staff; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
Unless an exemption from registration is otherwise available, any security
holder intending to distribute new notes should be covered by an effective
registration statement under the Securities Act containing the selling security
holder's information required by Item 507 of Regulation S-K under the Securities
Act. This prospectus may be used for an offer to resell, a resale or other
retransfer of new notes only as specifically set forth in this prospectus. Only
broker-dealers that acquired the existing notes as a result of market-making
activities or other trading activities may participate in the exchange offer.
Each broker-dealer that receives new notes for its own account in exchange for
existing notes, where such existing notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
the new notes. Please read the section captioned "Plan of Distribution" for more
details regarding the transfer of new notes.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE
We will accept for exchange existing notes validly tendered pursuant to the
exchange offer, or defectively tendered, if such defect has been waived by us,
after the later of: (1) the expiration date of the exchange offer; and (2) the
satisfaction or waiver of the conditions specified below under "-- Conditions of
the Exchange Offer." We will not accept existing notes for exchange subsequent
to the expiration date of the exchange offer. Tenders of existing notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof.
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We expressly reserve the right, in our sole discretion, to:
- delay acceptance for exchange of existing notes tendered under the
exchange offer, subject to Rule 14e-1 under the Exchange Act, which
requires that an offeror pay the consideration offered or return the
securities deposited by or on behalf of the holders promptly after the
termination or withdrawal of a tender offer, or
- terminate the exchange offer and not accept for exchange any existing
notes not theretofore accepted for exchange, if any of the conditions set
forth below under "-- Conditions of the Exchange Offer" have not been
satisfied or waived by us or in order to comply in whole or in part with
any applicable law. In all cases, new notes will be issued only after
timely receipt by the exchange agent of certificates representing
existing notes, or confirmation of book-entry transfer, a properly
completed and duly executed letter of transmittal, or a manually signed
facsimile thereof, and any other required documents. For purposes of the
exchange offer, we will be deemed to have accepted for exchange validly
tendered existing notes, or defectively tendered existing notes with
respect to which we have waived such defect, if, as and when we give
oral, confirmed in writing, or written notice to the exchange agent.
Promptly after the expiration date, we will deposit the new notes with
the exchange agent, who will act as agent for the tendering holders for
the purpose of receiving the new notes and transmitting them to the
holders. The exchange agent will deliver the new notes to holders of
existing notes accepted for exchange after the exchange agent receives
the new notes.
If, for any reason, we delay acceptance for exchange of validly tendered
existing notes or we are unable to accept for exchange validly tendered existing
notes, then the exchange agent may, nevertheless, on our behalf, retain tendered
existing notes, without prejudice to our rights described under "-- Expiration
Date; Extensions; Termination; Amendments," "-- Conditions of the Exchange
Offer" and "-- Withdrawal of Tenders," subject to Rule 14e-1 under the Exchange
Act, which requires that an offeror pay the consideration offered or return the
securities deposited by or on behalf of the holders thereof promptly after the
termination or withdrawal of a tender offer.
If any tendered existing notes are not accepted for exchange for any
reason, or if certificates are submitted evidencing more existing notes than
those that are tendered, certificates evidencing existing notes that are not
exchanged will be returned, without expense, to the tendering holder, or, in the
case of existing notes tendered by book-entry transfer into the exchange agent's
account at a book-entry transfer facility under the procedure set forth under
"-- Procedures for Tendering Existing Notes -- Book-Entry Transfer," such
existing notes will be credited to the account maintained at such book-entry
transfer facility from which such existing notes were delivered, unless
otherwise requested by such holder under "Special Delivery Instructions" in the
letter of transmittal, promptly following the exchange date or the termination
of the exchange offer.
Tendering holders of existing notes exchanged in the exchange offer will
not be obligated to pay brokerage commissions or transfer taxes with respect to
the exchange of their existing notes other than as described in "-- Transfer
Taxes" or in Instruction 6 to the letter of transmittal. We will pay all other
charges and expenses in connection with the exchange offer.
PROCEDURES FOR TENDERING EXISTING NOTES
Any beneficial owner whose existing notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee or held through
a book-entry transfer facility and who wishes to tender existing notes should
contact such registered holder promptly and instruct such registered holder to
tender existing notes on such beneficial owner's behalf.
Tender of Existing Notes Held Through DTC. The exchange agent and DTC have
confirmed that the exchange offer is eligible for the DTC automated tender offer
program. Accordingly, DTC participants may electronically transmit their
acceptance of the exchange offer by causing DTC to transfer existing notes to
the exchange agent in accordance with DTC's automated tender offer program
procedures for transfer. DTC will then send an agent's message to the exchange
agent.
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The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which states
that DTC has received an express acknowledgment from the participant in DTC
tendering existing notes that are the subject of that book-entry confirmation
that the participant has received and agrees to be bound by the terms of the
letter of transmittal, and that we may enforce such agreement against such
participant. In the case of an agent's message relating to guaranteed delivery,
the term means a message transmitted by DTC and received by the exchange agent,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering existing notes that they have received and agree to
be bound by the notice of guaranteed delivery.
Tender of Existing Notes Held in Physical Form. For a holder to validly
tender existing notes held in physical form:
- the exchange agent must receive at its address set forth in this
prospectus a properly completed and validly executed letter of
transmittal, or a manually signed facsimile thereof, together with any
signature guarantees and any other documents required by the instructions
to the letter of transmittal; and
- the exchange agent must receive certificates for tendered existing notes
at such address, or such existing notes must be transferred pursuant to
the procedures for book-entry transfer described above. A confirmation of
such book-entry transfer must be received by the exchange agent prior to
the expiration date of the exchange offer. A holder who desires to tender
existing notes and who cannot comply with the procedures set forth herein
for tender on a timely basis or whose existing notes are not immediately
available must comply with the procedures for guaranteed delivery set
forth below.
LETTERS OF TRANSMITTAL AND EXISTING NOTES SHOULD BE SENT ONLY TO THE EXCHANGE
AGENT, AND NOT TO US OR TO ANY BOOK-ENTRY TRANSFER FACILITY.
THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER TENDERING EXISTING NOTES. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL,
WE SUGGEST THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE OF THE EXCHANGE OFFER TO PERMIT DELIVERY TO THE EXCHANGE AGENT
PRIOR TO SUCH DATE. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF
EXISTING NOTES WILL BE ACCEPTED.
Signature Guarantees. Signatures on the letter of transmittal must be
guaranteed by an eligible institution unless:
- the letter of transmittal is signed by the registered holder of the
existing notes tendered therewith, or by a participant in one of the
book-entry transfer facilities whose name appears on a security position
listing it as the owner of those existing notes, or if any existing notes
for principal amounts not tendered are to be issued directly to the
holder, or, if tendered by a participant in one of the book-entry
transfer facilities, any existing notes for principal amounts not
tendered or not accepted for exchange are to be credited to the
participant's account at the book-entry transfer facility, and neither
the "Special Issuance Instructions" nor the "Special Delivery
Instructions" box on the letter of transmittal has been completed, or
- the existing notes are tendered for the account of an eligible
institution.
An eligible institution is a firm that is a participant in the Security Transfer
Agents Medallion Program or the Stock Exchanges Medallion Program, which is
generally a member of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office in the United States.
Book-Entry Transfer. The exchange agent will seek to establish a new
account or utilize an existing account with respect to the existing notes at DTC
promptly after the date of this prospectus. Any financial institution that is a
participant in the book-entry transfer facility system and whose name appears on
a security position listing it as the
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owner of the existing notes may make book-entry delivery of existing notes by
causing the book-entry transfer facility to transfer such existing notes into
the exchange agent's account. HOWEVER, ALTHOUGH DELIVERY OF EXISTING NOTES MAY
BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S ACCOUNT AT A
BOOK-ENTRY TRANSFER FACILITY, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER
OF TRANSMITTAL, OR A MANUALLY SIGNED FACSIMILE THEREOF, MUST BE RECEIVED BY THE
EXCHANGE AGENT AT ITS ADDRESS SET FORTH IN THIS PROSPECTUS ON OR PRIOR TO THE
EXPIRATION DATE OF THE EXCHANGE OFFER, OR ELSE THE GUARANTEED DELIVERY
PROCEDURES DESCRIBED BELOW MUST BE COMPLIED WITH. The confirmation of a
book-entry transfer of existing notes into the exchange agent's account at a
book-entry transfer facility is referred to in this prospectus as a "book-entry
confirmation." Delivery of documents to the book-entry transfer facility in
accordance with that book-entry transfer facility's procedures does not
constitute delivery to the exchange agent.
Guaranteed Delivery. If you wish to tender your existing notes and:
(1) certificates representing your existing notes are not lost but are not
immediately available,
(2) time will not permit your letter of transmittal, certificates
representing your existing notes and all other required documents to reach
the exchange agent on or prior to the expiration date of the exchange
offer, or
(3) the procedures for book-entry transfer cannot be completed on or prior
to the expiration date of the exchange offer, you may tender if all of the
following are complied with:
- your tender is made by or through an eligible institution;
- on or prior to the expiration date of the exchange offer, the exchange
agent has received from the eligible institution a properly completed and
validly executed notice of guaranteed delivery, by manually signed
facsimile transmission, mail or hand delivery, in substantially the form
provided with this prospectus. The notice of guaranteed delivery must:
(a) set forth your name and address, the registered number(s) of your
existing notes and the principal amount of existing notes tendered;
(b) state that the tender is being made thereby;
(c) guarantee that, within three New York Stock Exchange trading days
after the date of the notice of guaranteed delivery, the letter of
transmittal or facsimile thereof properly completed and validly executed,
together with certificates representing the existing notes, or a
book-entry confirmation, and any other documents required by the letter
of transmittal and the instructions thereto, will be deposited by the
eligible institution with the exchange agent; and
- the exchange agent receives the properly completed and validly executed
letter of transmittal or facsimile thereof with any required signature
guarantees, together with certificates for all existing notes in proper
form for transfer, or a book-entry confirmation, and any other required
documents, within three New York Stock Exchange trading days after the
date of the notice of guaranteed delivery.
Other Matters. New notes will be issued in exchange for existing notes
accepted for exchange only after timely receipt by the exchange agent of:
- certificates for (or a timely book-entry confirmation with respect to)
your existing notes, a properly completed and duly executed letter of
transmittal or facsimile thereof with any required signature guarantees,
or, in the case of a book-entry transfer, an agent's message; and
- any other documents required by the letter of transmittal.
All questions as to the form of all documents and the validity, including
time of receipt, and acceptance of all tenders of existing notes will be
determined by us, in our sole discretion, the determination of which shall be
final and binding. ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF EXISTING
NOTES WILL NOT BE
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CONSIDERED VALID. We reserve the absolute right to reject any or all tenders of
existing notes that are not in proper form or the acceptance of which, in our
opinion, would be unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular existing notes.
Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding.
Any defect or irregularity in connection with tenders of existing notes
must be cured within the time we determine, unless waived by us. Tenders of
existing notes will not be deemed to have been made until all defects and
irregularities have been waived by us or cured. Neither we, the exchange agent
nor any other person will be under any duty to give notice of any defects or
irregularities in tenders of existing notes, or will incur any liability to
holders for failure to give any such notice.
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
- any new notes that you receive will be acquired in the ordinary course of
your business;
- you have no arrangement or understanding with any person or entity to
participate in the distribution of the new notes;
- if you are not a broker-dealer, you are not engaged in and do not intend
to engage in the distribution of the new notes;
- if you are a broker-dealer that will receive new notes for your own
account in exchange for existing notes that were acquired as a result of
market-making activities, you will deliver a prospectus, as required by
law, in connection with any resale of those new notes; and
- you are not our "affiliate," as defined in Rule 405 of the Securities
Act, or, if you are an affiliate, you will comply with any applicable
registration and prospectus delivery requirements of the Securities Act.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender of existing notes at any time prior to 5:00 p.m., New York City time, on
the expiration date.
For a withdrawal to be effective:
- the exchange agent must receive a written notice of withdrawal at its
address set forth below under "-- Exchange Agent," or
- you must comply with the appropriate procedures of DTC's automated tender
offer program system.
Any notice of withdrawal must:
- specify the name of the person who tendered the existing notes to be
withdrawn; and
- identify the existing notes to be withdrawn, including the principal
amount of the existing notes.
If existing notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn existing
notes and otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal, and our determination shall be final
and binding on all parties. We will deem any existing notes so withdrawn not to
have been validly tendered for exchange for purposes of the exchange offer.
Any existing notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of existing notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described above,
such existing notes will be credited to an account maintained with DTC for the
existing notes. This return or crediting will take place as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer. You
may retender properly withdrawn existing notes by following one of the
procedures described under "-- Procedures for Tendering Existing Notes" at any
time on or prior to the expiration date.
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CONDITIONS TO THE EXCHANGE OFFER
We will not be required to accept for exchange, or exchange any new notes
for, any existing notes tendered, and we may terminate, extend or amend the
exchange offer and may, subject to Rule 14e-1 under the Exchange Act, which
requires that an offeror pay the consideration offered or return the securities
deposited by or on behalf of the holders thereof promptly after the termination
or withdrawal of a tender offer, postpone the acceptance for exchange of
existing notes so tendered if, on or prior to the expiration date of the
exchange offer, the following shall have occurred:
- we have determined that the offering and sales under the registration
statement, the filing of such registration statement or the maintenance
of its effectiveness would require disclosure of or would interfere in
any material respect with any material financing, merger, offering or
other transaction involving us or would otherwise require disclosure of
nonpublic information that could materially and adversely affect us.
The conditions to the exchange offer are for our sole benefit and may be
asserted by us in our sole discretion or may be waived by us, in whole or in
part, in our sole discretion, whether or not any other condition of the exchange
offer also is waived. We have not made a decision as to what circumstances would
lead us to waive any condition, and any waiver would depend on circumstances
prevailing at the time of that waiver. Any determination by us concerning the
events described in this section shall be final and binding upon all persons.
ALTHOUGH WE HAVE NO PRESENT PLANS OR ARRANGEMENTS TO DO SO, WE RESERVE THE RIGHT
TO AMEND, AT ANY TIME, THE TERMS OF THE EXCHANGE OFFER. WE WILL GIVE HOLDERS
NOTICE OF ANY AMENDMENTS IF REQUIRED BY APPLICABLE LAW.
TRANSFER TAXES
We will pay all transfer taxes applicable to the transfer and exchange of
existing notes pursuant to the exchange offer. If, however:
- delivery of the new notes, and/or certificates for existing notes for
principal amounts not exchanged, are to be made to any person other than
the record holder of the existing notes tendered;
- tendered certificates for existing notes are recorded in the name of any
person other than the person signing any letter of transmittal; or
- a transfer tax is imposed for any reason other than the transfer and
exchange of existing notes to us or our order,
the amount of any such transfer taxes, whether imposed on the record holder or
any other person, will be payable by the tendering holder prior to the issuance
of the new notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your existing notes for new notes in the exchange
offer, you will remain subject to the restrictions on transfer of the existing
notes:
- as set forth in the legend printed on the notes as a consequence of the
issuance of the existing notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws; and
- otherwise set forth in the memorandum distributed in connection with the
private offering of the existing notes.
In general, you may not offer or sell the existing notes unless they are
registered under the Securities Act, or if the offer or sale is exempt from
registration under the Securities Act and applicable state securities laws.
Except as required by the registration rights agreement, we do not intend to
register resales of the existing notes under the Securities Act. Based on
interpretations of the SEC staff, you may offer for resale, resell or otherwise
transfer new notes issued in the exchange offer without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that (1) you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act, (2) you acquired the new notes in the ordinary course of your
business and (3) you have no arrangement or understanding with respect to the
distribution of the new notes to be acquired in the exchange offer. If you
tender existing notes in the
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exchange offer for the purpose of participating in a distribution of the new
notes:
- you cannot rely on the applicable interpretations of the SEC; and
- you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered
by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
EXCHANGE AGENT
Bank One Trust Company, NA has been appointed as exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus, the letter of transmittal or
any other documents to the exchange agent. You should send certificates for
existing notes, letters of transmittal and any other required documents to the
exchange agent addressed as follows:
Bank One Trust Company, NA
153 West 51st Street
Fifth Floor
New York, New York 10019
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DESCRIPTION OF THE NOTES
We will issue the new notes under an indenture between us and Bank One
Trust Company, NA, successor to The First National Bank of Chicago, as trustee,
dated as of August 17, 1999. The existing notes were also issued under the
indenture. The terms of the existing notes are identical in all material
respects to the terms of the new notes, except that the existing notes contain
terms with respect to transfer restrictions (and therefore are not freely
tradeable) and adjustments in the interest rate.
The terms of the notes include those set forth in the indenture and those
made a part of the indenture by reference to the Trust Indenture Act of 1939.
The following description is a summary of the material provisions of the notes
and the indenture. It does not restate the indenture in its entirety. We urge
you to read the indenture because it, and not this description, defines your
rights as holders of the notes. Copies of the indenture will be available at the
offices of the trustee.
THE NOTES
The notes:
- are general unsecured obligations;
- rank equally with all of our other existing and future senior and
unsubordinated debt; and
- rank senior to all of our future subordinated debt.
Subject to the exceptions, and subject to compliance with the applicable
requirements, set forth in the indenture, we may discharge our obligations under
the indenture with respect to the notes as described under "-- Discharge and
Defeasance."
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on September 1, 2009. We are offering a maximum
aggregate principal amount of the new notes of $200,000,000.
Interest on the notes will:
- accrue at the rate of 7.75% per year;
- be payable semiannually on each March 1 and September 1, commencing March
1, 2000;
- be payable to the person in whose name the notes are registered at the
close of business on the relevant February 15 and August 15 preceding the
applicable interest payment date;
- be computed on the basis of a 360-day year comprised of twelve 30-day
months; and
- be payable on overdue interest to the extent permitted by law at the same
rate as interest is payable on principal.
If any interest payment date, maturity date or redemption date falls on a day
that is not a business day, the payment will be made on the next business day
with the same force and effect as if made on the relevant interest payment date,
maturity date or redemption date. Unless we default on a payment, no interest
will accrue for the period from and after the applicable maturity date or
redemption date.
DENOMINATIONS
The notes will be issued in registered form in denominations of $1,000 each
or integral multiples thereof.
OPTIONAL REDEMPTION
The notes will be redeemable, in whole or in part, at our option
exercisable at any time or from time to time upon not less than 30 and not more
than 60 days' notice as provided in the indenture, on any date prior to their
maturity at a redemption price equal to:
- the principal amount of such notes; plus
- a make-whole premium described below, if any.
The redemption price will never be less than 100% of the principal amount of the
relevant notes plus accrued and unpaid interest thereon, if any, to the
redemption date.
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The amount of the make-whole premium with respect to any note to be
redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the redemption date,
of:
- each interest payment that, but for such redemption, would have been
payable on the note or portion thereof being redeemed on each interest
payment date occurring after the redemption date (excluding any accrued
interest for the period prior to the redemption date); and
- the principal amount that, but for such redemption, would have been
payable at the final maturity of the note being redeemed; over
(2) the principal amount of the note being redeemed.
The present values of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. These present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the comparable treasury yield (as defined below)
plus 25 basis points. The make-whole premium will be calculated by an
independent investment banking institution of national standing appointed by us.
If we fail to appoint an independent investment banker at least 45 days prior to
the redemption date, or if the independent investment banker we appoint is
unwilling or unable to make the calculation, the calculation will be made by
Lehman Brothers Inc. If Lehman Brothers Inc. is unwilling or unable to make the
calculation, we will appoint an independent investment banking institution of
national standing to make the calculation.
For purposes of determining the make-whole premium, comparable treasury
yield means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Securities that have a constant maturity that
corresponds to the remaining term to maturity of the notes, calculated to the
nearest 1/12th of a year. The comparable treasury yield will be determined as of
the third business day immediately preceding the applicable redemption date.
The weekly average yields of United States Treasury Securities will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release. If the H.15 statistical release sets forth a
weekly average yield for United States Treasury Securities having a constant
maturity that is the same as the remaining term calculated as set forth above,
then the comparable treasury yield will be equal to such weekly average yield.
In all other cases, the comparable treasury yield will be calculated by
interpolation on a straight-line basis, between the weekly average yields on the
United States Treasury Securities that have a constant maturity closest to and
greater than the remaining term and the United States Treasury Securities that
have a constant maturity closest to and less than the remaining term (in each
case as set forth in the H.15 statistical release or any successor release). Any
weekly average yields calculated by interpolation will be rounded to the nearest
1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward.
If weekly average yields for United States Treasury Securities are not available
in the H.15 statistical release or otherwise, then the comparable treasury yield
will be calculated by interpolation of comparable rates selected by an
independent investment banker selected in the manner described in the second
preceding paragraph.
In the case of any partial redemption, selection of the notes for
redemption will be made by the trustee on a pro rata basis, by lot or by such
other method as the trustee in its sole discretion shall deem to be fair and
appropriate. However, no note of $1,000 in original principal amount shall be
redeemed in part. If any note is to be redeemed in part only, the notice of
redemption will state the portion of the principal amount to be redeemed. A new
note in principal amount equal to the unredeemed portion of the original note
will be issued upon the cancellation of the original note.
SINKING FUND
We are not required to make mandatory redemption or sinking fund payments
with respect to the notes.
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METHOD OF PAYMENT
The note requires that payment in respect of the global notes be made by
wire transfer of immediately available funds to the accounts specified by the
holders of the notes. If no such account is specified, we may choose to make
payment at the office of the trustee or by mailing a check to the holder's
registered address.
CERTAIN COVENANTS
The indenture does not limit the amount of indebtedness or other
obligations that we may incur and does not contain provisions that give you the
right to require us to repurchase your notes in the event of a decline in the
credit rating of our debt securities or upon a change of control. The indenture
contains covenants including, among others, the following:
Limitation on Liens. We will not, and will not permit any of our
subsidiaries (as defined below) to, issue, create, assume or guarantee any
indebtedness for borrowed money secured by a lien upon any of our Property
(as defined below) or the Property of any subsidiary or upon any shares of
stock or indebtedness of any subsidiary that owns or leases any Property
(whether such Property, shares of stock or indebtedness is now existing or
owned or subsequently created or acquired) without effectively providing
that the notes will be secured equally and ratably with or prior to such
secured debt until such time as such debt is no longer secured by a lien.
The foregoing restriction does not require us to secure the notes if
the liens consist of either Permitted Liens (as defined below) or if the
indebtedness secured by these liens is Exempted Indebtedness (as described
below).
Limitation on Sale-Leaseback Transactions. We will not, and will not
permit any of our subsidiaries to, enter into any Sale-Leaseback
Transaction (as defined below) with respect to any Property unless:
- we or our subsidiary, as the case may be, would be entitled,
pursuant to the provisions of the indenture, to incur indebtedness
secured by a lien on the Property involved in such transaction at
least equal in amount to the Attributable Indebtedness (as defined
below) with respect to that Sale-Leaseback Transaction without
equally and ratably securing the notes pursuant to the covenant
described above in "-- Limitation on Liens;"
- within 12 months after the effective date of such transaction, we
apply an amount equal to not less than the Attributable Indebtedness
of such Sale-Leaseback Transaction either (1) to the voluntary
defeasance or the repayment, redemption or retirement of the notes
or other indebtedness for borrowed money of ours or any of our
subsidiaries that matures more than one year after the creation of
such indebtedness or (2) to the acquisition, construction,
development or improvement of any Property used or useful; (3) any
combination of applications referred to in (1) and (2) above.
Exempted Indebtedness. Notwithstanding the foregoing limitations on
liens and Sale-Leaseback Transactions, we and our subsidiaries may issue,
incur, create, assume, or guarantee indebtedness secured by a lien (other
than a Permitted Lien) without securing the notes, or may enter into
Sale-Leaseback Transactions without complying with the preceding paragraph,
or enter into a combination of such transactions, if the sum of the
aggregate principal amount of all such indebtedness and the Attributable
Indebtedness of all such Sale-Leaseback Transactions then in existence, in
each case not otherwise permitted in the preceding three paragraphs, does
not at the time incurred exceed 10% of our Consolidated Net Tangible Assets
(as defined below).
Payments for Consent. We will not, and will not permit any of our
subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration whether by way of fee, interest or otherwise to or for the
benefit of any holder of notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the indenture or
the notes unless such consideration is offered to be paid and is paid to
all holders of the notes that consent, waiver or agree to amend in the time
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frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Reports. So long as any notes are outstanding, and pursuant to Section
314(a) of the Trust Indenture Act, we will:
(1) for as long as we are required to file information with the SEC
pursuant to the Exchange Act, file with the trustee, within 15 days after
we are required to file with the SEC, copies of the annual report and of
the information, documents and other reports which we may be required to
file with the SEC pursuant to the Exchange Act; or
(2) if we are not required to file information with the SEC pursuant to the
Exchange Act, file with the trustee and the SEC, in accordance with rules
and regulations prescribed from time to time by the SEC, any supplementary
and periodic information, documents and reports which may be required
pursuant to the Exchange Act, in respect of a security listed and
registered on a national securities exchange as may be prescribed in such
rules and regulations.
For so long as any notes remain outstanding and if applicable, we will make
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act available to securities analysts, investors and prospective
investors upon request.
MERGER, AMALGAMATION, CONSOLIDATION AND SALE OF ASSETS
We will not merge, amalgamate or consolidate with or into any other entity
or sell, convey, lease, transfer or otherwise dispose of all or substantially
all of our property or assets to any person, whether in a single transaction or
series of related transactions, except pursuant to Section 14 of our partnership
agreement, and unless:
- either we are the surviving entity or the surviving entity:
-- is an entity organized under the laws of the United States, a state
thereof or the District of Columbia, or Canada or a province thereof; and
-- expressly assumes by supplemental indenture satisfactory to the
trustee, the due and punctual payment of the principal of, premium, if
any, and interest on all of the notes, and the due and punctual
performance or observance of all the other covenants and conditions of
the indenture to be performed or observed by us;
- immediately before and immediately after giving effect to the transaction
or series of transactions, no default or event of default has occurred
and is continuing; and
- we have delivered to the trustee an officer's certificate and opinion of
counsel, each stating that:
-- the merger, amalgamation, consolidation, sale, conveyance, transfer,
lease or other disposition, and if a supplemental indenture is required,
the supplemental indenture, comply with the conditions set forth above
and all other conditions precedent to the transaction have been complied
with.
Notwithstanding the foregoing, any successor (including pursuant to Section
14 of our partnership agreement) must comply with the terms of the indenture,
including the requirement that the successor execute and deliver a supplemental
indenture.
EVENTS OF DEFAULT
"Event of default" when used in the indenture, means any of the following:
- failure to pay the principal of or any premium on any note when due;
- failure to pay interest on any note for 30 days;
- failure to perform any other term, covenant or warranty in the indenture
that continues for 90 days after being given written notice;
- default by us or any of our subsidiaries in the payment at the final
maturity, after the expiration of any applicable grace period, of
principal of, premium, if any, or interest on indebtedness for money
borrowed in the principal amount then outstanding of $25 million or more,
or acceleration of any indebtedness of $25 million or more so that it
becomes due and payable prior to its maturity date and such acceleration
is not rescinded within 60 days after notice to us in accordance with the
indenture;
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- certain events of bankruptcy, insolvency or reorganization; or
- any other event of default included in the indenture.
The trustee may withhold notice to the holders of notes of any default,
except in the payment of principal or interest, if it considers such withholding
of notice to be in the best interests of the holders.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in aggregate principal amount of the notes may declare the entire
principal of all the outstanding notes to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the notes can void the declaration.
Other than its duties in case of a default, a trustee is not obligated to
exercise any of its rights or powers under the indenture at the request, order
or direction of any holders, unless the holders offer to the trustee indemnity
satisfactory to the trustee. If they provide this indemnification, the holders
of a majority in principal amount of the notes may direct the time, method and
place of conducting any proceeding or any remedy available to the trustee, or
exercising any power conferred upon the trustee.
CERTAIN DEFINITIONS
As used in the foregoing description of certain covenants by which we are
bound pursuant to the indenture, the following terms have the following
meanings:
"Attributable Indebtedness" means with respect to a Sale-Leaseback
Transaction involving pipeline assets, at the time of determination, the
lesser of:
- the fair market value (as determined in good faith by our management
committee) of such pipeline assets;
- the present value of the total net amount of rent required to be paid
under the lease involved in such Sale-Leaseback Transaction during the
remaining term thereof (including any renewal term exercisable at the
lessee's option or period for which such lease has been extended),
discounted at the rate of interest set forth or implicit in the terms
of such lease or, if not practicable to determine such rate, the
weighted average interest rate per annum borne by the notes compounded
semiannually; or
- if the obligation with respect to the Sale-Leaseback Transaction
constitutes an obligation that is required to be classified and
accounted for as a capital lease obligation (as defined in the
indenture) for financial reporting purposes in accordance with
generally accepted accounting principles, the amount equal to the
capitalized amount of such obligation determined in accordance with
generally accepted accounting principles and included in the financial
statements of the lessee required to the paid by the lessee.
For purposes of the foregoing definition, rent will not include amounts required
to be paid by the lessee, whether or not designated as rent or additional rent,
on account of or contingent upon maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges. In the case of any lease that is
terminable by the lessee upon the payment of a penalty, such net amount shall be
the lesser of the net amount determined assuming termination upon the first date
such lease may be terminated (in which case the net amount shall also include
the amount of the penalty, but no rent shall be considered as required to be
paid under such lease subsequent to the first date upon which it may be so
terminated) or the net amount determined assuming no such termination.
"Consolidated Net Tangible Assets" means, at any date of determination, the
aggregate amount of total assets included on our most recent quarterly or annual
consolidated balance sheet less applicable reserves reflected in such balance
sheet, after deducting in accordance with generally accepted accounting
principles:
- all current liabilities reflected in such balance sheet; and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles reflected in such balance sheet.
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"Permitted Liens" include:
- liens existing at or provided for under the terms of agreements existing
on the date of the initial issuance of the notes;
- liens on property, shares of stock, indebtedness or other assets of any
person (which is not a subsidiary) existing at the time such person is
merged into or consolidated with or into us or any of our subsidiaries,
provided that such liens are not incurred in anticipation of such person
becoming a subsidiary or liens existing at the time of a sale, lease or
other disposition of the properties of a person as an entirety or
substantially as an entirety to us or any of our subsidiaries;
- liens on property, shares of stock, indebtedness for borrowed money or
other assets existing at the time of acquisition thereof by us or any of
our subsidiaries, or liens thereon to secure the payment of all or any
part of the purchase price thereof;
- liens on property, shares of stock, indebtedness for borrowed money or
other assets to secure any indebtedness for borrowed money incurred prior
to, at the time of, or within 24 months after, the latest of the
acquisition thereof, or, in the case of property, the completion of
construction, the completion of development or improvements or the
commencement of commercial operation of such property for the purpose of
financing all or any part of the purchase price thereof, such
construction or the making of such development or improvements;
- liens to secure indebtedness owing to us or our subsidiaries;
- liens on property to secure all or part of the cost of acquiring,
constructing, altering, improving, developing or repairing any property
or asset, or improvements used in connection with that property or liens
incurred by us or any of our subsidiaries to provide funds for any such
activities;
- liens in favor of the United States of America or any state, territory or
possession thereof (or the District of Columbia), or any department,
agency, instrumentality or political subdivision of the United States of
America or any state, territory or possession thereof (or the District of
Columbia), to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase
price or the cost of constructing, developing or improving the property
subject to such liens;
- liens on any property to secure bonds for the construction, installation
or financing of pollution control or abatement facilities, or other forms
of industrial revenue bond financing, or indebtedness issued or
guaranteed by the United States, any state or any department, agency or
instrumentality thereof;
- liens contemplated by Section 7.07 of the indenture;
- liens deemed to exist by reason of negative pledges in respect of
indebtedness; and
- liens to secure any refinancing, refunding, extension, renewal or
replacement of any lien referred to in the bullet points above; provided,
however, that any liens permitted by the terms set forth under any of
such bullet points shall not extend to or cover any property of ours or
of any of our subsidiaries, as the case may be, other than the property
specified in such clauses and improvements thereto or proceeds therefrom.
"Property" means any right or interest of ours or any of our subsidiaries
in or to property of any kind whatsoever, whether real, personal or mixed and
whether tangible or intangible.
"Sale-Leaseback Transaction" means any arrangement with any person
providing for the leasing by us or any of our subsidiaries of any Property,
which Property has been or is to be sold or transferred by us or such subsidiary
to such person, other than:
- any such transaction involving a lease for a term of not more than two
years;
- any such transaction between us and any of our subsidiaries or between
any of our subsidiaries; or
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- any such transaction executed by the time of or within one year after the
latest of the acquisition, the completion of construction, development or
improvement or the commencement of commercial operation of our pipeline
system assets subject to such leasing transaction.
"subsidiary" of any person means:
- any person of which more than 50% of the outstanding voting stock, at the
time of such determination, is owned or controlled, directly or
indirectly, by any person or one or more of the subsidiaries of that
person or a combination thereof; and
- any other person in which such person or one or more of the subsidiaries
of that person or a combination thereof has the power to control by
contract or otherwise the board of directors or equivalent governing body
or otherwise controls such entity.
For purposes of this definition, voting stock means capital stock of the
class or classes which under ordinary circumstances has voting power to elect at
least a majority of the board of directors or equivalent governing body of such
person, provided that capital stock that carries only the right to vote
conditionally upon the occurrence of an event shall not constitute voting stock
whether or not such event shall have occurred.
NO PERSONAL LIABILITY
None of our management committee members or our general partners or our
general partners' and operator's directors, officers, employees, incorporators
or stockholders, if any, shall have any liability for any of our obligations
under the notes or the indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of notes by accepting
a note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the notes. Such waiver may not be effective
to waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
DISCHARGE AND DEFEASANCE
We will be discharged from our obligations on the notes at any time if we
deposit with the trustee sufficient cash or non-callable government securities
to pay the principal, interest, any premium, and any other sums due to the
stated maturity date or a redemption date of the notes. If this happens, the
holders of the notes will not be entitled to the benefits of the indenture
except for registration of transfer and exchange of notes and replacement of
lost, stolen or mutilated notes. In addition, we will be released from our
obligations to comply with the covenant in the indentures to provide reports and
from restrictions in the indentures on our ability to merge, consolidate or sell
all or substantially all of our assets, and the limitations in the indenture on
liens and sale and leaseback transactions if we irrevocably deposit with the
trustee, in trust, cash or government securities to pay the principal, interest,
premium, if any, and any other sums due to the stated maturity date or
applicable redemption date of the notes and we comply with certain other
conditions. If this happens, our failure to comply with the covenants described
in the preceding sentence will not constitute a default or event of default in
respect of the notes.
Under federal income tax law as of the date of this offering memorandum, a
discharge described in the preceding paragraph may be treated as an exchange of
the related debt securities. Each holder might be required to recognize gain or
loss equal to the difference between the holder's cost or other tax basis for
the notes and the value of the holder's interest in the trust. Holders might be
required to include as income a different amount than would be includable
without the discharge. Prospective investors should seek tax advice to determine
their particular consequences of a discharge, including the applicability and
effect of tax laws other than the federal income tax law.
In addition, we may terminate our obligations under the notes, other than
our obligation to pay the principal of, premium, if any, and accrued and unpaid
interest on such notes and certain other obligations, provided that we either:
(1) deliver all outstanding notes (other than notes for which payment
amounts have been deposited with the trustee as described in the second
preceding paragraph) to the trustee for cancellation; or
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(2) all such notes not so delivered for cancellation have either become due
and payable or will become due and payable at their stated maturity within
one year or are called for redemption within one year, and in the case of
this clause (2) we have deposited with the trustee in trust an amount of
money sufficient to pay and disclose the entire indebtedness of such notes,
including interest to the stated maturity or applicable redemption date.
TRANSFER AND EXCHANGE
The notes will be issued in registered form and may be transferred or
exchanged only in accordance with the indenture. The registrar and the trustee
may require a holder, among other things, to furnish appropriate endorsements
and transfer documents and we may require a holder to pay any taxes and fees
required by law or permitted by the indenture. We are not required to transfer
or exchange any note selected for redemption. Also, we are not required to
transfer or exchange any note for a period of 15 days before a selection of
notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
CONCERNING THE TRUSTEE
Bank One Trust Company, NA, successor to The First National Bank of
Chicago, serves as trustee under the indenture. We have appointed the trustee to
serve as the paying agent and registrar for the notes. The trustee will be
permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict or resign. We currently,
and certain of our affiliates may, have banking relationships with the trustee.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an event of default
shall occur (which shall not be cured), the trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request of any holder of notes, unless such holder shall have offered to the
trustee security and indemnity satisfactory to it against any loss, liability or
expense.
BOOK-ENTRY, DELIVERY AND FORM
Generally, the notes will be issued in the form of global notes registered
in the name of DTC or its nominee, as described under the caption "-- Global
Securities."
Existing notes issued in certificated form may be exchanged for new notes
in certificated form.
Payment of the principal of and interest on certificated notes is subject
to the indenture and will be made at the corporate trust office of the trustee
or such other office or agency as may be designated by it for such purpose in
New York City. Payment of interest on certificated notes will be made to the
person in whose name such note is registered at the close of business on the
applicable record date. All other terms of the certificated notes are governed
by the indenture.
Except as described below, the global notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the global notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"-- Depositary Procedures -- Exchange of Book-Entry Notes for Certificated
Notes."
Initially, the trustee will act as paying agent and registrar for the
notes. The notes may be presented for registration of transfer and exchange at
the offices of the registrar.
DEPOSITARY PROCEDURES
DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations and to facilitate the
clearance and settlement of transactions in those securities between
participants through electronic book-entry changes in accounts of participants.
The participants include securities brokers and dealers (including the initial
purchasers), banks, trust companies, clearing corporations and certain other
organizations. Access to DTC's system is also available to other entities such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not
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participants may beneficially own securities held by or on behalf of DTC only
through the participants or indirect participants. The ownership interest and
transfer of ownership interest of each actual purchaser of each security held by
or on behalf of DTC are recorded on the records of the participants and indirect
participants.
DTC has also advised us that pursuant to procedures established by it, (a)
upon deposit of the global notes, DTC will credit the accounts of the designated
participants with portions of the principal amount of global notes and (b)
ownership of such interests in the global notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by DTC (with respect to participants) or by participants and the indirect
participants (with respect to other owners of beneficial interests in the global
notes).
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interest in a global note to such persons may be limited to
that extent. Because DTC can act only on behalf of participants, which in turn
act on behalf of indirect participants and certain banks, the ability of a
person having a beneficial interest in a global note to pledge such interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interests, may be affected by the lack of physical
certificates evidencing such interest. For certain other restrictions on the
transferability of the notes, see "-- Exchange of Book-Entry Notes for
Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS, OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Under the terms of the indenture, we and the trustee will treat the persons
in whose names the notes, including the global notes, are registered as the
owners thereof for the purpose of receiving such payments and for any and all
other purposes whatsoever. Payments in respect of the principal and premium and
liquidated damages, if any, and interest on a global note registered in the name
of DTC or its nominee will be payable by the trustee to DTC or its nominee in
its capacity as the registered holder under the indenture. Consequently, none of
us, the trustee nor any of our agents or the trustee's agents has or will have
any responsibility or liability for (a) any aspect of DTC's records or any
participant's or indirect participant's records relating to or payments made on
account of beneficial ownership interests in the global notes, or for
maintaining, supervising or reviewing any of DTC's records or any participant's
or indirect participant's records relating to the beneficial ownership interests
in the global notes or (b) any other matter relating to the actions and
practices of DTC or any of its participants or indirect participants.
DTC has advised us that its current practices for payments of principal,
interest, and the like with respect to securities such as the notes is to credit
the accounts of the relevant participants with the payment on the payment date,
in amounts proportionate to their respective holdings in principal amount of
beneficial interests in the relevant security such as the global notes as shown
on the records of DTC. Payments by participants and the indirect participants to
the beneficial owners of notes will be governed by standing instructions and
customary practices and will not be the responsibility of DTC, the trustee or
us. Neither we nor the trustee will be liable for any delay by DTC or its
participants in identifying the beneficial owners of the notes, and we and the
trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the notes for
all purposes.
The global notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in immediately available funds.
Transfers between indirect participants (other than indirect participants who
hold an interest in the notes through Euroclear or CEDEL) who hold an interest
through a participant will be effected in accordance with the procedures of such
participant but generally will settle in immediately available funds. Transfers
between and among indirect participants who hold interests in the notes through
Euroclear and CEDEL will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described herein,
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cross-market transfers between participants in DTC, on the one hand, and
Euroclear or CEDEL participants, on the other hand, will be effected by
Euroclear's or CEDEL's respective nominee through DTC in accordance with DTC's
rules on behalf of Euroclear or CEDEL, as the case may be; however, delivery of
instructions relating to cross-market transactions must be made directly to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time for Euroclear and UK time for CEDEL) of such system. Indirect
participants who hold interests in the notes through Euroclear and CEDEL may not
deliver instructions directly to Euroclear's or CEDEL's nominee. Euroclear or
CEDEL, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective nominee to take action to
deliver or receive interests in the relevant global note in DTC, and to make or
receive payment in accordance with normal procedures for same-day fund
settlement applicable to DTC.
Because of time zone differences, the securities accounts of an indirect
participant who holds an interest in the notes through Euroclear or CEDEL
purchasing an interest in a global note from a participant in DTC will be
credited, and any such crediting will be reported to the relevant Euroclear or
CEDEL, during the securities settlement processing day (which must be a business
day for Euroclear or CEDEL) immediately following the settlement date of DTC in
New York. Although recorded in DTC's accounting records as of DTC's settlement
date in New York, Euroclear and CEDEL customers will not access the cash amount
credited to their accounts as a result of a sale of an interest in a global note
to a DTC participant until the European business day for Euroclear and CEDEL
immediately following DTC's settlement date.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account interests in the global notes are credited and only in respect of such
portion of the aggregate principal amount of the notes to which such participant
or participants has or have given direction. However, if there is an Event of
Default under the notes, DTC reserves the right to exchange global notes
(without the direction of one or more of its participants) for legended notes in
certificated form, and to distribute such certificated forms of notes to its
participants.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures
to facilitate transfers of interests in the notes among participants, including
Euroclear and CEDEL, they are under no obligation to perform or to continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither we, the initial purchasers nor the trustee shall have any responsibility
for the performance by DTC, Euroclear and CEDEL or their respective participants
and indirect participants of their respective obligations under the rules and
procedures governing any of their operations.
DTC and Year 2000 Issues. DTC's management is aware that some computer
applications, systems and the like for processing data that are dependent upon
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its participants and other
members of the financial community that is has developed and is implementing a
program so that its computer systems, as the same relate to the timely payment
of distributions (including principal and interest payments) to securityholders,
book-entry deliveries, and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be complete within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors on whom the depositary relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the financial community that
it is contacting (and will continue to contact) third-party vendors from whom
the depositary acquires services to: (a) impress upon them the importance of
such services being Year 2000 compliant; and (b) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
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The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that we believe to be
reliable, but we take no responsibility for the accuracy thereof.
Exchange of Book-Entry Notes for Certificated Notes. A global note is
exchangeable for definitive notes in registered certificated form if (1) DTC (A)
notifies us that it is unwilling or unable to continue as depository for the
global note and we thereupon fail to appoint a successor depository or (B) has
ceased to be a clearing agency registered under the Exchange Act, (2) we, at our
option, notify the trustee in writing that we elect to cause issuance of the
notes in certificated form or (3) there shall have occurred and be continuing a
Default or Event of Default. In addition, beneficial interests in a global note
held by any participant or indirect participant may be exchanged for
certificated notes upon request to DTC by such participant (for itself and on
behalf of an indirect participant) but only upon at least 20 days' prior written
notice given to the trustee by or on behalf of DTC in accordance with customary
procedures. In all cases, certificated notes delivered in exchange for any
global note or beneficial interest therein will be registered in names, and
issued in any approved denominations, requested by or on behalf of DTC (in
accordance with its customary procedures) unless we determine otherwise in
compliance with applicable law.
Neither we nor the trustee will be liable for any delay by the holder of
the global note or DTC in identifying the beneficial owners of notes, and we and
the trustee may conclusively rely on, and will be protected in relying on,
instructions from the holder of the global note or DTC for all purposes.
Certificated Notes. Subject to certain conditions, any person having a
beneficial interest in the global note may, upon request to the trustee,
exchange such beneficial interest for notes in the form of certificated notes.
Upon any such issuance, the trustee is required to register such certificated
notes in the name of, and cause the same to be delivered to, such person or
persons (or the nominee of any thereof). In addition, if (a) we notify the
trustee in writing that DTC is no longer willing or able to act as a depository
and we are unable to locate a qualified successor within 90 days or (b) we, at
our option, notify the trustee in writing that we elect to cause the issuance of
notes in the form of certificated notes under the indenture or (c) DTC will not
continue to hold the book-entry interests related to the global notes or is no
longer a clearing agency registered under the Exchange Act and we do not replace
DTC within 120 days, then, upon surrender by the global note holder of its
global note, notes in such form will be issued to each person that the global
note holder and DTC identify as being the beneficial owner of the related notes.
Neither we nor the trustee will be liable for any delay by the global note
holder or DTC in identifying the beneficial owners of notes and we and the
trustee may conclusively rely on, and will be protected in relying on,
instructions from the global note holder or DTC for all purposes.
Same-day Settlement and Payment. The indenture will require that payments
in respect of the notes represented by the global note (including principal,
premium, if any, and interest) be made by wire transfer of immediately available
funds to the accounts specified by the global note holder. With respect to
certificated notes, we will make all payments of principal, premium, if any, and
interest by wire transfer of immediately available funds to the accounts
specified by the holders thereof or, if no such account is specified, by mailing
a check to each such holder's registered address. We expect that secondary
trading in the certificated notes will also be settled in immediately available
funds.
MEETINGS
The indenture contains provisions describing how meetings of the holders of
notes may be convened. A meeting may be called at any time by the trustee, and
also, upon request, by us or the holders of at least 10% in principal amount of
the outstanding notes. A notice of the meeting must always be given in the
manner described under "-- Notices" below. Generally speaking, any resolution
presented at a meeting of the holders of a series of notes may be adopted by the
affirmative vote of the holders of a majority in principal amount of the
outstanding notes, unless the indenture allows the action to be voted upon to be
taken with the approval of the holders of a different specific percentage of
principal amount of the notes. In that case, the holders of outstanding notes of
at least the specified percentage must vote in favor of the action. Any
resolution passed or
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decision taken at any meeting of holders of notes in accordance with the
indenture will be binding on all holders of notes. The quorum at any meeting
called to adopt a resolution, and at any reconvened meeting, will be an
aggregate principal amount sufficient to take action upon the matter for which
the meeting was called.
GOVERNING LAW
The indenture and the notes will be governed by and construed in accordance
with the laws of the State of New York, without regard to conflicts of laws
principles.
NOTICES
Notices to holders of notes will be given by mail to the addresses of such
holders as they appear in the security register.
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UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a discussion of certain material U.S. federal income tax
consequences of the ownership and disposition of the notes. Unless otherwise
stated, this discussion is limited to the tax consequences to those persons who
purchased the notes from the initial purchasers and who hold these notes as
capital assets under Section 1221 of the Internal Revenue Code of 1986, as
amended. The discussion does not address specific tax consequences that may be
relevant to particular persons including, for example, financial institutions,
broker-dealers, insurance companies, tax-exempt organizations, and persons in
special situations, such as those who hold notes as part of a straddle, hedge,
conversion transaction, or other integrated investment. In addition, this
discussion does not address U.S. federal alternative minimum tax consequences or
any aspect of state, local or foreign taxation. This discussion is based upon
the Code, the Treasury Department regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all of which are subject to
change, possibly with retroactive effect. We will treat the notes as
indebtedness for federal income tax purposes, and the following discussion
assumes that this treatment is correct.
For purposes of this discussion, you are a "U.S. Holder" if you are a
beneficial owner of a note and are a U.S. citizen or resident, a corporation,
partnership or other entity created or organized in or under the laws of the
U.S. or of any political subdivision thereof, an estate or certain electing
trusts in existence as of August 28, 1996, the income of which is subject to
U.S. federal income taxation regardless of its source, or a trust if a United
States court is able to exercise primary supervision over its administration and
one or more U.S. persons have the authority to control all of its substantial
decisions. You are a "Non-U.S. Holder" if you are a holder of a note who is not
a U.S. Holder.
PROSPECTIVE PURCHASERS OF THE NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE SPECIFIC U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM
OF OWNING AND DISPOSING OF THE NOTES, AS WELL AS THE APPLICATION OF STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX LAWS.
TAX CONSEQUENCES TO U.S. HOLDERS
Taxation of Interest. If you are a U.S. Holder, interest on your notes
generally will be taxable as ordinary interest income at the time payments are
accrued or are received in accordance with your regular method of accounting for
federal income tax purposes.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of the notes, you will recognize gain or loss equal to the difference
between the amount realized upon the sale, exchange or retirement (less any
portion allocable to accrued and unpaid interest) and your adjusted tax basis in
the notes. Your adjusted tax basis in the notes generally will be your cost for
the notes, less any principal payments you receive.
The gain or loss you recognize on the sale, exchange or retirement of the
notes will be capital gain or loss. The gain or loss will be long-term capital
gain or loss if you have held the notes for more than twelve months. Long-term
capital gain is subject to a maximum federal tax rate of 20% for U.S. Holders
other than corporations. The deductibility of capital losses by U.S. Holders is
subject to limitation.
To the extent that the amount realized represents accrued but unpaid
interest, that amount must be taken into account as interest income, if it was
not previously included in your income. See "-- Taxation of Interest."
Exchange Offer. Whether you acquired your existing notes from the initial
purchasers or subsequently, you will not recognize any taxable gain or loss on
the exchange of the existing notes for new notes pursuant to the exchange offer,
and your tax basis and holding period in the new notes will be the same as in
the existing notes.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Taxation of Interest. If you are a Non-U.S. Holder, you generally will not
be subject to U.S. federal income or withholding tax on interest paid on the
notes so long as that interest is not effectively connected with your conduct of
a trade or business within the U.S., and you:
- do not actually or constructively own 10% or more of the total combined
voting power of our capital or profits interests;
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<PAGE> 60
- are not a "controlled foreign corporation" with respect to which we are a
"related person" within the meaning of the Code;
- are not a bank within the meaning of Section 881(c)(3)(A) of the Code;
and
- satisfy the requirements of Sections 871(h) or 881(c) of the Code, as
described below under "-- Owner Statement Requirement."
If these conditions are not satisfied, then interest paid on the notes will
be subject to U.S. withholding tax at a rate of 30% unless that rate is reduced
or eliminated pursuant to an applicable tax treaty and you provide us with a
properly completed and executed Form W-8 BEN, as provided for in the Treasury
Regulations.
Sale, Exchange or Retirement of the Notes. Any capital gain you recognize
on the sale, exchange, retirement or other taxable disposition of a note will be
exempt from U.S. federal income and withholding tax, provided that:
- the gain is not effectively connected with your conduct of a trade or
business within the U.S.; and
- if you are an individual, you are not present in the U.S. for 183 days or
more during the taxable year.
Effectively Connected Income. If the interest, gain or other income you
recognize on a note is effectively connected with your conduct of a trade or
business within the U.S., you will be exempt from the withholding tax previously
discussed if you provide us with a properly completed and executed Form W-8 ECI,
but generally will be subject to U.S. federal income tax on the interest, gain
or other income at regular federal income tax rates. In addition to regular U.S.
federal income tax, if you are a corporation, you may be subject to a branch
profits tax equal to 30% of your effectively connected earnings and profits, as
adjusted for certain items, unless you qualify for a lower rate under an
applicable tax treaty.
Federal Estate Taxes. A note held by an individual who at the time of death
is not a citizen or resident of the U.S. will not be subject to U.S. federal
estate tax as a result of such individual's death, provided that the individual
does not actually or constructively own 10% or more of our capital or profits
interests and that the interest accrued on the notes was not effectively
connected with that holder's conduct of a trade or business within the U.S.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, where required, report to you and the Internal Revenue Service the
amount of any interest paid on the notes in each calendar year and the amounts
of tax withheld, if any, with respect to those payments. A noncorporate U.S.
Holder may be subject to information reporting and to backup withholding at a
rate of 31% with respect to payments of interest made on a note, or proceeds of
the disposition of a note before maturity, unless the U.S. Holder provides a
correct taxpayer identification number or proof of an applicable exemption and
otherwise complies with applicable requirements of the information reporting and
backup withholding rules.
In the case of payments of interest to Non-U.S. Holders, current Treasury
Regulations provide that the 31% backup withholding tax and certain information
reporting requirements will not apply to payments with respect to which either
the requisite certification, as described above, has been received or an
exemption has otherwise been established, provided that neither we nor our
payment agent has actual knowledge that the holder is a U.S. person or that the
conditions of any other exemption are not in fact satisfied.
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<PAGE> 61
Under current Treasury Regulations, information reporting and backup
withholding requirements will apply, however, to the gross proceeds paid to a
Non-U.S. Holder on the disposition of the notes by or through a U.S. office of a
U.S. or foreign broker, unless the Non-U.S. Holder otherwise establishes an
exemption. Information reporting requirements, but not backup withholding, will
also apply to payment of the proceeds of a disposition of the notes by or
through a foreign office of a U.S. broker or foreign brokers with certain types
of relationships to the U.S. unless the broker has documentary evidence in its
file that the holder of the notes is not a U.S. person and the broker has no
actual knowledge to the contrary, or the holder establishes an exemption.
Neither information reporting nor backup withholding generally will apply to
payment of the proceeds of a disposition of the notes by or through a foreign
office of a foreign broker not subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the holder's U.S.
federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.
61
<PAGE> 62
NORTHERN BORDER PIPELINE COMPANY PARTNERSHIP AGREEMENT
The following is a summary of the material provisions of our partnership
agreement.
ORGANIZATION AND PARTNERS
We are a general partnership that was formed as of March 9, 1978 under the
Uniform Partnership Act as then in effect in the State of Texas. Our address is
1111 South 103rd Street, Omaha, Nebraska 68124-1000, and our telephone number is
(402) 398-7700.
PURPOSE
Our purpose under the partnership agreement is limited to the planning,
design, financing, construction, ownership and operation of the pipeline system,
together with all related properties and facilities, and any extensions,
expansions, additions or other improvements thereto. Unless all of our partners
agree otherwise, the purpose clause has the effect of restricting us from
constructing or acquiring additional natural gas transmission assets, other than
those that constitute an expansion, extension, addition or improvement of the
pipeline system, and from expanding the scope of our activities beyond the
natural gas transmission business.
MANAGEMENT AND VOTING
Except for the day-to-day management of our affairs and the operation of
the pipeline system, which are the responsibility of the operator, our
management is overseen by the management committee.
Under our partnership agreement, voting power on the management committee
is presently allocated among Northern Border Partners' three representatives in
proportion to their general partner interests in Northern Border Partners. As a
result, the 70% voting power of Northern Border Partners' three representatives
on the management committee is allocated as follows: 35% to Northern Plains
Natural Gas Company, 22.75% to Pan Border Gas Company and 12.25% to Northwest
Border Pipeline Company. Each of Northern Plains, Pan Border and Northwest
Border has the right to select one member of the management committee. Northern
Plains and Pan Border are subsidiaries of Enron Corp. Therefore, Enron controls
57.75% of the voting power of the management committee and has the right to
select two of the members of the management committee. Northwest Border is a
subsidiary of The Williams Companies, Inc.
Generally, our management committee will act by majority vote. However,
unanimity will be required with respect to the following matters, among other
things:
- expansions or extensions of our pipeline system requiring capital
expenditures in an amount requiring certification of those facilities by
the FERC, currently $19.8 million or more;
- settlement of cases brought under Section 4 or 5 of the Natural Gas Act;
- some transfers of general partner interests; and
- any change in, or suspension of, our cash distribution policy.
If, however, all but one of the members of our management committee vote in
favor of a matter requiring unanimous approval, other than transfers of general
partner interests, any one of the partners voting in favor of the matter has the
right to submit the matter to an arbitration panel. The arbitration panel will
be composed of three independent natural gas industry experts, one appointed by
the members voting in favor of the matter, one appointed by the dissenting
member and a third appointed by the two experts. The arbitration panel will
determine if we should proceed with the disputed matter, using our best
interests as its sole criteria. If the panel concludes that approval of the
matter before it is in our best interests, the matter will be deemed to have
received unanimous approval despite the disapproving vote of the dissenting
member.
OPERATOR
Our partnership agreement designates Northern Plains as the operator of the
pipeline system. Northern Plains' rights and obligations as operator are
provided for in our partnership agreement and in a separate operating agreement
between Northern Plains and us. The initial term of the operating agreement
expires in 2007. The operating
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<PAGE> 63
agreement will continue in effect thereafter on a year-to-year basis unless
terminated by us or Northern Plains upon six months written notice by either
party. Substantially all of the services provided by the operator are provided
by employees of Northern Plains who devote their time to our day-to-day
operations.
Our partnership agreement states that Northern Plains may be removed as
operator by unanimous vote of the members of our management committee, other
than the member appointed by Northern Plains. If the total number of members on
our management committee has increased to five or more members, Northern Plains
may be removed as operator by the vote of members representing 65% or more of
the total general partnership interest in support of a finding that the operator
has, through misfeasance, nonfeasance or gross negligence, acted in a manner
contrary to our best interests.
The operator is entitled to reimbursement for all reasonable costs,
including overhead and administrative expenses, incurred by it and its
affiliates in connection with the performance of its responsibilities as
operator. In addition, we have agreed to indemnify the operator against any
claims and liabilities arising out of the good faith performance by the operator
of its responsibilities under our partnership agreement, to the extent the
operator is acting within the scope of its authority and in the course of our
business.
CASH DISTRIBUTION POLICY
In general, our partnership agreement provides that distributions to our
partners are to be made on a proportionate basis according to each partner's
capital account balance. The amount and timing of distributions are determined
by our management committee. Any changes to, or suspension of, our cash
distribution policy requires the unanimous approval of our management committee,
subject to arbitration in the event three of the four members of our management
committee vote in favor of the change or suspension. See "-- Management and
Voting" above.
Our cash distribution policy as currently approved by our management
committee provides that we are to make distributions quarterly in an amount
equal to the previous quarter's sum, if positive, of the following, determined
on a regulatory basis of accounting:
(1) 100% of net income generated during the quarter, excluding
specific noncash items, plus
(2) 100% of the current portion of any allowance for income taxes for
that quarter, plus
(3) an amount equal to 35% of the sum of deferred tax expense,
depreciation expense, amortization of regulatory assets, or minus, in the
case of amortization of regulatory liabilities, for that quarter, each as
computed under our tariff, minus
(4) an amount equal to 35% of maintenance capital expenditures for
that quarter.
If an amount determined by this formula is negative, then the negative
amount is carried forward and subtracted in the calculation for the next
quarter. Decisions regarding cash distributions could affect our ability to
repay long-term indebtedness.
AUDIT AND COMPENSATION COMMITTEE
Our partnership agreement authorizes each representative on our management
committee other than Northern Plains, if Northern Plains or its affiliate is the
operator, to appoint one member to serve on a three member audit and
compensation committee. No member of the committee may also be an officer,
director or employee of the operator, which is currently Northern Plains, or of
any affiliate thereof. The audit and compensation committee is responsible for
all matters relating to any of our audits and review of the compensation of the
operator's senior management and reimbursement of the operator for its costs and
expenses relating to personnel. The audit and compensation committee is
obligated to report to our management committee on an annual basis with respect
to these matters.
ALLOCATION OF INCOME, GAIN, LOSS AND DEDUCTION
Our partnership agreement provides that, if we have a net profit or a net
loss, items of income, gain, loss and deduction will be allocated to the
particular capital accounts of the partners in
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<PAGE> 64
accordance with their particular general partnership interests, that are based
on relative capital account balances.
TRANSFER OF INTERESTS
Generally, our general partners are not permitted to transfer their general
partner interests, or any indebtedness owed to them by us, without the unanimous
consent of our management committee. Each general partner may, however, encumber
its interests in our profits and surplus, and any indebtedness, and transfer its
interest in us, or any indebtedness, to a corporation that is an affiliate of
the transferor in connection with a statutory merger with the corporation or
sale of all or substantially all of its assets to the corporation.
ADDITIONAL CAPITAL REQUIREMENTS
Our partnership agreement provides that our management committee may
request additional capital contributions from our general partners. Each general
partner has the right, but not the obligation, to contribute its pro rata
portion of the total amount of additional contributions requested. If a partner
elected not to make the additional contribution, its general partnership
interest would be diluted.
CHANGE TO CORPORATE FORM
Our partnership agreement provides that, under some circumstances, our
business and assets will be transferred to a corporation in which each partner
would receive shares of stock sufficient to give it an ownership interest in the
corporation that is equal to its then existing ownership interest. The transfer
will occur automatically if it becomes unlawful for us to carry on our business
and we hold an effective certificate of public convenience and necessity from
the FERC at that time.
Our general partners may also cause a transfer to a corporation upon the
approval of partners owning at least a two-thirds general partnership interest.
WITHDRAWAL OF GENERAL PARTNERS
Our general partners have the right to withdraw. If they do, the
withdrawing partner's capital account is treated as our contingent liability to
be repaid on our liquidation or at any other time as our management committee
determines that the amount may be repaid without undue hardship to us.
INDEMNIFICATION
Under the terms of our partnership agreement, we have agreed to indemnify
the operator and the members of our management committee and any other
committees established by that committee against any claims and liabilities
arising out of the good faith performance by these persons of their
responsibilities and obligations within the scope of their authority in the
course of our business. This indemnification includes indemnification in favor
of the members of the audit and compensation committee.
BUSINESS OPPORTUNITIES
Our partnership agreement provides that our partners, their affiliates and
transferees, will not have any duty to offer business opportunities to us, with
specified exceptions.
TERMINATION AND DISSOLUTION
Our partnership agreement provides that we will automatically dissolve
upon:
(1) the transfer of all of our business and assets to a corporation;
(2) the sale or abandonment of all or substantially all of our
business and assets, provided that this kind of sale or abandonment may be
made only by unanimous written consent of all general partners; or
(3) the occurrence of any event that makes it unlawful for our
business to be carried on. In addition to these automatic dissolution
events, we may be dissolved by unanimous consent of all of its partners,
upon the occurrence of a bankruptcy or similar event with respect to a
partner or the dissolution of a partner.
LIQUIDATION AND DISTRIBUTION OF PROCEEDS
Our partnership agreement provides that, following our dissolution, unless
we are reconstituted and continued under the terms of our
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<PAGE> 65
partnership agreement, our business and affairs will be wound up and our assets
liquidated in an orderly manner. Any amounts remaining upon satisfaction of our
obligations to our creditors will be distributed to the partners in accordance
with the positive balances in their particular capital accounts.
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<PAGE> 66
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC set forth in no action
letters issued to third parties, we believe that you may transfer new notes
issued under the exchange offer in exchange for existing notes unless you are:
- our "affiliate" within the meaning of Rule 405 under the Securities Act;
- a broker-dealer that acquired existing notes directly from us; or
- a broker-dealer that acquired existing notes as a result of market-making
or other trading activities without compliance with the registration and
prospectus delivery provisions of the Securities Act;
provided that you acquire the new notes in the ordinary course of your business
and you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a distribution
of the new notes. Broker-dealers receiving new notes in the exchange offer will
be subject to a prospectus delivery requirement with respect to resales of the
new notes.
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original sale of the
existing notes, with this prospectus. Pursuant to the registration rights
agreement, we have agreed to permit participating broker-dealers to use this
prospectus in connection with the resale of new notes.
If you wish to exchange your existing notes for new notes in the exchange
offer, you will be required to make certain representations to us as set forth
in "The Exchange Offer -- Exchange Terms" and "-- Procedures for Tendering
Existing Notes -- Other Matters" and in the letter of transmittal. In addition,
if you are a broker-dealer who receives new notes for your own account in
exchange for existing notes that were acquired by you as a result of
market-making activities or other trading activities, you will be required to
acknowledge that you will deliver a prospectus in connection with any resale by
you of those new notes. See "The Exchange Offer -- Resale of New Notes."
We will not receive any proceeds from any sale of new notes by
broker-dealers. Broker-dealers who receive new notes for their own account in
the exchange offer may sell them from time to time in one or more transactions
in the over-the-counter market:
- in negotiated transactions;
- through the writing of options on the new notes or a combination of such
methods of resale;
- at market prices prevailing at the time of resale; or
- at prices related to the prevailing market prices or negotiated prices.
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any new notes. Any broker-dealer
that resells new notes it received for its own account pursuant to the exchange
offer and any broker or dealer that participates in a distribution of new notes
may be deemed to be an "underwriter" within the meaning of the Securities Act,
and any profit on any resale of new notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The letter of transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers and will indemnify
holders of the existing notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act, as set forth in the
registration rights agreement.
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<PAGE> 67
LEGAL MATTERS
The validity of the new notes offered will be passed upon for us by Chapman
and Cutler, Chicago, Illinois.
EXPERTS
Our balance sheet as of December 31, 1998 and 1997, and the related
statements of income, changes in partners' capital and cash flows for each of
the three years in the period ended December 31, 1998, included in this
prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed a registration statement on Form S-4 with the SEC. This
prospectus, which forms a part of the registration statement, does not contain
all the information included in the registration statement. Certain information
is omitted and you should refer to the exhibits attached to the registration
statement, including exhibits filed with it, at the SEC's public reference
facilities in Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at the regional offices of the SEC. Please call the SEC at
1-800-SEC-0330 for more information on the public reference rooms. You may also
obtain copies of these materials from the public reference facilities of the
SEC, at prescribed rates. The SEC maintains a Web site (http:/www.sec.gov) that
contains reports, proxy and information statements and other information
regarding all registrants that file electronically with the SEC, and that would
include any filings we make with the SEC.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Balance Sheet -- June 30, 1999 (unaudited).................. F-2
Statement of Income -- Six months ended June 30, 1999 and
1998 (unaudited).......................................... F-3
Statement of Cash Flows -- Six months ended June 30, 1999
and 1998 (unaudited)...................................... F-4
Statement of Changes in Partners' Capital -- Six months
ended June 30, 1999 (unaudited)........................... F-5
Notes to Financial Statements (unaudited)................... F-6
Report of Independent Public Accountants.................... F-8
Balance Sheet -- December 31, 1998 and 1997................. F-9
Statement of Income -- Years ended December 31, 1998, 1997
and 1996.................................................. F-10
Statement of Cash Flows -- Years ended December 31, 1998,
1997 and 1996............................................. F-11
Statement of Changes in Partners' Capital -- Years ended
December 31, 1998, 1997 and 1996.......................... F-12
Notes to Financial Statements............................... F-13
</TABLE>
F-1
<PAGE> 69
NORTHERN BORDER PIPELINE COMPANY
BALANCE SHEET
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
<S> <C>
ASSETS
- ------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents................................. $ 25,913
Accounts receivable....................................... 26,415
Materials and supplies, at cost........................... 2,868
Under recovered cost of service........................... --
----------
Total current assets.............................. 55,196
----------
NATURAL GAS TRANSMISSION PLANT
In service................................................ 2,352,497
Construction work in progress............................. 5,527
----------
Total property, plant and equipment............... 2,358,024
Less: Accumulated provision for depreciation and
amortization........................................... 613,303
----------
Net property, plant and equipment................. 1,744,721
----------
OTHER ASSETS................................................ 13,295
----------
Total assets...................................... $1,813,212
==========
LIABILITIES AND PARTNERS' CAPITAL
- ------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable.......................................... $ 20,573
Accrued taxes other than income........................... 19,400
Accrued interest.......................................... 11,684
Over recovered cost of service............................ 4,123
----------
Total current liabilities......................... 55,780
----------
LONG-TERM DEBT.............................................. 912,000
----------
RESERVES AND DEFERRED CREDITS............................... 10,519
----------
PARTNERS' CAPITAL........................................... 834,913
----------
Total liabilities and partners' capital........... $1,813,212
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 70
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF INCOME
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 1998
-------- -------
<S> <C> <C>
OPERATING REVENUES.......................................... $146,657 $96,355
-------- -------
OPERATING EXPENSES
Operations and maintenance................................ 18,052 14,444
Depreciation and amortization............................. 25,680 19,788
Taxes other than income................................... 14,866 11,905
Regulatory credit......................................... -- (2,230)
-------- -------
Operating expenses................................ 58,598 43,907
-------- -------
OPERATING INCOME............................................ 88,059 52,448
-------- -------
INTEREST EXPENSE
Interest expense.......................................... 28,990 18,680
Interest expense capitalized.............................. (41) (6,211)
-------- -------
Interest expense, net............................. 28,949 12,469
-------- -------
OTHER INCOME
Allowance for equity funds used during construction....... 45 4,513
Other income, net......................................... 93 614
-------- -------
Other income...................................... 138 5,127
-------- -------
NET INCOME TO PARTNERS...................................... $ 59,248 $45,106
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 71
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1999 1998
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income to partners.................................... $ 59,248 $ 45,106
-------- ---------
Adjustments to reconcile net income to partners to net
cash provided by operating activities:
Depreciation and amortization.......................... 25,686 19,797
Allowance for equity funds used during construction.... (45) (4,513)
Regulatory credit...................................... -- (2,258)
Changes in components of working capital............... (2,517) (3,620)
Other.................................................. 883 212
-------- ---------
Total adjustments................................. 24,007 9,618
-------- ---------
Net cash provided by operating activities.............. 83,255 54,724
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant and equipment,
net.................................................... (76,958) (298,935)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners............................... -- 197,000
Distributions to partners................................. (67,773) (32,915)
Issuance of long-term debt................................ 65,000 90,000
Retirement of long-term debt.............................. (15,000) --
-------- ---------
Net cash provided by (used in) financing activities....... (17,773) 254,085
-------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS..................... (11,476) 9,874
Cash and cash equivalents -- beginning of period............ 37,389 19,986
-------- ---------
Cash and cash equivalents -- end of period.................. $ 25,913 $ 29,860
======== =========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest (net of amount capitalized).............. $ 28,845 $ 12,129
======== =========
Changes in components of working capital:
Accounts receivable.................................... (7,511) 1,701
Materials and supplies................................. 492 196
Accounts payable....................................... (1,895) 1,885
Accrued taxes other than income........................ (428) (1,930)
Accrued interest....................................... (79) 158
Over/under recovered cost of service................... 6,904 (5,630)
-------- ---------
Total............................................. $ (2,517) $ (3,620)
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 72
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
NORTHERN
TC PIPELINES BORDER
TRANSCANADA TRANSCAN INTERMEDIATE INTERMEDIATE TOTAL
BORDER NORTHERN LIMITED LIMITED PARTNERS'
PIPELINE LTD. LTD. PARTNERSHIP PARTNERSHIP CAPITAL
------------- --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Partners' Capital at December 31,
1998.............................. $ 50,606 $ 202,425 $ -- $590,407 $843,438
Net income to partners.............. 2,930 11,715 3,130 41,473 59,248
Distributions paid.................. (4,067) (16,265) -- (47,441) (67,773)
Ownership transfer.................. (48,330) (193,321) 241,651 -- --
-------- --------- -------- -------- --------
Partners' Capital at June 30,
1999.............................. $ 1,139 $ 4,554 $244,781 $584,439 $834,913
======== ========= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 73
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Northern Border Pipeline Company (Northern Border Pipeline) is a general
partnership and is subject to regulation by the Federal Energy Regulatory
Commission (FERC). The financial statements included herein have been prepared
by Northern Border Pipeline without audit in accordance with generally accepted
accounting principles. Certain information and footnote disclosures normally
included in annual financial statements have been condensed or omitted, although
Northern Border Pipeline believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements as of December
31, 1998, together with the report of independent public accountants thereon. In
the opinion of management, these statements reflect all adjustments which are
necessary for a fair statement of results for the interim periods.
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. Income taxes are the responsibility of the partners and are not reflected in
these financial statements. However, the Northern Border Pipeline tariff
establishes the method of accounting for and calculating income taxes and
requires Northern Border Pipeline to reflect in its cost of service the income
taxes which would have been paid or accrued if Northern Border Pipeline were
organized during the period as a corporation. As a result, for purposes of
calculating the return allowed by the FERC, partners' capital and rate base are
reduced by the amount equivalent to the net accumulated deferred income taxes.
Such amounts were $307.7 million and $300.0 million as of June 30, 1999 and
December 31, 1998, respectively, and are primarily related to accelerated
depreciation and other plant-related differences.
3. Accounts payable shown on the accompanying balance sheet includes
approximately $15.8 million and $37.4 million at June 30, 1999 and December 31,
1998, respectively, of project costs incurred but not paid on Northern Border
Pipeline's expansion and extension of its pipeline system that was placed into
service in late December 1998 (The Chicago Project). These costs are recorded in
natural gas transmission plant in service on the accompanying balance sheet and
are excluded from the changes in accounts payable and capital expenditures for
property, plant and equipment, net on the accompanying statement of cash flows.
4. In October 1998, Northern Border Pipeline filed a certificate application
with the FERC to seek approval to expand and extend its pipeline system into
Indiana by November 2000 (Project 2000). If approved and constructed, Project
2000 would afford shippers on the extended pipeline system access to industrial
gas consumers in northern Indiana. As a result of permanent releases of capacity
between several existing and project shippers originally included in the October
1998 application, Northern Border Pipeline amended its application with the FERC
in March 1999. Project 2000 revised capital expenditures are estimated to be
approximately $126 million.
Numerous parties have filed to intervene in this proceeding. Several
parties have protested this application asking that the FERC deny Northern
Border Pipeline's request for rolled-in rate treatment for the new facilities
and that Northern Border Pipeline be required to solicit indications of interest
from existing shippers for capacity releases that would possibly eliminate the
construction of certain new facilities.
5. Northern Border Pipeline filed a rate proceeding with the FERC in May 1999
for a redetermination of its allowed equity rate of return. In this proceeding,
Northern Border Pipeline proposed, among other things, to increase its allowed
equity rate of return. The total annual cost of service increase due to Northern
Border Pipeline's proposed changes is approximately $30 million. A number of
Northern Border Pipeline's shippers and competing pipelines have filed
interventions and protests. In June 1999, the FERC issued an order in which the
proposed changes were suspended until December 1, 1999, after which the proposed
changes will be implemented with subsequent billings subject to refund. The
order set for hearing not only Northern Border Pipeline's proposed changes but
also several issues raised by intervenors including the appropriateness of
F-6
<PAGE> 74
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Northern Border Pipeline's cost of service tariff, depreciation schedule and
creditworthiness standards. A procedural schedule has been established which
calls for the hearing to commence in July 2000.
6. As agreed to in a Stipulation and Agreement (Stipulation) to settle its
November 1995 rate case, Northern Border Pipeline implemented a capital project
cost containment mechanism (PCCM). The purpose of the PCCM was to limit Northern
Border Pipeline's ability to include cost overruns on The Chicago Project in
rate base and to provide incentives to Northern Border Pipeline for cost
underruns. The PCCM amount is determined by comparing the final cost of The
Chicago Project to the budgeted cost. The Stipulation required the budgeted cost
for The Chicago Project, which had been initially filed with the FERC for
approximately $839 million, to be adjusted for the effects of inflation and
project scope changes, as defined in the Stipulation. Such adjusted budgeted
cost of The Chicago Project has been estimated to be $897 million, with the
final construction cost estimated to be $894 million. Thus, Northern Border
Pipeline's notification to the FERC and its shippers in its June 1999 report,
reflects the conclusion that there is a $3 million addition to rate base as a
result of the PCCM. The Stipulation requires the calculation of the PCCM to be
reviewed by an independent national accounting firm. Several parties to the
Stipulation have advised the FERC that they may have questions and desire
further information about the report, and may possibly wish to test it and its
conclusions in an appropriate proceeding in the future. The parties also stated
that if it is determined that Northern Border Pipeline is not permitted to
include certain claimed costs for The Chicago Project in its rate base, they
reserve their rights to seek refunds, with interest, of any overcollections.
Although Northern Border Pipeline believes the computation has been made in
accordance with the terms of the Stipulation, it is unable to predict at this
time whether any adjustments will be required. Later developments may prevent
recovery of amounts originally calculated under the PCCM, which may result in a
non-cash charge to write down transmission plant and that charge could be
material to the operating results of Northern Border Pipeline.
7. Effective May 28, 1999, TransCanada Border PipeLine Ltd. and TransCan
Northern Ltd. transferred their combined 30% ownership interest in Northern
Border Pipeline to TC PipeLines Intermediate Limited Partnership. In accordance
with the partnership agreement, net income and distributions were prorated at
the effective date of the ownership transfer. The partners' capital balance for
TransCanada Border PipeLine Ltd. and TransCan Northern Ltd. at June 30, 1999
represents the amount of distribution that was paid August 3, 1999.
8. Northern Border Pipeline makes distributions to its general partners
approximately one month following the end of the quarter. The distribution
computed for the second quarter of 1999 of approximately $30.1 million was paid
August 3, 1999.
F-7
<PAGE> 75
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management Committee of
Northern Border Pipeline Company:
We have audited the accompanying balance sheet of Northern Border Pipeline
Company (a Texas partnership) as of December 31, 1998 and 1997, and the related
statements of income, cash flows and changes in partners' capital for each of
the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northern Border Pipeline
Company as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Omaha, Nebraska
January 19, 1999
F-8
<PAGE> 76
NORTHERN BORDER PIPELINE COMPANY
BALANCE SHEET
(In Thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 37,389 $ 19,986
Accounts receivable....................................... 16,434 15,557
Related party receivables................................. 2,470 1,780
Materials and supplies, at cost........................... 3,360 3,677
Under recovered cost of service........................... 2,781 --
---------- ----------
Total current assets.............................. 62,434 41,000
---------- ----------
NATURAL GAS TRANSMISSION PLANT
In service................................................ 2,302,457 1,497,743
Construction work in progress............................. 1,530 211,378
---------- ----------
Total property, plant and equipment............... 2,303,987 1,709,121
Less: Accumulated provision for depreciation and
amortization........................................... 589,464 608,231
---------- ----------
Net property, plant and equipment................. 1,714,523 1,100,890
---------- ----------
OTHER ASSETS................................................ 13,932 5,230
---------- ----------
Total assets...................................... $1,790,889 $1,147,120
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable.......................................... $ 44,042 $ 61,618
Accrued taxes other than income........................... 19,828 20,294
Accrued interest.......................................... 11,763 10,367
Over recovered cost of service............................ -- 4,601
---------- ----------
Total current liabilities......................... 75,633 96,880
---------- ----------
LONG-TERM DEBT.............................................. 862,000 459,000
---------- ----------
RESERVES AND DEFERRED CREDITS............................... 9,818 9,828
---------- ----------
PARTNERS' CAPITAL........................................... 843,438 581,412
---------- ----------
Total liabilities and partners' capital........... $1,790,889 $1,147,120
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE> 77
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
OPERATING REVENUES
Operating revenues........................................ $196,600 $226,019 $214,103
Provision for rate refunds................................ -- (39,969) (12,160)
-------- -------- --------
Operating revenues, net........................... 196,600 186,050 201,943
-------- -------- --------
OPERATING EXPENSES
Operations and maintenance................................ 29,447 28,522 26,974
Depreciation and amortization............................. 40,989 38,708 46,979
Taxes other than income................................... 21,381 22,393 24,390
Regulatory credit......................................... (8,878) -- --
-------- -------- --------
Operating expenses................................ 82,939 89,623 98,343
-------- -------- --------
OPERATING INCOME............................................ 113,661 96,427 103,600
-------- -------- --------
INTEREST EXPENSE
Interest expense.......................................... 44,542 33,020 33,117
Interest expense capitalized.............................. (19,001) (3,660) (447)
-------- -------- --------
Interest expense, net............................. 25,541 29,360 32,670
-------- -------- --------
OTHER INCOME
Allowance for equity funds used during construction....... 10,237 1,400 396
Other income, net......................................... 1,874 4,305 2,517
-------- -------- --------
Other income...................................... 12,111 5,705 2,913
-------- -------- --------
NET INCOME TO PARTNERS...................................... $100,231 $ 72,772 $ 73,843
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 78
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income to partners................................... $ 100,231 $ 72,772 $ 73,843
--------- --------- ---------
Adjustments to reconcile net income to partners to net
cash provided by operating activities:
Depreciation and amortization......................... 41,005 38,715 47,010
Allowance for equity funds used during construction... (10,237) (1,400) (396)
Regulatory credit..................................... (9,105) -- --
Provision for billings subject to refund.............. -- 40,403 12,227
Refunds to shippers................................... -- (52,630) --
Changes in components of working capital.............. (18,471) 16,389 5,452
Other................................................. 354 1,079 (1,328)
--------- --------- ---------
Total adjustments................................ 3,546 42,556 62,965
--------- --------- ---------
Net cash provided by operating activities............. 103,777 115,328 136,808
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant and equipment,
net................................................... (651,169) (152,070) (18,597)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners.............................. 223,000 81,000 --
Distributions to partners................................ (61,205) (99,322) (102,845)
Issuance of long-term debt............................... 403,000 209,000 --
Retirement of long-term debt............................. -- (127,500) (32,500)
Borrowings on (repayment of) note payable................ -- (10,000) 10,000
Long-term debt financing costs........................... -- (744) --
--------- --------- ---------
Net cash provided by (used in) financing
activities..................................... 564,795 52,434 (125,345)
--------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS.................... 17,403 15,692 (7,134)
Cash and cash equivalents -- beginning of period......... 19,986 4,294 11,428
--------- --------- ---------
Cash and cash equivalents -- end of period............... $ 37,389 $ 19,986 $ 4,294
========= ========= =========
Changes in components of working capital:
Accounts receivable................................... $ (1,567) $ 1,927 $ 931
Materials and supplies................................ 317 170 218
Accounts payable...................................... (10,769) 14,587 1,673
Accrued taxes other than income....................... (466) (674) 1,065
Accrued interest...................................... 1,396 14 (163)
Over/under recovered cost of service.................. (7,382) 365 1,728
--------- --------- ---------
Total............................................ $ (18,471) $ 16,389 $ 5,452
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE> 79
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(In Thousands)
<TABLE>
<CAPTION>
NORTHERN
BORDER
TRANSCANADA TRANSCAN INTERMEDIATE TOTAL
BORDER NORTHERN LIMITED PARTNERS'
PIPELINE LTD. LTD. PARTNERSHIP CAPITAL
------------- -------- ------------ ---------
<S> <C> <C> <C> <C>
Partners' Capital at December 31, 1995......... $ 88,954 $ 77,835 $389,175 $ 555,964
Net income to partners......................... 11,237 10,916 51,690 73,843
Distributions paid............................. (13,936) (16,917) (71,992) (102,845)
Ownership transfer............................. (54,637) 54,637 -- --
-------- -------- -------- ---------
Partners' Capital at December 31, 1996......... 31,618 126,471 368,873 526,962
Net income to partners......................... 4,366 17,466 50,940 72,772
Contributions received......................... 4,860 19,440 56,700 81,000
Distributions paid............................. (5,959) (23,838) (69,525) (99,322)
-------- -------- -------- ---------
Partners' Capital at December 31, 1997......... 34,885 139,539 406,988 581,412
Net income to partners......................... 6,014 24,055 70,162 100,231
Contributions received......................... 13,380 53,520 156,100 223,000
Distributions paid............................. (3,673) (14,689) (42,843) (61,205)
-------- -------- -------- ---------
Partners' Capital at December 31, 1998......... $ 50,606 $202,425 $590,407 $ 843,438
======== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE> 80
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND MANAGEMENT
Northern Border Pipeline Company (Northern Border Pipeline) is a general
partnership, formed March 9, 1978, pursuant to the Texas Uniform Partnership
Act. The ownership percentages of the partners in Northern Border Pipeline
(Partners) at both December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
OWNERSHIP
PARTNER PERCENTAGE
------- ----------
<S> <C>
Northern Border Intermediate Limited Partnership............ 70
TransCan Northern Ltd....................................... 24
TransCanada Border PipeLine Ltd............................. 6
</TABLE>
Northern Border Pipeline owns a 1,214-mile natural gas transmission
pipeline system extending from the United States-Canadian border near Port of
Morgan, Montana, to a terminus near Manhattan, Illinois.
Northern Border Pipeline is managed by a Management Committee that includes
three representatives from Northern Border Intermediate Limited Partnership
(Partnership) and one representative from TransCanada Border PipeLine Ltd. and
TransCan Northern Ltd. (collectively TransCanada), both of which are
wholly-owned subsidiaries of TransCanada PipeLines Limited. The Partnership's
representatives selected by its general partners, Northern Plains Natural Gas
Company (Northern Plains), a wholly-owned subsidiary of Enron Corp. (Enron), Pan
Border Gas Company (Pan Border), a wholly-owned subsidiary of Northern Plains,
and Northwest Border Pipeline Company, a wholly-owned subsidiary of The Williams
Companies, Inc., have 35%, 22.75% and 12.25%, respectively, of the voting
interest on the Management Committee. The representative designated by
TransCanada votes the remaining 30% interest. In December 1998, Northern Plains
acquired Pan Border from a subsidiary of Duke Energy Corporation. At the
closing, Pan Border's sole asset consisted of its general partner interest in
the Partnership. The day-to-day management of Northern Border Pipeline's affairs
is the responsibility of Northern Plains (the Operator), as defined by the
operating agreement between Northern Border Pipeline and Northern Plains.
Northern Border Pipeline is charged for the salaries, benefits and expenses of
the Operator. Substantially all of the operations and maintenance expenses are
paid to the Operator and other Enron affiliates. Additionally, an Enron
affiliate was responsible for project management on Northern Border Pipeline's
expansion and extension of its pipeline from near Harper, Iowa to a point near
Manhattan, Illinois (The Chicago Project) (see Note 5).
Net income and distributions are allocated based on ownership percentages.
Effective December 1, 1996, TransCan Northern Ltd. purchased a portion of the
TransCanada Border PipeLine Ltd. equity ownership in Northern Border Pipeline.
The net income and distributions are reflected in the capital account balances
at their new ownership interests from that date forward.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Northern Border Pipeline is subject to regulation by the Federal Energy
Regulatory Commission (FERC). Northern Border Pipeline's accounting policies
conform to generally accepted accounting principles, as applied in the case of
regulated entities.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(A) Property, Plant and Equipment and Related Depreciation and
Amortization. Property, plant and equipment is stated at original cost.
Construction work in progress shown on the accompanying balance sheet includes
approximately $197.9 million at December 31, 1997, of project-to-date costs on
The Chicago
F-13
<PAGE> 81
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Project. In December 1998, Northern Border Pipeline placed into service the
facilities for The Chicago Project. At December 31, 1998 and 1997, approximately
$37.4 million and $44.2 million, respectively, of project costs incurred but not
paid for The Chicago Project were recorded in accounts payable and natural gas
transmission plant on the balance sheet and were excluded from the change in
accounts payable and expenditures for property, plant and equipment, net on the
statement of cash flows.
Maintenance and repairs are charged to operations in the period incurred.
The provision for depreciation and amortization of the transmission line is an
integral part of Northern Border Pipeline's FERC tariff. The effective
depreciation rate applied to Northern Border Pipeline's gross transmission plant
in 1998, 1997 and 1996 was 2.5%, 2.5% and 3.1%, respectively (see Note 5). At
the time The Chicago Project was placed into service, Northern Border Pipeline's
depreciation rate was reduced to 2.0%. Beginning in the year 2000, the
depreciation rate is scheduled to increase gradually on an annual basis until it
reaches 3.2% in 2002. Composite rates are applied to all other functional groups
of property having similar economic characteristics.
The original cost of property retired is charged to accumulated
depreciation and amortization, net of salvage and cost of removal. No retirement
gain or loss is included in income except in the case of extraordinary
retirements or sales.
(B) Income Taxes. Income taxes are the responsibility of the Partners and
are not reflected in these financial statements. However, the Northern Border
Pipeline FERC tariff establishes the method of accounting for and calculating
income taxes and requires Northern Border Pipeline to reflect in its cost of
service the income taxes which would have been paid or accrued if Northern
Border Pipeline were organized during the period as a corporation. As a result,
for purposes of calculating the return allowed by the FERC, Partners' capital
and rate base are reduced by the amount equivalent to the net accumulated
deferred income taxes. Such amounts were approximately $300 million at both
December 31, 1998 and 1997, and are primarily related to accelerated
depreciation and other plant-related differences.
(C) Revenue Recognition. Northern Border Pipeline bills the cost of service
on an estimated basis for a six month cycle. Any net excess or deficiency
resulting from the comparison of the actual cost of service determined for that
period in accordance with the FERC tariff to the estimated billing is
accumulated, including carrying charges thereon and is either billed to or
credited back to the shippers. Revenues reflect actual cost of service. An
amount equal to differences between billing estimates and the actual cost of
service, including carrying charges, is reflected in current assets or current
liabilities.
(D) Allowance for Funds Used During Construction. The allowance for funds
used during construction (AFUDC) represents the estimated costs, during the
period of construction, of funds used for construction purposes. For regulated
activities, Northern Border Pipeline is permitted to earn a return on and
recover AFUDC through its inclusion in rate base and the provision for
depreciation. The rate employed for the equity component of AFUDC is the equity
rate of return stated in Northern Border Pipeline's FERC tariff.
(E) Cash and Cash Equivalents. Cash equivalents consist of highly liquid
investments with original maturities of three months or less. The carrying
amount of cash and cash equivalents approximates fair value because of the short
maturity of these investments.
(F) Risk Management. Financial instruments are used by Northern Border
Pipeline in the management of its interest rate exposure. A control environment
has been established which includes policies and procedures for risk assessment
and the approval, reporting and monitoring of financial instrument activities.
As a result, Northern Border Pipeline has entered into various interest rate
swap agreements with major financial institutions which hedge interest rate risk
by effectively converting certain of its floating rate debt to fixed rate debt.
Additionally, Northern Border Pipeline has entered into interest rate forward
agreements to hedge the interest rate on a planned issuance of fixed rate debt.
Northern Border Pipeline does not use these
F-14
<PAGE> 82
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
instruments for trading purposes. The cost or benefit of the interest rate swap
agreements is recognized currently as a component of interest expense. No cost
or benefit is currently associated with the interest rate forward agreements.
3. SHIPPER SERVICE AGREEMENTS
Operating revenues are collected pursuant to the FERC tariff which directs
that Northern Border Pipeline collect its cost of service through firm
transportation service agreements (firm service agreements). Northern Border
Pipeline's FERC tariff provides an opportunity to recover all operations and
maintenance costs of the pipeline, taxes other than income taxes, interest,
depreciation and amortization, an allowance for income taxes and a regulated
equity return. Billings for the firm service agreements are based on contracted
volumes to determine the allocable share of cost of service and are not
dependent upon the percentage of available capacity actually used.
Northern Border Pipeline's firm service agreements extend for various terms
with termination dates that range from October 2001 to December 2013. Northern
Border Pipeline also has interruptible service contracts with numerous other
shippers as a result of its self-implementing blanket transportation authority.
Revenues received from the interruptible service contracts are credited to the
cost of service reducing the billings for the firm service agreements.
Northern Border Pipeline's largest shipper, Pan-Alberta Gas (U.S.) Inc.
(PAGUS), is presently obligated for approximately 26.5% of the cost of service
through three firm service agreements which expire in October 2003. FERC
approval is required for the extension of one of the firm service agreements,
relating to approximately 6.5% of the cost of service, beyond October 2001.
Financial guarantees exist through October 2001 for approximately 17.0% of the
total cost of service related to the contracted capacity of PAGUS, including
10.5% guaranteed by Northern Natural Gas Company, a wholly-owned subsidiary of
Enron. The remaining cost of service obligation of PAGUS is supported by various
credit support arrangements, including among others, a letter of credit, an
escrow account and an upstream capacity transfer agreement. Operating revenues
from the PAGUS firm service agreements and interruptible service contracts for
the years ended December 31, 1998, 1997 and 1996 were $87.3 million, $86.8
million and $95.7 million, respectively.
Shippers affiliated with the Partners of Northern Border Pipeline have firm
service agreements representing approximately 16.9% of the cost of service.
These firm service agreements extend for various terms with termination dates
that range from October 2003 to May 2009. Operating revenues from the affiliated
firm service agreements and interruptible service contracts for the years ended
December 31, 1998, 1997 and 1996 were $22.4 million, $20.2 million and $21.4
million, respectively.
4. CREDIT FACILITIES AND LONG-TERM DEBT
Detailed information on long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
(THOUSANDS OF DOLLARS) 1998 1997
- ---------------------- -------- --------
<S> <C> <C>
Senior notes -- average 8.43%, due from 2000 to 2003........ $250,000 $250,000
Pipeline Credit Agreement
Five-year revolving credit facility....................... 127,500 127,500
Three-year revolving credit facility...................... 484,500 81,500
-------- --------
Total............................................. $862,000 $459,000
======== ========
</TABLE>
In June 1997, Northern Border Pipeline entered into a credit agreement
(Pipeline Credit Agreement) with certain financial institutions to borrow up to
an aggregate principal amount of $750 million. The
F-15
<PAGE> 83
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. CREDIT FACILITIES AND LONG-TERM DEBT-- (CONTINUED)
Pipeline Credit Agreement is comprised of a $200 million five-year revolving
credit facility to be used for the retirement of Northern Border Pipeline's
existing bank loan agreement and for general business purposes, and a $550
million three-year revolving credit facility to be used for the construction of
The Chicago Project. The three-year revolving credit facility may be converted
to a term loan maturing in June 2002 once certain conditions are met. The
Pipeline Credit Agreement permits Northern Border Pipeline to choose among
various interest rate options, to specify the portion of the borrowings to be
covered by specific interest rate options and to specify the interest rate
period, subject to certain parameters. Northern Border Pipeline is required to
pay a facility fee on the aggregate principal amount of $750 million.
At both December 31, 1998 and 1997, Northern Border Pipeline had
outstanding interest rate swap agreements with notional amounts of $90 million.
Under the agreements, which have a remaining average maturity of approximately
one year as of December 31, 1998, Northern Border Pipeline makes payments to
counterparties at fixed rates and in return receives payments at variable rates
based on the London Interbank Offered Rate. At both December 31, 1998 and 1997,
Northern Border Pipeline was in a payable position relative to its
counterparties. The average effective interest rate of Northern Border
Pipeline's variable rate debt, taking into consideration the interest rate swap
agreements, was 6.17% and 7.09% at December 31, 1998 and 1997, respectively.
During September 1998, Northern Border Pipeline executed interest rate
forward agreements with an aggregate notional amount of $150 million to hedge
the interest rate for a planned issuance of fixed rate debt during 1999. The
average reference interest rate on the agreements, based on ten-year U.S.
Treasury Notes, is 4.90%.
Interest paid, net of amounts capitalized, during the years ended December
31, 1998, 1997 and 1996 was $23.8 million, $29.0 million and $31.9 million,
respectively.
Aggregate required repayments of long-term debt are as follows: $66
million, $41 million, $690 million and $65 million for 2000, 2001, 2002 and
2003, respectively. There are no required repayment obligations for 1999. The
aggregate required repayments reflect Northern Border Pipeline's intent and
ability to convert the three-year revolving credit facility to a term loan.
Certain of Northern Border Pipeline's long-term debt and credit
arrangements contain requirements as to the maintenance of minimum partners'
capital and debt to capitalization ratios which restrict the incurrence of other
indebtedness by Northern Border Pipeline and also place certain restrictions on
distributions to the partners of Northern Border Pipeline. Under the most
restrictive of the covenants, as of December 31, 1998 and 1997, respectively,
$173 million and $81 million of partners' capital of Northern Border Pipeline
could be distributed.
The following estimated fair values of financial instruments represent the
amount at which each instrument could be exchanged in a current transaction
between willing parties. Based on quoted market prices for similar issues with
similar terms and remaining maturities, the estimated fair value of the senior
notes was approximately $287 million and $276 million at December 31, 1998 and
1997, respectively. At both December 31, 1998 and 1997, the estimated fair value
which would be payable to terminate the interest rate swap agreements, taking
into account current interest rates, was approximately $3 million. The estimated
fair value which would be payable to terminate the interest rate forward
agreements, taking into account current interest rates, was approximately $3
million at December 31, 1998. Northern Border Pipeline presently intends to
maintain the current schedule of maturities for the senior notes and the
interest rate swap agreements which will result in no gains or losses on their
respective repayment. The carrying value of Northern Border Pipeline's variable
rate debt approximates the fair value since the interest rates are periodically
adjusted to current market conditions.
F-16
<PAGE> 84
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES
Regulatory Proceedings. In October 1998, Northern Border Pipeline filed a
certificate application with the FERC to seek approval to expand and extend its
pipeline system into Indiana by November 2000 (Project 2000). Project 2000 would
afford shippers on the extended pipeline system access to industrial gas
consumers in northern Indiana. Project 2000 capital expenditures are estimated
at $130 million.
In January 1998, Northern Border Pipeline filed an application with the
FERC to acquire the linepack gas required to operate the pipeline from the
shippers and to provide the linepack gas in the future for its operations. The
cost of the linepack gas acquired in 1998, which is included in rate base,
totaled approximately $11.7 million.
In August 1997, Northern Border Pipeline received FERC approval of a
Stipulation and Agreement (Stipulation) filed on October 15, 1996 to settle its
November 1995 rate case. Northern Border Pipeline filed the rate case, in
compliance with its FERC tariff, for the determination of its allowed equity
rate of return and was permitted, pursuant to a December 1995 FERC order, to
begin collecting the requested increase in the equity rate of return effective
June 1, 1996, subject to refund. In accordance with the terms of the
Stipulation, Northern Border Pipeline's allowed equity rate of return was
reduced from the requested 14.25% to 12.75% for the period June 1, 1996 to
September 30, 1996 and to 12% thereafter. Additionally, the Stipulation reduced
the effective depreciation rate applied to Northern Border Pipeline's gross
transmission plant from 3.6% to 2.7% for the period June 1, 1996 to December 31,
1996, which resulted in an average effective depreciation rate of 3.1% for the
year ended December 31, 1996. Beginning January 1, 1997, the depreciation rate
was reduced to 2.5%. In October 1997, Northern Border Pipeline used a
combination of cash on hand and borrowings on a revolving credit facility to pay
refunds to its shippers of approximately $52.6 million. Under the terms of the
Stipulation, Northern Border Pipeline agreed to further reduce its depreciation
rate to 2.0% and agreed to implement a $31 million settlement adjustment
mechanism (SAM) when The Chicago Project was placed in service. The SAM
effectively reduces the allowed return on rate base.
Also as agreed to in the Stipulation, Northern Border Pipeline implemented
a capital project cost containment mechanism (PCCM). The purpose of the PCCM was
to limit Northern Border Pipeline's ability to include cost overruns on The
Chicago Project in rate base and to provide incentives to Northern Border
Pipeline for cost underruns. The PCCM amount is determined by comparing the
final cost of The Chicago Project to the budgeted cost. The Stipulation required
the budgeted cost for The Chicago Project, which had been initially filed with
the FERC for approximately $839 million, to be adjusted for the effects of
inflation and project scope changes, as defined in the Stipulation. Such
adjusted budgeted cost of The Chicago Project has been estimated as of the in
service date to be $889 million, with the final construction cost estimated to
be $892 million. Thus, Northern Border Pipeline's report to the FERC and its
shippers in late December 1998, reflected the conclusion that, based on
information as of that date, there would be no adjustment to rate base as a
result of the PCCM. Northern Border Pipeline is obligated by the Stipulation to
update its calculation of the PCCM six months after the in service date of The
Chicago Project. The Stipulation requires the calculation of the PCCM to be
reviewed by an independent national accounting firm. Several parties to the
Stipulation have advised the FERC that they may have questions and desire
further information about the report, and may possibly wish to test it (or the
final report) and its conclusions in an appropriate proceeding in the future.
The parties also stated that if it is determined that Northern Border Pipeline
is not permitted to include certain claimed costs for The Chicago Project in its
rate base, they reserve their rights to seek refunds, with interest, of any
overcollections. Although Northern Border Pipeline believes the initial
computation has been made in accordance with the terms of the Stipulation, it is
unable to make a definitive determination at this time whether any adjustments
will be required. Should subsequent developments cause costs not to be recovered
pursuant to the PCCM, a non-cash charge to write down transmission plant may
result and such charge could be material to the operating results of Northern
Border Pipeline.
F-17
<PAGE> 85
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
During the construction of The Chicago Project, Northern Border Pipeline
placed certain new facilities into service in advance of the December 1998 in
service date to maintain gas flow at firm contracted capacity while existing
facilities were being modified. As required by the certificate of public
convenience and necessity issued by the FERC, Northern Border Pipeline recorded
a regulatory credit of approximately $8.9 million in 1998, which is reflected on
the statement of income. The regulatory credit results in a deferral of the cost
of service of these new facilities. The regulatory asset that resulted from the
cost of service deferral is included with Other Assets on the balance sheet at
December 31, 1998. Northern Border Pipeline is allowed to recover the regulatory
asset from its shippers over a ten-year period commencing with the in service
date of The Chicago Project.
Environmental Matters. Northern Border Pipeline is not aware of any
material contingent liabilities with respect to compliance with applicable
environmental laws and regulations.
Other. Various legal actions that have arisen in the ordinary course of
business are pending. Northern Border Pipeline believes that the resolution of
these issues will not have a material adverse impact on Northern Border
Pipeline's results of operations or financial position.
6. CAPITAL EXPENDITURE PROGRAM
Total capital expenditures for 1999 are estimated to be $131 million. This
includes approximately $30 million for Project 2000 (see Note 5), approximately
$85 million for The Chicago Project and approximately $16 million for renewals
and replacements of the existing facilities. Approximately $37 million of the
capital expenditures for The Chicago Project is for construction completed in
1998. Funds required to meet the 1999 capital expenditures are anticipated to be
provided primarily from debt borrowings and internal sources.
F-18
<PAGE> 86
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, ANY INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
THESE SECURITIES IN ANY CIRCUMSTANCES IN WHICH THIS OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE UNDER THIS
PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF NORTHERN BORDER PIPELINE COMPANY SINCE THE DATE
OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
- --------------------------------------------------------------------------------
NORTHERN BORDER PIPELINE COMPANY
OFFER TO EXCHANGE UP TO $200,000,000 OF
7.75% SENIOR NOTES DUE 2009, SERIES A
FOR ANY AND ALL OUTSTANDING
7.75% SENIOR NOTES DUE 2009
---------------------------
PROSPECTUS
, 1999
---------------------------
- --------------------------------------------------------------------------------
DEALER PROSPECTUS DELIVERY OBLIGATIONS. UNTIL , 2000, ALL
DEALERS THAT EFFECT TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND REGARDING THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 87
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF MANAGEMENT COMMITTEE MEMBERS.
Under the terms of the Northern Border Pipeline Company Partnership
Agreement, the registrant has agreed to indemnify the members of its management
committee and any other committees established by that committee against any
claims and liabilities arising out of the good faith performance by these
persons of their responsibilities and obligations within the scope of their
authority in the course the registrant's business. This indemnification includes
indemnification in favor of the members of the audit and compensation committee.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 -- Northern Border Pipeline Company General Partnership
Agreement between Northern Plains Natural Gas Company,
Northwest Border Pipeline Company, Pan Border Gas
Company, TransCanada Border Pipeline Ltd. and TransCan
Northern Ltd., effective March 9, 1978, as amended
(incorporated by reference to Exhibit 10.2 to Northern
Border Partners, L.P.'s Form S-1, SEC File No. 33-66158
("Form S-1")).
4.1 -- Indenture, dated as of August 17, 1999, between the
registrant and Bank One Trust Company, NA, successor to
The First National Bank of Chicago, as trustee.
4.2 -- Registration Rights Agreement, dated as of August 17,
1999, by and among the registrant and Banc of America
Securities LLC, Lehman Brothers Inc., A.G. Edwards &
Sons, Inc. and Salomon Smith Barney Inc., as Initial
Purchasers.
5.1 -- Opinion of Chapman and Cutler, as to the validity of the
new notes.
8.1 -- Opinion of Chapman and Cutler, as to certain tax matters.
10.1 -- Operating Agreement between the registrant and Northern
Plains Natural Gas Company, dated February 28, 1980
(incorporated by reference to Exhibit 10.3 to Form S-1).
10.2 -- Note Purchase Agreement between the registrant and the
parties listed therein, dated July 15, 1992 (incorporated
by reference to Exhibit 10.6 to Form S-1).
10.3 -- Supplemental Agreement to the Note Purchase Agreement
dated as of June 1, 1995 (incorporated by reference to
Exhibit 10.6.1 to Northern Border Partners, L.P.'s Form
10-K for the year ended December 31, 1995, SEC File No.
1-12202 ("1995 10-K")).
10.4 -- Guaranty made by Panhandle Eastern Pipeline Company,
dated October 31, 1992 (incorporated by reference to
Exhibit 10.9 to Form S-1).
10.5 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Gas Marketing,
Inc., dated June 22, 1990 (incorporated by reference to
Exhibit 10.10 to Form S-1).
10.6 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between the registrant
and Enron Gas Marketing, Inc. (incorporated by reference
to Exhibit 10.10.1 to Northern Border Partners, L.P.'s
Form 10-K for the year ended December 31, 1993, SEC File
No. 1-12202 ("1993 10-K")).
10.7 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between the registrant
and Enron Gas Marketing, inc., effective November 1, 1994
(incorporated by reference to Exhibit 10.10.2 to Northern
Border Partners, L.P.'s Form 10-K for the year ended
December 31, 1994, SEC File No. 1-12202 ("1994 10-K")).
</TABLE>
II-1
<PAGE> 88
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.8 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shipper Service Agreement effective August 1, 1995
and November 1, 1995 (incorporated by reference to
Exhibit 10.10.3 to 1995 10-K).
10.9 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shipper Service Agreement effective April 1, 1998
(incorporated by reference to Exhibit 10.10.4 to Northern
Border Partner, L.P.'s Form 10-K for the year ended
December 31, 1997, SEC File No. 1-12202 ("1997 10-K")).
10.10 -- Guaranty made by Northern Natural Gas Company, dated
October 7, 1993 (incorporated by reference to Exhibit
10.11.1 to 1993 10-K).
10.11 -- Guaranty made by Northern Natural Gas Company, dated
October 7, 1993 (incorporated by reference to Exhibit
10.11.2 to 1993 10-K).
10.12 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Western Gas
Marketing Limited, as agent for TransCanada PipeLines
Limited, dated December 15, 1980 (incorporated by
reference to Exhibit 10.13 to Form S-1).
10.13 -- Amendment to Northern Border Pipeline Company Service
Agreement extending the term effective November 1, 1995
(incorporated by reference to Exhibit 10.13.1 to 1995
10-K).
10.14 -- Seventh Supplement Amending Northern Border Pipeline
Company General Partnership Agreement (incorporated by
reference to Exhibit 10.15 to Form S-1).
10.15 -- Eighth Supplement Amending Northern Border Pipeline
Company General Partnership Agreement.
10.16 -- Form of Conveyance, Contribution and Assumption Agreement
among Northern Plains Natural Gas Company, Northwest
Border Pipeline Company, Pan Border Gas Company, Northern
Border Partners, L.P., and Northern Border Intermediate
Limited Partnership (incorporated by reference to Exhibit
10.16 to Form S-1).
10.17 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Transcontinental Gas
Pipe Line Corporation, dated July 14, 1983, with Amended
Exhibit A effective February 11, 1994 (incorporated by
reference to Exhibit 10.17 to 1995 10-K).
10.18 -- Form of Credit Agreement among the registrant, The First
National Bank of Chicago, as Administrative Agent, The
First National Bank of Chicago, Royal Bank of Canada, and
Bank of America National Trust and Savings Association,
as Syndication Agents, First Chicago Capital Markets,
Inc., Royal Bank of Canada, and BancAmerica Securities,
Inc., as Joint Arrangers and Lenders (as defined therein)
dated as of June 16, 1997 (incorporated by reference to
Exhibit 10(c) to Amendment No. 1 to Northern Border
Partners, L.P.'s Form S-3, SEC File No. 333-40601 ("Form
S-3")).
10.19 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated October 15, 1997
(incorporated by reference to Exhibit 10.21 to 1997
10-K).
10.20 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated October 15, 1997
(incorporated by reference to Exhibit 10.22 to 1997
10-K).
</TABLE>
II-2
<PAGE> 89
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.21 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated August 5, 1997 with Amendment
dated September 25, 1997 (incorporated by reference to
Exhibit 10.25 to 1997 10-K).
10.22 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated August 5, 1997 (incorporated
by reference to Exhibit 10.26 to 1997 10-K).
10.23 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and TransCanada Gas
Services Inc., as agent for TransCanada PipeLines Limited
dated August 5, 1997 (incorporated by reference to
Exhibit 10.27 to 1997 10-K).
10.24 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and TransCanada Gas
Services Inc., as agent for TransCanada PipeLines Limited
dated August 14, 1997 (incorporated by reference to
Exhibit 10.28 to 1997 10-K).
10.25 -- Northern Border Pipeline Company Agreement among Northern
Plains Natural Gas Company, Pan Border Gas Company,
Northwest Border Pipeline Company, TransCanada Border
Pipeline Ltd., TransCan Northern Ltd., Northern Border
Intermediate Limited Partnership, Northern Border
Partners, L.P., and the Management Committee of Northern
Border Pipeline, dated as of March 17, 1999 (incorporated
by reference to Exhibit 10.21 to Northern Border
Partners, L.P.'s Form 10-K for the year ended December
31, 1998, SEC File No. 1-12202).
10.26 -- Form of Contribution, Conveyance and Assumption Agreement
among TC PipeLines, LP and certain other parties
(incorporated by reference to Exhibit 10.2 to TC
PipeLines, LP's Form S-1, SEC File No. 333-69947 ("TC
Form S-1")).
10.27 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Western Gas Marketing extending the
term effective April 2, 1999 (incorporated by reference
to Exhibit 10.11.1 to TC Form S-1).
10.28 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Enron Capital & Trade Resources
Corp. effective November 1, 1998 (incorporated by
reference to Exhibit 10.15.1 to TC Form S-1).
10.29 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Enron Capital & Trade Resources
Corp. effective April 2, 1999 (incorporated by reference
to Exhibit 10.16.1 to TC Form S-1).
10.30 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 10, 1996, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.19 to TC Form S-1).
10.31 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.20 to TC Form S-1).
</TABLE>
II-3
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.32 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.21 to TC Form S-1).
10.33 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.22 to TC Form S-1).
10.34 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.23 to TC Form S-1).
10.35 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated December 18, 1998 (incorporated
by reference to Exhibit 10.24 to TC Form S-1).
10.36 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc., dated October 1, 1993, with
Amended Exhibit A effective June 22, 1998 (incorporated
by reference to Exhibit 10.25 to TC Form S-1).
10.37 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc. (successor to Natgas U.S.
Inc.), dated October 6, 1989, with Amended Exhibit A
effective April 2, 1999 (incorporated by reference to
Exhibit 10.26 to TC Form S-1).
10.38 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc., dated October 1, 1992, with
Amended Exhibit A effective June 22, 1998 (incorporated
by reference to Exhibit 10.27 to TC Form S-1).
12.1 -- Statement re: computation of ratios.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Chapman and Cutler (included in Exhibit 5.1).
23.3 -- Consent of Chapman and Cutler (included in Exhibit 8.1).
24.1 -- Power of Attorney (included on page II-7 of the
Registration Statement).
25.1 -- Statement of Eligibility of Bank One Trust Company, NA,
as trustee, on Form T-1 with respect to the Indenture
between the registrant and Bank One Trust Company, NA, as
trustee, with respect to the registrant's 7.75% Senior
Notes due 2009, Series A.
99.1 -- Form of Letter of Transmittal.
</TABLE>
II-4
<PAGE> 91
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-5
<PAGE> 92
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Northern Border
Pipeline Company has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Omaha, Nebraska, on the
6th day of October, 1999.
Northern Border Pipeline Company, as
the
Registrant
By: Northern Plains Natural Gas
Company, as
Operator
By: /s/ JERRY L. PETERS
--------------------------------
Jerry L. Peters
Vice President, Finance and
Treasurer
Northern Plains Natural Gas
Company
II-6
<PAGE> 93
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Larry L. DeRoin and Jerry L. Peters, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their, or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED ON THE 6TH DAY OF OCTOBER,
1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ LARRY L. DEROIN President, Northern Plains Natural Gas Company
- ----------------------------------------------------- (functional equivalent to the registrant's
Larry L. DeRoin principal executive officer) and Management
Committee Member
/s/ JERRY L. PETERS Vice President, Finance and Treasurer,
- ----------------------------------------------------- Northern Plains Natural Gas Company
Jerry L. Peters (functional equivalent to the registrant's
principal financial and accounting officer)
/s/ STANLEY C. HORTON Management Committee Member
- -----------------------------------------------------
Stanley C. Horton
/s/ PAUL F. MACGREGOR Management Committee Member
- -----------------------------------------------------
Paul F. MacGregor
/s/ BRIAN E. O'NEILL Management Committee Member
- -----------------------------------------------------
Brian E. O'Neill
</TABLE>
II-7
<PAGE> 94
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 -- Northern Border Pipeline Company General Partnership
Agreement between Northern Plains Natural Gas Company,
Northwest Border Pipeline Company, Pan Border Gas
Company, TransCanada Border Pipeline Ltd. and TransCan
Northern Ltd., effective March 9, 1978, as amended
(incorporated by reference to Exhibit 10.2 to Northern
Border Partners, L.P.'s Form S-1, SEC File No. 33-66158
("Form S-1")).
4.1 -- Indenture, dated as of August 17, 1999, between the
registrant and Bank One Trust Company, NA, successor to
The First National Bank of Chicago, as trustee.
4.2 -- Registration Rights Agreement, dated as of August 17,
1999, by and among the registrant and Banc of America
Securities LLC, Lehman Brothers Inc., A.G. Edwards &
Sons, Inc. and Salomon Smith Barney Inc., as Initial
Purchasers.
5.1 -- Opinion of Chapman and Cutler, as to the validity of the
new notes.
8.1 -- Opinion of Chapman and Cutler, as to certain tax matters.
10.1 -- Operating Agreement between the registrant and Northern
Plains Natural Gas Company, dated February 28, 1980
(incorporated by reference to Exhibit 10.3 to Form S-1).
10.2 -- Note Purchase Agreement between the registrant and the
parties listed therein, dated July 15, 1992 (incorporated
by reference to Exhibit 10.6 to Form S-1).
10.3 -- Supplemental Agreement to the Note Purchase Agreement
dated as of June 1, 1995 (incorporated by reference to
Exhibit 10.6.1 to Northern Border Partners, L.P.'s Form
10-K for the year ended December 31, 1995, SEC File No.
1-12202 ("1995 10-K")).
10.4 -- Guaranty made by Panhandle Eastern Pipeline Company,
dated October 31, 1992 (incorporated by reference to
Exhibit 10.9 to Form S-1).
10.5 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Gas Marketing,
Inc., dated June 22, 1990 (incorporated by reference to
Exhibit 10.10 to Form S-1).
10.6 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between the registrant
and Enron Gas Marketing, Inc. (incorporated by reference
to Exhibit 10.10.1 to Northern Border Partners, L.P.'s
Form 10-K for the year ended December 31, 1993, SEC File
No. 1-12202 ("1993 10-K")).
10.7 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between the registrant
and Enron Gas Marketing, inc., effective November 1, 1994
(incorporated by reference to Exhibit 10.10.2 to Northern
Border Partners, L.P.'s Form 10-K for the year ended
December 31, 1994, SEC File No. 1-12202 ("1994 10-K")).
10.8 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shipper Service Agreement effective August 1, 1995
and November 1, 1995 (incorporated by reference to
Exhibit 10.10.3 to 1995 10-K).
10.9 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shipper Service Agreement effective April 1, 1998
(incorporated by reference to Exhibit 10.10.4 to Northern
Border Partners, L.P.'s Form 10-K for the year ended
December 31, 1997, SEC File No. 1-12202 ("1997 10-K")).
10.10 -- Guaranty made by Northern Natural Gas Company, dated
October 7, 1993 (incorporated by reference to Exhibit
10.11.1 to 1993 10-K).
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.11 -- Guaranty made by Northern Natural Gas Company, dated
October 7, 1993 (incorporated by reference to Exhibit
10.11.2 to 1993 10-K).
10.12 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Western Gas
Marketing Limited, as agent for TransCanada PipeLines
Limited, dated December 15, 1980 (incorporated by
reference to Exhibit 10.13 to Form S-1).
10.13 -- Amendment to Northern Border Pipeline Company Service
Agreement extending the term effective November 1, 1995
(incorporated by reference to Exhibit 10.13.1 to 1995
10-K).
10.14 -- Seventh Supplement Amending Northern Border Pipeline
Company General Partnership Agreement (incorporated by
reference to Exhibit 10.15 to Form S-1).
10.15 -- Eighth Supplement Amending Northern Border Pipeline
Company General Partnership Agreement.
10.16 -- Form of Conveyance, Contribution and Assumption Agreement
among Northern Plains Natural Gas Company, Northwest
Border Pipeline Company, Pan Border Gas Company, Northern
Border Partners, L.P., and Northern Border Intermediate
Limited Partnership (incorporated by reference to Exhibit
10.16 to Form S-1).
10.17 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Transcontinental Gas
Pipe Line Corporation, dated July 14, 1983, with Amended
Exhibit A effective February 11, 1994 (incorporated by
reference to Exhibit 10.17 to 1995 10-K).
10.18 -- Form of Credit Agreement among the registrant, The First
National Bank of Chicago, as Administrative Agent, The
First National Bank of Chicago, Royal Bank of Canada, and
Bank of America National Trust and Savings Association,
as Syndication Agents, First Chicago Capital Markets,
Inc., Royal Bank of Canada, and BancAmerica Securities,
Inc., as Joint Arrangers and Lenders (as defined therein)
dated as of June 16, 1997 (incorporated by reference to
Exhibit 10(c) to Amendment No. 1 to Northern Border
Partners, L.P.'s Form S-3, SEC File No. 333-40601 ("Form
S-3")).
10.19 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated October 15, 1997
(incorporated by reference to Exhibit 10.21 to 1997
10-K).
10.20 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated October 15, 1997
(incorporated by reference to Exhibit 10.22 to 1997
10-K).
10.21 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated August 5, 1997 with Amendment
dated September 25, 1997 (incorporated by reference to
Exhibit 10.25 to 1997 10-K).
10.22 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and Enron Capital &
Trade Resources Corp. dated August 5, 1997 (incorporated
by reference to Exhibit 10.26 to 1997 10-K).
10.23 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and TransCanada Gas
Services Inc., as agent for TransCanada PipeLines Limited
dated August 5, 1997 (incorporated by reference to
Exhibit 10.27 to 1997 10-K).
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.24 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between the registrant and TransCanada Gas
Services Inc., as agent for TransCanada PipeLines Limited
dated August 14, 1997 (incorporated by reference to
Exhibit 10.28 to 1997 10-K).
10.25 -- Northern Border Pipeline Company Agreement among Northern
Plains Natural Gas Company, Pan Border Gas Company,
Northwest Border Pipeline Company, TransCanada Border
Pipeline Ltd., TransCan Northern Ltd., Northern Border
Intermediate Limited Partnership, Northern Border
Partners, L.P., and the Management Committee of Northern
Border Pipeline, dated as of March 17, 1999 (incorporated
by reference to Exhibit 10.21 to Northern Border
Partners, L.P.'s Form 10-K for the year ended December
31, 1998, SEC File No. 1-12202).
10.26 -- Form of Contribution, Conveyance and Assumption Agreement
among TC PipeLines, LP and certain other parties
(incorporated by reference to Exhibit 10.2 to TC
PipeLines, LP's Form S-1, SEC File No. 333-69947 ("TC
Form S-1")).
10.27 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Western Gas Marketing extending the
term effective April 2, 1999 (incorporated by reference
to Exhibit 10.11.1 to TC Form S-1).
10.28 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Enron Capital & Trade Resources
Corp. effective November 1, 1998 (incorporated by
reference to Exhibit 10.15.1 to TC Form S-1).
10.29 -- Amended Exhibit A to Northern Border Pipeline Company
U.S. Shippers Service Agreement between Northern Border
Pipeline Company and Enron Capital & Trade Resources
Corp. effective April 2, 1999 (incorporated by reference
to Exhibit 10.16.1 to TC Form S-1).
10.30 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 10, 1996, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.19 to TC Form S-1).
10.31 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.20 to TC Form S-1).
10.32 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.21 to TC Form S-1).
10.33 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.22 to TC Form S-1).
10.34 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated October 5, 1998, with Amended
Exhibit A effective April 2, 1999 (incorporated by
reference to Exhibit 10.23 to TC Form S-1).
</TABLE>
<PAGE> 97
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.35 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
TransCanada Gas Services Inc. as agent for TransCanada
PipeLines Limited, dated December 18, 1998 (incorporated
by reference to Exhibit 10.24 to TC Form S-1).
10.36 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc., dated October 1, 1993, with
Amended Exhibit A effective June 22, 1998 (incorporated
by reference to Exhibit 10.25 to TC Form S-1).
10.37 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc. (successor to Natgas U.S.
Inc.), dated October 6, 1989, with Amended Exhibit A
effective April 2, 1999 (incorporated by reference to
Exhibit 10.26 to TC Form S-1).
10.38 -- Northern Border Pipeline Company U.S. Shippers Service
Agreement between Northern Border Pipeline Company and
Pan-Alberta Gas (U.S.) Inc., dated October 1, 1992, with
Amended Exhibit A effective June 22, 1998 (incorporated
by reference to Exhibit 10.27 to TC Form S-1).
12.1 -- Statement re: computation of ratios.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of Chapman and Cutler (included in Exhibit 5.1).
23.3 -- Consent of Chapman and Cutler (included in Exhibit 8.1).
24.1 -- Power of Attorney (included on page II-7 of the
Registration Statement).
25.1 -- Statement of Eligibility of Bank One Trust Company, NA,
as trustee, on Form T-1 with respect to the Indenture
between the registrant and Bank One Trust Company, NA, as
trustee, with respect to the registrant's 7.75% Senior
Notes due 2009, Series A.
99.1 -- Form of Letter of Transmittal.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
EXECUTION COPY
================================================================================
NORTHERN BORDER PIPELINE COMPANY
Issuer
7.75% SENIOR NOTES DUE 2009
7.75% SENIOR NOTES DUE 2009, Series A
INDENTURE
Dated as of August 17, 1999
THE FIRST NATIONAL BANK OF CHICAGO
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE(1)
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
310 (a)(1)...................................................................................................7.09
(a)(2)...................................................................................................7.09
(a)(3)...................................................................................................N.A.
(a)(4)...................................................................................................N.A.
(a)(5).............................................................................................7.08; 7.09
(b)................................................................................................7.08; 7.09
(c)......................................................................................................N.A.
311 (a)......................................................................................................7.13
(b)......................................................................................................7.13
(c)......................................................................................................N.A.
312 (a)......................................................................................................2.05
(b).....................................................................................................10.03
(c).....................................................................................................10.03
313 (a)......................................................................................................7.15
(b)(2)...................................................................................................7.15
(c)...............................................................................................7.15, 10.02
(d)......................................................................................................7.15
314 (a)......................................................................................................4.03
(a)(4)..................................................................................................10.04
(c)(1)...................................................................................................N.A.
(c)(2)...................................................................................................N.A.
(c)(3)...................................................................................................N.A.
(e).....................................................................................................10.05
(f)......................................................................................................N.A.
315 (a)......................................................................................................7.01
(b)......................................................................................................7.02
(c)......................................................................................................7.01
(d)......................................................................................................7.01
(e)......................................................................................................6.14
316 (a)(last sentence).......................................................................................2.09
(a)(1)(A)................................................................................................6.12
(a)(1)(B)................................................................................................6.13
(a)(2)...................................................................................................N.A.
(b)......................................................................................................6.08
(c)......................................................................................................2.12
317 (a)(1)...................................................................................................6.04
(a)(2)...................................................................................................6.04
(b)......................................................................................................2.04
318 (a).....................................................................................................10.01
(b).....................................................................................................10.01
(c).....................................................................................................10.01
</TABLE>
N.A. means not applicable.
- --------
This Cross-Reference Table is not part of this Indenture.
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.....................................................................................1
SECTION 1.02 Incorporation by Reference of Trust Indenture Act..............................................13
SECTION 1.03 Rules of Construction..........................................................................14
ARTICLE II
THE NOTES
SECTION 2.01 Form and Dating................................................................................14
SECTION 2.02 Execution and Authentication...................................................................16
SECTION 2.03 Registrar and Paying Agent.....................................................................16
SECTION 2.04 Paying Agent to Hold Money in Trust............................................................17
SECTION 2.05 Holder Lists...................................................................................17
SECTION 2.06 Transfer and Exchange..........................................................................17
SECTION 2.07 Replacement Notes..............................................................................32
SECTION 2.08 Outstanding Notes..............................................................................32
SECTION 2.09 Treasury Notes.................................................................................33
SECTION 2.10 Temporary Notes................................................................................33
SECTION 2.11 Cancellation...................................................................................33
SECTION 2.12 Defaulted Interest.............................................................................34
SECTION 2.13 CUSIP Numbers..................................................................................34
ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01 Notices to Trustee.............................................................................34
SECTION 3.02 Selection of Notes to be Redeemed..............................................................34
SECTION 3.03 Notice of Redemption...........................................................................35
SECTION 3.04 Effect of Notice of Redemption.................................................................36
SECTION 3.05 Deposit of Redemption Price....................................................................36
SECTION 3.06 Notes Redeemed in Part.........................................................................36
SECTION 3.07 Mandatory Redemption...........................................................................37
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Notes...............................................................................37
SECTION 4.02 Maintenance of Office or Agency................................................................37
SECTION 4.03 Reports........................................................................................38
SECTION 4.04 Statement by Officers as to Default............................................................39
SECTION 4.05 Existence......................................................................................39
SECTION 4.06 Limitations on Liens...........................................................................39
SECTION 4.07 Restriction of Sale-Leaseback Transactions.....................................................39
SECTION 4.08 Waiver of Certain Covenants....................................................................40
SECTION 4.09 Payments for Consent...........................................................................40
SECTION 4.10 Money for Note Payments to Be Held in Trust....................................................41
ARTICLE V
SUCCESSORS
SECTION 5.01 Company May Consolidate, Etc., Only on Certain Terms...........................................42
SECTION 5.02 Successor Substituted..........................................................................43
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default..............................................................................43
SECTION 6.02 Acceleration of Maturity; Rescission and Annulment.............................................44
SECTION 6.03 Collection of Indebtedness and Suits for Enforcement by Trustee................................45
SECTION 6.04 Trustee May File Proofs of Claim...............................................................46
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.........................................46
SECTION 6.06 Application of Money Collected.................................................................47
SECTION 6.07 Limitation on Suits............................................................................47
SECTION 6.08 Unconditional Right of Holders to Receive Principal,
Premium, Liquidated Damages and Interest.......................................................48
SECTION 6.09 Restoration of Rights and Remedies.............................................................48
SECTION 6.10 Rights and Remedies Cumulative.................................................................48
SECTION 6.11 Delay or Omission Not Waiver...................................................................48
SECTION 6.12 Control by Holders.............................................................................49
SECTION 6.13 Waiver of Past Defaults........................................................................49
SECTION 6.14 Undertaking for Costs..........................................................................49
SECTION 6.15 Waiver of Usury, Stay or Extension Laws........................................................50
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE VII
TRUSTEE
SECTION 7.01 Certain Duties and Responsibilities............................................................50
SECTION 7.02 Notice of Defaults.............................................................................51
SECTION 7.03 Certain Rights of Trustee......................................................................52
SECTION 7.04 Not Responsible for Recitals or Issuance of Notes..............................................53
SECTION 7.05 May Hold Notes.................................................................................53
SECTION 7.06 Money Held in Trust............................................................................54
SECTION 7.07 Compensation and Reimbursement.................................................................54
SECTION 7.08 Disqualification; Conflicting Interests........................................................55
SECTION 7.09 Corporate Trustee Required; Eligibility........................................................55
SECTION 7.10 Resignation and Removal; Appointment of Successor..............................................55
SECTION 7.11 Acceptance of Appointment by Successor.........................................................57
SECTION 7.12 Merger, Conversion, Consolidation or Succession to Business....................................57
SECTION 7.13 Preferential Collection of Claims Against Company..............................................57
SECTION 7.14 Appointment of Authenticating Agent............................................................58
SECTION 7.15 Reports by Trustee to Holders of the Notes.....................................................59
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.......................................60
SECTION 8.02 Legal Defeasance and Discharge.................................................................60
SECTION 8.03 Covenant Defeasance............................................................................61
SECTION 8.04 Conditions to Legal or Covenant Defeasance.....................................................61
SECTION 8.05 Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions.............................................63
SECTION 8.06 Repayment to Company...........................................................................63
SECTION 8.07 Reinstatement..................................................................................64
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 Without Consent of Holders of Notes............................................................64
SECTION 9.02 With Consent of Holders of Notes...............................................................65
SECTION 9.03 Compliance with Trust Indenture Act............................................................66
SECTION 9.04 Revocation and Effect of Consents..............................................................67
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 9.05 Notation on or Exchange of Notes...............................................................67
SECTION 9.06 Trustee to Sign Amendments, Etc................................................................67
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Trust Indenture Act Controls...................................................................67
SECTION 10.02 Notices........................................................................................68
SECTION 10.03 Communication by Holders of Notes with Other Holders of Notes..................................69
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.............................................69
SECTION 10.05 Statements Required in Certificate or Opinion..................................................69
SECTION 10.06 Rules by Trustee and Agents....................................................................70
SECTION 10.07 No Personal Liability of Directors, Officers, Employees
and Stockholders .......................................................................70
SECTION 10.08 Governing Law..................................................................................70
SECTION 10.09 No Adverse Interpretation of Other Agreements..................................................70
SECTION 10.10 Successors.....................................................................................70
SECTION 10.11 Severability...................................................................................71
SECTION 10.12 Counterpart Originals..........................................................................71
SECTION 10.13 Table of Contents, Headings, Etc...............................................................71
SECTION 10.14 Acts of Holders; Record Dates..................................................................71
ARTICLE XI
MEETINGS OF HOLDERS OF NOTES
SECTION 11.01 Purposes for Which Meetings May Be Called......................................................72
SECTION 11.02 Call, Notice and Place of Meetings.............................................................73
SECTION 11.03 Persons Entitled to Vote at Meetings...........................................................73
SECTION 11.04 Quorum; Action.................................................................................73
SECTION 11.05 Determination of Voting Rights; Conduct and
Adjournment of Meetings .............................................................74
SECTION 11.06 Counting Votes and Recording Action of Meetings................................................75
EXHIBITS
EXHIBIT A-1 Form of Note.................................................................................A1-1
EXHIBIT A-2 Form of Regulation S Temporary Global Note...................................................A2-1
EXHIBIT B Form of Certificate of Transfer...............................................................B-1
EXHIBIT C Form of Certificate of Exchange...............................................................C-1
EXHIBIT D Registration Rights Agreement.................................................................D-1
</TABLE>
v
<PAGE> 7
INDENTURE dated as of August 17, 1999 between Northern Border Pipeline
Company, a Texas partnership (the "Company"), and The First National Bank of
Chicago, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 7.75% Senior
Notes due 2009 (the "Initial Notes") and the 7.75% Senior Notes due 2009, Series
A, issued in the Exchange Offer (the "Exchange Notes" and, together with the
Initial Notes, the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control. With respect to the Company, "Affiliate" shall mean the
General Partners, Northern Border Partners, L.P., TC PipeLines, LP, Pan Border
Gas Company, Northwest Border Pipeline Company and the Operator.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and CEDEL that apply to such transfer or exchange.
"Attributable Indebtedness" means with respect to a Sale-Leaseback
Transaction involving pipeline assets, as of the time of determination, the
lesser of (i) the fair market value of such pipeline
<PAGE> 8
assets (as determined in good faith by the Company's Management Committee); (ii)
the present value of the total Net Amount of Rent required to be paid under the
lease involved in such Sale-Leaseback Transaction during the remaining term
thereof (including any renewal term exercisable at the lessee's option or period
for which the lease has been extended), discounted at the rate of interest set
forth or implicit in the terms of such lease or, if not practicable to determine
such rate, the weighted average interest rate per annum borne by the Notes,
compounded semiannually; or (iii) if the obligation with respect to the
Sale-Leaseback Transaction constitutes an obligation that is required to be
classified and accounted for as a Capital Lease Obligation for financial
reporting purposes in accordance with GAAP, the amount equal to the capitalized
amount of such obligation determined in accordance with GAAP and included in the
financial statements of the lessee required to be paid by the lessee.
"Authenticating Agent" means any person authorized by the Trustee
pursuant to Section 7.14 hereof to authenticate the Notes.
"Authorized Newspaper" means a newspaper, in the English language or in
an official language of the country of publication, customarily published on
each Business Day, whether or not published on Saturdays, Sundays or holidays,
and of general circulation in the place in connection with which the term is
used or in the financial community of such place. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or different newspapers in the same city meeting the
foregoing requirements and in each case on any day that is a Business Day in the
place of publication.
"Bankruptcy Code" means Title 11, U.S. Code, as amended, or any similar
federal or state law for the relief of debtors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock"(i) in the case of a corporation, corporate stock; (ii)
in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock; (iii) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); (iv) any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing Person,
and any rights (other than debt securities convertible into capital stock)
warrants or options exchangeable for or convertible into such capital stock; and
(v) all warrants, options or other rights to acquire any of the interests
described in clauses (i) through
2
<PAGE> 9
(iv) above (but excluding any debt security that is convertible into, or
exchangeable for, any of the interests described in clauses (i) through (iv)
above).
"CEDEL" means Cedel Bank, societe anonyme.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by a member of the Management Committee, the
Officers of the Operator or a person duly authorized by any of them, and
delivered to the Trustee.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Consolidated Net Tangible Assets" means, at any date of determination,
the aggregate amount of total assets included in the Company's most recent
quarterly or annual consolidated balance sheet prepared in accordance with GAAP
less applicable reserves reflected in such balance sheet, after deducting the
following amounts: (i) all current liabilities reflected in such balance sheet;
and (ii) all goodwill, trade names, trademarks, patents, unamortized debt
discount and expenses and other like intangibles reflected in such balance
sheet.
"Currency Hedging Obligations" means, with respect to any Person, the
net payment Obligations of such Person under agreements or arrangements designed
to protect such Person against fluctuations in the currency exchange rates
incurred or entered into in the ordinary course of its business and not for
speculative purposes.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequester or similar official under the Bankruptcy Code.
"Default" means any event that is or with the passage of time or the
giving of notice (or both) would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
3
<PAGE> 10
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means notes registered under the Securities Act that
are issued under Section 2.06 hereof in exchange for the Notes pursuant to the
Exchange Offer.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Exempted Indebtedness" means Indebtedness of which the Company or any
of its Subsidiaries is an obligor or guarantor, or that has been assumed by the
Company or any of its Subsidiaries, which Indebtedness is secured by a Lien
(other than a Permitted Lien), or any Attributable Indebtedness of the Company
or any of its Subsidiaries, provided that the sum of the aggregate principal
amount of all such Indebtedness then outstanding (other than the Notes) so
secured by a Lien (other than a Permitted Lien) and the amount of all the
outstanding Attributable Indebtedness, in each case not otherwise permitted by
Section 4.06 or 4.07, does not at the time such Indebtedness or Attributable
Indebtedness is incurred exceed 10% of the Consolidated Net Tangible Assets of
the Company and its Subsidiaries.
"Fair Market Value" means, with respect to consideration received or to
be received pursuant to any transaction by any Person, the fair market value of
such consideration as determined in good faith by the Management Committee of
the Company.
"Financial Hedging Obligations" means, with respect to any Person, the
net payment Obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates or currency exchange rates incurred or entered into in the
ordinary course of its business and not for speculative purposes.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the statements and pronouncements of
the Financial Accounting Standards Board and such other statements by such other
entities as have been approved by a significant segment of the accounting
profession, which are applicable at the date of determination.
"General Partners" means Northern Border Intermediate Limited
Partnership and TC PipeLines Intermediate Limited Partnership.
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<PAGE> 11
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.
"Global Notes" means Global Notes, in the form of Exhibit A hereto,
issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d)(iv) or 2.06(f)
hereof.
"Government Contract Lien" means any Lien in favor of the United States
of America or any State thereof, territory or possession thereof (or the
District of Columbia), or any department, agency, instrumentality or political
subdivision thereof (or the District of Columbia) to secure partial, progress,
advance or other payments pursuant to any contract or statute or to secure any
Indebtedness incurred for the purpose of financing all or any part of the
purchase price or the cost of constructing, developing or improving the property
subject to such Liens.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantees
or obligations the full faith and credit of the United States is pledged.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof or pledging assets to secure), of
all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, collectively,
the Currency Hedging Obligations of such Person and the Financial Hedging
Obligations of such Person.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, at any date, any of
the following, without duplication: (i) any liability of such Person (A) for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (B) evidenced by a note,
bond, debenture or similar instrument, or (C) for the payment of money relating
to a Capital Lease Obligation or other obligation (whether issued or assumed)
relating to the deferred purchase price of property; (ii) all conditional sale
obligations and all obligations under any title retention agreement (even if the
rights and remedies of the seller under such agreement in the event of default
are limited to repossession or sale of such property); (iii) all obligations for
the reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit translation, other than as entered into in the ordinary course of
business; (iv) all indebtedness of others secured by (or for which the holder of
such indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on any asset or property (including, without limitation, leasehold
interests and any other tangible or intangible property) of such Person, whether
or not such indebtedness is assumed by such Person or is not otherwise such
Person's legal liability in full, the
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<PAGE> 12
amount of such indebtedness for the purposes of this definition shall be limited
to the lesser of the amount of such indebtedness secured by such Lien or the
fair market value of the assets or the property securing such lien, (v) all
indebtedness of others (including all interest and dividends on any Indebtedness
or preferred securities of any other Person) the payment of which is guaranteed,
directly or indirectly, by such Person or that is otherwise its legal liability
or which such Person has agreed to purchase or repurchase or in respect of which
such Person has agreed contingently to supply or advance funds; and (vi) to the
extent not otherwise included in this definition, obligations in respect of
Hedging Obligations. Indebtedness shall not include (a) accounts payable arising
in the ordinary course of business and (b) any obligations in respect of
prepayments for natural gas or oil production or natural gas or oil imbalances.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Purchasers" means Banc of America Securities LLC, Lehman
Brothers Inc., A. G. Edwards & Sons, Inc. and Salomon Smith Barney Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of the
Securities Act.
"Initial Notes" has the meaning set forth in the preamble to this
Indenture.
"Interest Payment Date" March 1 and September 1.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under the Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any
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<PAGE> 13
lease in the nature thereof, any option or other agreement to sell or give a
security interest in any asset and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Liquidated Damages" means all additional interest then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Committee" means the management committee that oversees
management of the Company.
"Net Amount of Rent" as to any lease for any period means the aggregate
amount of rent payable by the lessee with respect to such period after excluding
amounts, whether or not designated as rent or additional rent, required to be
paid on account of or contingent upon maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges. In the case of any lease that is
terminable by the lessee upon the payment of a penalty, such net amount shall be
the lesser of (i) the net amount determined assuming termination of the lease on
the first date such lease may be terminated (in which case such net amount shall
also include the amount of such penalty, but no rent shall be considered as
payable under such lease subsequent to the first date upon which it may be so
terminated) or (ii) such net amount assuming no such termination.
"Non-U.S. Person" means a person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, premium (if any), Liquidated Damages
(if any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company or its
Subsidiaries whether or not a claim for post-filing interest is allowed in such
proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement
obligations, damages (including Liquidated Damages, if any,), guarantees and
other liabilities or amounts payable under the documentation governing any
Indebtedness or in respect thereof.
"Offering" means the offering of the Initial Notes by the Company.
"Offering Memorandum" means the Offering Memorandum of the Company
dated August 11, 1999 with respect to the Offering.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any
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<PAGE> 14
Assistant Treasurer, the Controller, the Secretary or any Vice-President of such
Person and with respect to the Company any of the President, Vice President,
Finance, or any vice president of the Operator, acting singly.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Operator, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Operator, that meets the requirements of
Section 10.05 hereof.
"Operator" means Northern Plains Natural Gas Company, a subsidiary of
Enron Corp., or any successor operator of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Company or the
Operator or any Subsidiary of the Company.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium, interest or Liquidated Damages on the Notes on
behalf of the Company.
"Participant" means, with respect to DTC, Euroclear or CEDEL, a Person
who has an account with DTC, Euroclear or CEDEL, respectively (and, with respect
to DTC, shall include Euroclear and CEDEL).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Partnership Agreement" means the Northern Border Pipeline Company
General Partnership Agreement effective as of March 9, 1978, as amended.
"Permitted Liens" means, with respect to any Person:
(i) with respect to the Notes issued under this Indenture, Liens
existing on or provided for under the terms of agreements
existing on the date the Notes are issued;
(ii) Liens on property, shares of stock, Indebtedness or other
assets of any Person (which is not a Subsidiary) existing at
the time such Person is merged into or consolidated with or
into the Company or any of its Subsidiaries; provided that
such Liens are not incurred in anticipation of such Person
becoming a Subsidiary; or liens existing at the time of a
sale, lease or other disposition of properties of a Person as
an entirety or substantially as an entirety to the Company or
any of its Subsidiaries;
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<PAGE> 15
(iii) Liens on property, shares of stock, Indebtedness or other
assets existing at the time of acquisition thereof by the
Company or any of its Subsidiaries, or Liens to secure all or
part of the purchase price thereof;
(iv) Liens on property, shares of stock, indebtedness for borrowed
money, or other assets to secure any Indebtedness incurred
prior to, at the time of or within 24 months after, the latest
of the acquisition thereof or, in the case of property, the
completion of construction, the completion of development or
improvements or the commencement of commercial operation of
such property for the purpose of financing all or part of the
purchase price thereof, such construction or the making of
such developments or improvements;
(v) Liens securing Indebtedness owed to the Company or any of its
Subsidiaries;
(vi) Liens on property to secure all or part of the cost of
acquiring, constructing, altering, improving, developing or
repairing any property or asset, or improvements used in
connection with that property or Liens incurred by the Company
or any of its Subsidiaries to provide funds for any such
activities;
(vii) Government Contract Liens;
(viii) Liens on any property to secure bonds for the construction,
installation or financing of pollution control or abatement
facilities or other forms of industrial revenue bond
financing, or indebtedness issued or guaranteed by the United
States, any state or any department, agency or instrumentality
thereof;
(ix) Liens contemplated by Section 7.07 hereof;
(x) Liens deemed to exist by reason of negative pledges in respect
of Indebtedness; and
(xi) Liens to secure any refinancing, refunding, extension, renewal
or replacement (or successive refinancings, refundings,
extensions, renewals or replacements), as a whole or in part,
of any Indebtedness secured by any Lien referred to in clauses
(i) through (x) above; provided, however, that such Lien(s)
shall not extend to any property of the Company or any of its
Subsidiaries, as the case may be, other than the property
specified in clauses (i) through (x) above to which the Lien
securing such refinanced, refunded, extended, renewed or
replaced Indebtedness applied and improvements thereto or
proceeds therefrom.
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<PAGE> 16
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Place of Payment", when used with respect to the Notes, means, unless
otherwise specifically provided in notice given pursuant to Section 4.02 hereof,
the office or agency of the Company in the City of New York and such other place
or places where, the principal of and any premium, interest and Liquidated
Damages, if any, on the Notes are payable.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Proceeding" means any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of a Person (including, without
limitation, any such proceeding under Bankruptcy Code).
"Property" means any right or interest of the Company or any of its
Subsidiaries in and to property of any kind whatsoever, whether real, personal
or mixed and whether tangible or intangible.
"Purchase Agreement" means the Purchase Agreement dated August 11, 1999
among the Company and the Initial Purchasers (as defined therein.)
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
of the rules and regulations promulgated by the SEC under the Securities Act.
"Redemption Date" means the date on which the Notes are to be redeemed
pursuant to Article III, hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 17, 1999, by and among the Company and the other
parties named on the signature pages thereof, attached hereto as Exhibit D, as
such agreement may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
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<PAGE> 17
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Responsible Officer," when used with respect to the Trustee, means any
officer, including, without limitation, any vice president, assistant vice
president, assistant treasurer or secretary within the Corporate Trust
Administration of the Trustee (or any successor group of the Trustee) or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to particular corporate trust matter, any other officer or employee to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Period" means the 40-day distribution compliance period as
set forth in Regulation S.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means the Global Note in the form of Exhibit
A-1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 144A.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"Sale-Leaseback Transaction" means any arrangement with any Person
pursuant to which the Company or any of its Subsidiaries leases any Property
that has been or is to be sold or
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<PAGE> 18
transferred by the Company or its Subsidiaries to such Person, other than (i)
any such transaction involving a lease for a term of not more than two years,
(ii) any such transaction between the Company and any of its Subsidiaries or
between any Subsidiaries of the Company, and (iii) any such transaction executed
by the time of, or within 12 months after the latest of, the acquisition, the
completion of construction, development or improvement, or the commencement of
commercial operation of the Company's pipeline system assets subject to such
leasing transaction.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Indebtedness" means any Indebtedness of the Company which
is subordinated in right of payment to the Notes.
"Subsidiary" of any Person means (i) any Person of which at the time of
such determination more than 50% of the outstanding voting stock is owned or
controlled, directly or indirectly, by such Person or one or more of the
Subsidiaries of that Person or a combination thereof, and (ii) any other Person
in which such Person or one or more of the Subsidiaries of that Person (or a
combination thereof) has the power to control by contract or otherwise the board
of directors or equivalent governing body or otherwise controls such entity. For
the purposes of this definition, "voting stock" means stock of the class or
classes which under ordinary circumstances has voting power to elect at least a
majority of the members of the board of directors, managers or trustees of such
corporation, provided that stock that carries only the right to vote
conditionally upon the occurrence of an event shall not constitute voting stock
whether or not such event shall have occurred. Unless otherwise provided,
references in this Indenture to a Subsidiary are to a Subsidiary of the Company.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 as
in effect on the date on which this Indenture is qualified under the TIA.
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<PAGE> 19
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not and are not required to
bear the Private Placement Legend.
"U.S." means the United States of America.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock"of any Person as of any date means the Capital Stock of
such Person pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers, general partners or trustees of any Person (irrespective of
whether or not, at the time, Capital Stock of any other class or classes shall
have, or might have, voting power by reason of the occurrence of any
contingency) or, with respect to a partnership (whether general or limited), any
general partner interest in such partnership.
Other Definitions
<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
- -------------------------------------------------------------------------------- ----------
<S> <C>
"Covenant Defeasance"........................................................... 8.03
"DTC"........................................................................... 2.03
"Event of Default".............................................................. 6.01
"Legal Defeasance".............................................................. 8.02
"Paying Agent".................................................................. 2.03
"Registrar"..................................................................... 2.03
</TABLE>
SECTION 1.02 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
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<PAGE> 20
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.03 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular; provisions apply to successive events and transactions; and
(5) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE II
THE NOTES
SECTION 2.01 Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
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<PAGE> 21
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling. Notes issued
in global form shall be substantially in the form of Exhibit A-1 or A-2 attached
hereto (including the Global Note Legend and the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A-1 attached hereto (but without
the Global Note Legend and without the "Schedule of Exchanges of Interests in
the Global Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee, the Depositary or the Note Custodian, at the direction of the Trustee,
in accordance with instructions given by the Holder thereof as required by
Section 2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the nominee of the Depository for credit to the accounts of
designated agents holding on behalf of Euroclear or CEDEL, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and CEDEL certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b)
hereof), and (ii) an Officers' Certificate from the Company certifying to the
effect that the 40-day distribution compliance period applicable to the
Regulation S Temporary Global Note has expired. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in one or more Regulation S
Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers
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<PAGE> 22
of interest as hereinafter provided. The provisions of the "Operating Procedures
of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear"
and the "General Terms and Conditions of Cedel Bank" and "Customer Handbook" of
CEDEL shall be applicable to transfers of beneficial interests in the Regulation
S Temporary Global Note and the Regulation S Permanent Global Notes that are
held by members of, or Participants, in DTC through Euroclear or CEDEL.
SECTION 2.02 Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid. A
Note shall not be valid until authenticated by the manual signature of the
Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue on the Issue Date up to
$200,000,000 aggregate principal amount of the Notes. The aggregate principal
amount of Notes outstanding at any time may not exceed $200,000,000 except as
provided in Section 2.07 hereof. The Trustee may appoint an Authenticating Agent
acceptable to the Company to authenticate Notes. An Authenticating Agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An Authenticating Agent has the same rights as an Agent to deal with (i)
Holders or (ii) an Affiliate of the Company.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency within the City and
State of New York where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more co-
registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall promptly notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes. The Company initially
appoints the Trustee to act as the Registrar and Paying Agent and to act as Note
Custodian with respect to the Global Notes.
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<PAGE> 23
SECTION 2.04 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall provide to a Responsible Officer of the
Trustee at least seven Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA ss.
312(a).
SECTION 2.06 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that it is unwilling or
unable to continue to act as Depositary for the Global Notes or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 90 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion notifies the Trustee in writing that it elects to cause issuance of
the Notes in certificated form; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Company for Definitive Notes prior to
(x) the expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities Act or an
Opinion of Counsel to the effect that such certificates are not required
pursuant to Rule 903. If an Event of Default occurs and
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<PAGE> 24
is continuing, the Company shall, at the request of the Holder thereof, exchange
all or part of a Global Note for one or more Definitive Notes in denominations
of $1000 or multiples thereof. Upon the occurrence of either of the preceding
events in (i) or (ii) above, Definitive Notes shall be issued in such names as
the Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
Notwithstanding anything in this Section 2.06 to the contrary, no Notes shall be
transferred or exchanged for a period of 15 days prior to a selection of Notes
to be redeemed pursuant to Article 3.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same
Global Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend; provided, however, that prior to the expiration of the
Restricted Period transfers of beneficial interests in the Temporary
Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred
only to Persons who take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests (other than a transfer of a
beneficial interest in a Global Note to a Person who takes delivery
thereof in the form of a beneficial interest in the same Global Note),
the transferor of such beneficial interest must deliver to the
Registrar (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note
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<PAGE> 25
in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to
be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions
given by the Depositary to the Registrar containing information
regarding the Person in whose name such Definitive Note shall be
registered to effect the transfer or exchange referred to in (1) above;
provided that in no event shall Definitive Notes be issued upon the
transfer or exchange of beneficial interests in the Regulation S
Temporary Global Note prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act. Upon an
Exchange Offer by the Company in accordance with Section 2.06(f)
hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to
have been satisfied upon receipt by the Registrar of the instructions
contained in the Letter of Transmittal delivered by the Holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction
of all of the requirements for transfer or exchange of beneficial
interests in Global Notes contained in this Indenture, the Notes and
otherwise applicable under the Securities Act, the Trustee shall adjust
the principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another
Restricted Global Note. A beneficial interest in any Restricted Global
Note may be transferred to a Person who takes delivery thereof in the
form of a beneficial interest in another Restricted Global Note if the
transfer complies with the requirements of clause (ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in
the form of a beneficial interest in the 144A Global Note,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in Item (1)
thereof; or
(B) if the transferee will take delivery in
the form of the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in Item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in
a Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note if the exchange or transfer complies with the requirements of
clause (ii) above and:
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<PAGE> 26
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of the beneficial
interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such
beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for a beneficial interest in
an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in
Item (1) thereof;
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in
the form of Exhibit B hereto, including the certifications in
Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an authentication order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraph
(B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
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<PAGE> 27
(c) Transfer or Exchange of Beneficial Interests for
Definitive Notes.
(i) If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in Item (2) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in Item (1)
thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (2) thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(a) thereof;
(E) if such beneficial interest is being
transferred pursuant to any other exemption (including a
beneficial interest being transferred to an Institutional
Accredited Investor) from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by Item (3)
thereof, if applicable;
(F) if such beneficial interest is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (3)(b) thereof; or
(G) if such beneficial interest is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(c) thereof, the Trustee, upon notice of receipt of
such documentation by the Registrar, shall cause
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<PAGE> 28
the aggregate principal amount of the applicable Global Note
to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Person
designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in
exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c) shall be registered in such
name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The
Trustee shall make available for delivery such Definitive
Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement
Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C)
hereof, a beneficial interest in the Regulation S Temporary Global Note
may not be (A) exchanged for a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903(c)(3)(B)
under the Securities Act or (B) transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to the
conditions set forth in clause (A) above or unless the transfer is
pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding Section 2.06(c)(i) hereof, a
holder of a beneficial interest in a Restricted Global Note may
exchange such beneficial interest for an Unrestricted Definitive Note
or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
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<PAGE> 29
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder
in the form of Exhibit C hereto, including the certifications
in Item (2) thereof;
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a Definitive Note that does not bear
the Private Placement Legend, a certificate from such holder
in the form of Exhibit B hereto, including the certifications
in Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company, to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Definitive Note,
then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant
to Section 2.06(h) hereof, and the Company shall execute and the
Trustee shall authenticate and make available for delivery to the
Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall make available
for delivery such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear
the Private Placement Legend. A beneficial interest in an Unrestricted
Global Note cannot be exchanged for a Definitive Note bearing the
Private Placement Legend or transferred to a Person who takes delivery
thereof in the form of a Definitive Note bearing the Private Placement
Legend.
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<PAGE> 30
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted
Definitive Note proposes to exchange such Note for a
beneficial interest in a Restricted Global Note, a certificate
from such Holder in the form of Exhibit C hereto, including
the certifications in Item (6) thereof;
(B) if such Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in Item (1)
thereof;
(C) if such Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (2) thereof;
(D) if such Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(a) thereof;
(E) if such Definitive Note is being
transferred to an Institutional Accredited Investor or in
reliance on any other exemption from the registration
requirements of the Securities Act, in either case, other than
those listed in subparagraphs (B) through (D) above, a
certificate in the form of Exhibit B hereto, including
certifications, certificates, and any Opinion of Counsel
required by Item (3) thereof, if applicable;
(F) if such Definitive Note is being
transferred to the Company or any of its subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in Item (3)(b) thereof; or
(G) if such Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
Item (3)(c) thereof,
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<PAGE> 31
the Trustee, upon notice of receipt of such documentation by the Registrar,
shall cancel the Definitive Note, increase or cause to be increased the
aggregate principal amount of, in the case of subparagraph (A) above, the
appropriate Restricted Global Note and, in the case of subparagraph (B) above,
the Rule 144A Global Note, and, in the case of subparagraph (C) above, the
Regulation S Global Note.
(ii) A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive
Notes proposes to exchange such Notes for a beneficial
interest in the Unrestricted Global Note, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in Item (3) thereof;
(2) if the Holder of such Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of a beneficial interest in
the Unrestricted Global Note, a certificate from such Holder
in the form of Exhibit B hereto, including the certifications
in Item (4) thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act,
that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Definitive
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<PAGE> 32
Notes are being exchanged or transferred in compliance with
any applicable blue sky securities laws of any State of the
United States.
Upon satisfaction of the conditions of any of the subparagraphs in this Section
2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause
to be increased the aggregate principal amount of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an exchange or
transfer, the Trustee shall cancel the applicable Unrestricted
Definitive Note and increase or cause to be increased the aggregate
principal amount of one of the Unrestricted Global Notes.
(iv) If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an
Unrestricted Global Note has not yet been issued, the Company shall
issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to
subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to
and registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
(A) if the transfer will be made pursuant to
Rule 144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in Item (1) thereof;
(B) if the transfer will be made pursuant to
Rule 903 or Rule 904 under the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in Item (2) thereof; and
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<PAGE> 33
(C) if the transfer will be made pursuant to
any other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by Item (3)
thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged
by the Holder thereof for an Unrestricted Definitive Note or
transferred to a Person or Persons who take delivery thereof in the
form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer, is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant
to the Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications
in Item 4 thereof;
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in Item (4)
thereof; and
(3) in each such case set forth in
this subparagraph (D), an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such
exchange or transfer is in compliance with the Securities Act,
that the restrictions on transfer contained herein and in the
Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Restricted
Definitive Note is being exchanged or transferred in
compliance with any applicable blue sky securities laws of any
State of the United States.
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<PAGE> 34
(iii) A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note. Upon receipt of a request for such
a transfer, the Registrar shall register the Unrestricted Definitive
Notes pursuant to the instructions from the Holder thereof.
Unrestricted Definitive Notes cannot be exchanged for or transferred to
Persons who take delivery thereof in the form of a Restricted
Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of (A) an authentication order in accordance with Section 2.02
hereof and (B) an Opinion of Counsel opining as to the enforceability of the
Exchange Notes and the guarantees thereof, the Trustee shall authenticate (i)
one or more Unrestricted Global Notes in an aggregate principal amount equal to
the principal amount of the beneficial interests in the Restricted Global Notes
tendered for acceptance by persons that are not (x) broker-dealers, (y) Persons
participating in the distribution of the Exchange Notes or (z) Persons who are
affiliates (as defined in Rule 144) of the Company and accepted for exchange in
the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted for
exchange in the Exchange Offer. Concurrent with the issuance of such Notes, the
Trustee shall cause the aggregate principal amount of the applicable Restricted
Global Notes to be reduced accordingly, and the Company shall execute and the
Trustee shall authenticate and make available for delivery to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, EXCEPT AS SET FORTH IN
THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER:
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<PAGE> 35
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO NORTHERN BORDER PIPELINE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (D)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE TRANSFER AGENT THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO NORTHERN BORDER PIPELINE COMPANY), OR
(G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
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AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any
Global Note or Definitive Note issued pursuant to subparagraph
(b)(iv), (c)(iv), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) of this Section 2.06 (and all Notes issued in
exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear
a legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO ARTICLE 2 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.03 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The
Regulation S Temporary Global Note shall bear a legend in substantially
the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a
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particular Global Note has been redeemed, repurchased or canceled in whole and
not in part, each such Global Note shall be returned to or retained and canceled
by the Trustee in accordance with Section 2.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the
Trustee, the Note Custodian or the Depositary at the direction of the Trustee,
to reflect such reduction; and if the beneficial interest is being exchanged for
or transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note, such other Global Note shall be
increased accordingly and an endorsement shall be made on such Global Note, by
the Trustee, the Note Custodian or by the Depositary at the direction of the
Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Global Notes and Definitive Notes upon the Company's order or at the
Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06 and 9.05 hereof).
(iii) The Registrar shall not be required to register
the transfer or exchange of any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Global Notes and Definitive Notes issued
upon any registration of transfer or exchange of Global Notes or
Definitive Notes shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Global Notes or Definitive Notes surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue,
to register the transfer of or to exchange Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any
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Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions
of Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a transfer or exchange may be submitted by
facsimile.
SECTION 2.07 Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08 Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. If
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the principal amount of any Note is considered paid under Section 4.01 hereof,
it ceases to be outstanding and interest and Liquidated Damages, if any, on it
cease to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a Redemption Date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest and Liquidated Damages, if any.
SECTION 2.09 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
SECTION 2.10 Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11 Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Notes to the Company upon the Company's written request. The Company
may not issue new Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.
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SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent record date, in each case at the rate provided in the Notes. The
Company shall promptly notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment.
The Company shall fix or cause to be fixed each such record date and payment
date, provided that no such record date shall be less than 10 days prior to the
related payment date for such defaulted interest. At least 15 days before the
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the record date, the related payment date
and the amount of such interest to be paid.
SECTION 2.13 CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01 Notices to Trustee.
The Company may elect to redeem Notes in whole or in part, provided,
however, that it shall furnish to the Trustee, at least 30 days but not more
than 60 days before a Redemption Date, an Officers' Certificate setting forth
(i) the Redemption Date, (ii) the principal amount of Notes to be redeemed and
(iii) the redemption price.
SECTION 3.02 Selection of Notes to be Redeemed.
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate; provided that no Notes of $1,000 or less shall be redeemed in part.
In the event of partial redemption by lot,
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the particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the Redemption Date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes (including CUSIP numbers) to be
redeemed and shall state
(a) the Redemption Date;
(b) the redemption price as computed in accordance with the
terms of the Notes;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the Redemption Date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest and Liquidated Damages, if any, on Notes called for
redemption cease to accrue on and after the Redemption Date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 30 days prior to the
Redemption Date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
Redemption Date at the redemption price.
A notice of redemption may not be conditional.
SECTION 3.05 Deposit of Redemption Price.
No later than 10:00 a.m. New York City Time on the Redemption Date, the
Company shall deposit with the Trustee or with the Paying Agent money sufficient
to pay the redemption price (as calculated in accordance with the terms of the
Notes) of and accrued interest and Liquidated Damages, if any, on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall promptly return
to the Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of, and
accrued interest and Liquidated Damages, if any, on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the Redemption Date, interest, and Liquidated Damages, if any,
shall cease to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest record date but on or
prior to the related Interest Payment Date, then any accrued and unpaid interest
and Liquidated Damages, if any, shall be paid to the Person in whose name such
Note was registered at the close of business on such record date. If any Note
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall be paid on the unpaid principal, from the Redemption Date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
4.01 hereof.
SECTION 3.06 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
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SECTION 3.07 Mandatory Redemption.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest and Liquidated Damages, if any, on the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, interest and
Liquidated Damages, if any, shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. New York City Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, interest and Liquidated Damages, if any, then due.
The Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under the Bankruptcy Code) on overdue principal at the rate borne on
the Notes to the extent lawful; it shall pay interest (including post-petition
interest in any proceeding under the Bankruptcy Code) on overdue installments of
interest and Liquidated Damages, if any, (without regard to any applicable grace
period) at the same rate to the extent lawful.
SECTION 4.02 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall
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in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, the City of New York for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the office of the Trustee at 14 Wall
Street, 8th floor, New York, New York 10005, as one such office or agency of the
Company in accordance with Section 2.03 hereof.
SECTION 4.03 Reports.
(a) The Company, pursuant to Section 314(a) of the Trust
Indenture Act, shall:
(i) For as long as the Company is required to file
information with the SEC pursuant to the Exchange Act, file with the
Trustee, within 15 days after the Company is required to file with the
SEC, copies of the annual report and of the information, documents and
other reports which the Company may be required to file with the SEC
pursuant to the Exchange Act; or if the Company is not required to file
information with the SEC pursuant to the Exchange Act, file with the
Trustee and the SEC in accordance with rules and regulations prescribed
from time to time by the SEC any supplementary and periodic
information, documents and reports which may be required pursuant to
the Exchange Act, in respect of a security listed and registered on a
national securities exchange as may be prescribed in such rules and
regulations.
(ii) Transmit within 30 days after the filing thereof
with the Trustee, in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraph (i) of this Section as may be required by rules and
regulations prescribed from time to time by the SEC.
(b) For so long as any Initial Notes remain outstanding, the
Company shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 4.04 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 150 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 4.05 Existence.
Subject to Article 5, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if it
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company.
SECTION 4.06 Limitations on Liens.
The Company will not, nor will it permit any Subsidiary of the Company
to, issue, create, assume or guarantee any Indebtedness of the character
specified in clause (i)(A) of the definition of the term "Indebtedness" secured
by a Lien upon any Property or upon any Capital Stock or indebtedness of any
Subsidiary that owns or leases any Property (whether such Property, Capital
Stock or Indebtedness is existing or owned on the date of this Indenture or is
hereafter created or acquired), without in any such case making effective
provision whereby all of the Notes outstanding hereunder shall be secured
equally and ratably with, or prior to, such Indebtedness so long as such
Indebtedness shall be so secured. This restriction shall not apply to (1) any
Permitted Lien and (2) any Lien securing Exempted Indebtedness.
SECTION 4.07 Restriction of Sale-Leaseback Transactions.
The Company will not, nor will it permit any Subsidiary to, engage in a
Sale-Leaseback Transaction with respect to any Property unless:
(i) the Company or such Subsidiary, as the case may
be, would be entitled to incur Indebtedness of the character specified
in clause (i)(A) of the definition of the term "Indebtedness" secured
by a Lien on the Property to be leased pursuant to such Sale- Leaseback
Transaction in a principal amount at least equal to the Attributable
Indebtedness with respect to such Sale-Leaseback Transaction without
securing the Notes pursuant to Section 4.06; or
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(ii) within a one-year period after the effective
date of such Sale-Leaseback Transaction, the Company or such Subsidiary
applies or causes to be applied an amount equal to not less than the
Attributable Indebtedness of such Sale-Leaseback Transaction to (a) the
voluntary defeasance or the repayment, redemption or retirement of the
Notes or other Indebtedness of the Company or any Subsidiary of the
character specified in clause (i)(A) of the definition of the terms
"Indebtedness" that matures more than one year after the creation of
such Indebtedness, (b) the acquisition, construction, development or
improvement of any property used or useful in the business of the
Company or any of its Subsidiaries, or (c) any combination of
applications referred to sub-clauses (a) and (b) of this clause (ii).
SECTION 4.08 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Section 4.05, 4.06 or 4.07 with
respect to the Notes or any negative covenant with respect to the Notes
contained in resolutions of the Management Committee, Officers' Certificate or
supplemental indenture authorizing the Notes if before the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Notes (voting as one class) shall, by act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
A waiver which changes or eliminates any term, provision or condition
of this Indenture which has expressly been included solely for the benefit of
the Holders, or which modifies the rights of the Holders with respect to such
term, provision or condition, shall be deemed not to affect the rights under
this Indenture of the Holders.
SECTION 4.09 Payments for Consent.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to or for the benefit of any Holder of Notes
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Notes unless such consideration is
offered to be paid and is paid to all Holders of the Notes that consent, waive
or agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.
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SECTION 4.10 Money for Note Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to the Notes, it will, on or before each due date of the principal of or
any premium, Liquidated Damages, if any, or interest on the Notes, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal and any premium, Liquidated Damages, if any, and interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Notes, it will, on or prior to each due date of the principal of or any premium,
Liquidated Damages, if any, or interest on the Notes, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for the Notes other than the
Trustee to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee, subject to the provisions of this Section,
that such Paying Agent will (1) hold all sums held by it for the payment of the
principal of (and premium, if any), Liquidated Damages, if any, or interest, if
any, on the Notes in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided; (2) give the Trustee notice of any default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal (and
premium, if any), Liquidated Damages, if any, or interest if any, on the Notes;
and (3) during the continuance of any such default, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent for payment in respect of the Notes.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium,
Liquidated Damages, if any, or interest on any of the Notes and remaining
unclaimed for two years after such principal, premium, Liquidated Damages, if
any, or interest has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Notes shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
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that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in an
Authorized Newspaper in each Place of Payment with respect to the Notes, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
ARTICLE V
SUCCESSORS
SECTION 5.01 Company May Consolidate, Etc., Only on Certain Terms.
Except as provided in Section 5.02, the Company shall not merge,
amalgamate or consolidate with or into any other Person (other than a merger or
amalgamation with any Subsidiary of the Company in which the Company is the
surviving entity) or sell, convey, lease, transfer or otherwise dispose of its
properties and assets as, or substantially as, an entirety to, any Person,
whether in a single transaction or series of related transactions, unless:
(a) (A) in the case of a merger, the Company is the surviving
entity, or (B) the Person formed by such consolidation or amalgamation or into
which the Company is merged or amalgamated or the Person which acquires by sale,
conveyance, transfer or disposition, or which leases, all or substantially all
of the properties and assets of the Company (i) is an entity organized under the
laws of the United States, a state thereof or the District of Columbia, or
Canada or a province thereof and (ii) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the principal of
and any premium, Liquidated Damages, if any, and interest on all the Notes and
the performance or observance of every other covenant and condition of this
Indenture on the part of the Company to be performed or observed;
(b) immediately before and immediately after giving effect to
such transaction, no Default or Event of Default has occurred and is continuing;
and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such merger,
amalgamation, consolidation, sale, conveyance, transfer, lease or other
disposition and the supplemental indenture required in connection with such
transaction, if any, comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
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SECTION 5.02 Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any sale, transfer, lease or other disposition of the
properties and assets of the Company as, or substantially as, an entirety in
accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such sale, transfer, lease or
other disposition is made (including a required transfer of the business and
assets of the Company to Northern Border Pipeline Corporation pursuant to
Section 14 of the Partnership Agreement) shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named originally as
the Company herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Notes.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
"Event of Default", wherever used herein with respect to the Notes,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest or any Liquidated
Damages upon the Notes when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(b) default in the payment of the principal of (or premium, if
any, on), the Notes at their Stated Maturity; or
(c) default in the performance, or breach, of any term,
covenant or warranty of the Company in this Indenture, and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the Notes
then outstanding a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(d) the Company pursuant to or within the meaning of any the
Bankruptcy Code (A) commences a voluntary case, (B) consents to the entry of any
order for relief against it in an
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involuntary case, (C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or (D) makes a general assignment for
the benefit of its creditors; or
(e) a court of competent jurisdiction enters an order or
decree under any the Bankruptcy Code that (A) is for relief against the Company
in an involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 90 days;
(f) any default by the Company or any of its Subsidiaries in
the payment, at the final maturity date and after the expiration of any
applicable grace period, of principal of, premium, if any, Liquidated Damages,
if any, or interest on indebtedness for money borrowed in the principal amount
then outstanding of $25,000,000 or more, or acceleration of any indebtedness of
such amount, such that such indebtedness becomes due and payable prior to its
maturity date and such acceleration is not rescinded within 60 days after notice
to the Company; or
(g) any other Event of Default identified in this Indenture.
SECTION 6.02 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to the Notes occurs and is
continuing (other than an Event of Default described in clause (d) or (e) of
Section 6.01), then in every such case the Trustee or the Holders of not less
than 25% in principal amount of the Notes may declare the principal amount of
the Notes to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due and
payable. Notwithstanding the foregoing, if an Event of Default specified in
clause (d) or (e) of Section 6.01 occurs, Notes then outstanding shall be due
and payable immediately without further action or notice.
At any time after such a declaration of acceleration with respect to
the Notes has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the notes then outstanding, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all the Notes,
(B) the principal of (and premium, if any, on) and
Liquidated Damages, if any, on the Notes have become due otherwise than
by such declaration of acceleration and any interest thereon at the
rate or rates prescribed therefor in the Notes,
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(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates prescribed
therefor in the Notes, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel;
and
(b) all Events of Default with respect to the Notes, other
than the non-payment of the principal of the Notes which have become due solely
by such declaration of acceleration, have been cured or waived as provided for
below.
If an Event of Default occurs and is not subsequently cured, the
Trustee shall, in the exercise of its power, use the degree of care of a prudent
man in the conduct of his affairs.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
SECTION 6.03 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on the
Notes when such interest becomes due and payable and such default continues for
a period of 30 days, or
(b) default is made in the payment of the principal of (or
premium, if any, on) and Liquidated Damages, if any, on the Notes at the
maturity date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of the Notes, the whole amount then due and payable on the Notes for
principal and any premium, Liquidated Damages, if any, and interest and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal and premium, Liquidated Damages and on any overdue
interest, at the rate or rates prescribed therefor in the Notes, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
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adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default with respect to the Notes occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders of the Notes by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 6.04 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company or any other
obligor upon the Notes, their property or their creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or otherwise, to take
any and all actions authorized under the Trust Indenture Act in order to have
claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding; provided, however, that the
Trustee may, on behalf of the Holders, vote for the election of a trustee in
bankruptcy or similar official and be a member of a creditors' committee or
other similar committee.
SECTION 6.05 Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
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SECTION 6.06 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any
premium, Liquidated Damages, if any, or interest, upon presentation of the Notes
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
7.07;
SECOND: To the payment of the amounts then due and unpaid for principal
of and any premium, Liquidated Damages and interest on the Notes, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal and any premium, Liquidated Damages and
interest, respectively; and
THIRD: The balance, if any, to the Company.
SECTION 6.07 Limitation on Suits.
No Holder of the Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Notes;
(b) the Holders of not less than 25% in principal amount of
the Notes then outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
indemnity satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Notes then outstanding;
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it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 6.08 Unconditional Right of Holders to Receive Principal, Premium,
Liquidated Damages and Interest.
Notwithstanding any other provision in this Indenture, Holders shall
have the right, which is absolute and unconditional, to receive payment of the
principal of and any premium any Liquidated Damages and (subject to Sections
2.06 and the provisions hereof regarding the payment of interest) interest on
the Notes on the maturity date expressed in the Notes (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement of
any such payment, and such rights shall not be impaired without the consent of
such Holder.
SECTION 6.09 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 6.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Notes herein, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article
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or by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
SECTION 6.12 Control by Holders.
The Holders of a majority in aggregate principal amount of the Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Notes; provided, however,
that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture;
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; and
(c) subject to the provisions of Section 7.01, the Trustee
shall have the right to decline to follow any such direction if the Trustee in
good faith shall determine that the proceeding so directed would involve the
Trustee in personal liability.
SECTION 6.13 Waiver of Past Defaults.
The Holders of a majority in aggregate principal amount of the Notes
may on behalf of the Holders of all the Notes waive any past default hereunder
and its consequences, except
(a) a continuing default in the payment of the principal of or
any premium, Liquidated Damages or interest on the Notes, or
(b) a default in respect of a covenant or provision hereof
which cannot be modified or amended hereunder without the consent of each
Holder.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 6.14 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs,
including legal fees and expenses, against any such party litigant, in the
manner and to the extent
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provided in the Trust Indenture Act; provided, however, that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company or the Trustee.
SECTION 6.15 Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VII
TRUSTEE
SECTION 7.01 Certain Duties and Responsibilities.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
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(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.12 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02 Notice of Defaults.
If a Default occurs and is continuing with respect to the Notes, the
Trustee shall, within 90 days after it occurs, transmit, in the manner and to
the extent provided in Section 313(c) of the Trust Indenture Act, notice of all
uncured or unwaived Defaults actually known to it; provided, however, that,
except in the case of a Default in payment on the Notes, the Trustee may
withhold the notice if and so long as the board of directors, the executive
committee or a trust committee of its directors and/or its duly authorized
officers in good faith determines that withholding such notice is in the
interests of Holders; provided further, however, that, in the case of any
default or breach of the character specified in Section 6.01(c) with respect to
the Notes, no such notice to Holders shall be given until at least 60 days after
the occurrence thereof.
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SECTION 7.03 Certain Rights of Trustee.
Subject to the provisions of Section 7.01:
(a) the Trustee may conclusively rely on and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Company Request or Company
Order (other than delivery of any Security to the Trustee for authentication and
delivery pursuant to Section 2.02, which shall be sufficiently evidenced as
provided therein) and any resolution of the Management Committee shall be
sufficiently evidenced;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and
the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder;
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(h) the Trustee may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded;
(i) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture;
(j) the Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a default is received by the Trustee at the Corporate Trust Office of the
Trustee, and such notice references the Notes and this Indenture; and
(k) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 7.04 Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. Neither the Trustee nor any Authenticating Agent makes any
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee or any Authenticating Agent shall not be accountable for
the use or application by the Company of Notes or the proceeds thereof.
SECTION 7.05 May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 7.08
and 7.13, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar
or such other agent.
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SECTION 7.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 7.07 Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to time such compensation
as shall be agreed in writing from time to time between the Company and the
Trustee for all services rendered by it hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct; and
(c) to indemnify each of the Trustee and any predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damages, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses of defending itself
against any claim (whether asserted by the Company, a Holder or another Person)
or liability in connection with the exercise or performance of any of its powers
or duties hereunder, except those attributable to its negligence or willful
misconduct.
The obligations of the Company under this Section to compensate the
Trustee and to pay or reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness when such obligations have
been past due for 90 days. Such additional indebtedness shall be secured by a
lien prior to that of the Notes upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of the Holders
of particular Notes.
Without limiting any rights available to the Trustee under applicable
law, when the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 6.01(d) or Section 6.01(e), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for such services are intended to constitute expenses of
administration under any applicable provisions of the Bankruptcy Code.
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The provisions of this Section shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Notes.
SECTION 7.08 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 7.09 Corporate Trustee Required; Eligibility.
There shall at all times be one Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus required by the Trust Indenture Act. If such
Person publishes reports of condition at least annually, pursuant to law or to
the requirements of a supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Person shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 7.10 Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 7.11.
The Trustee may resign at any time with respect to the Notes by giving
written notice thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 7.11 shall not have been delivered to the
Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes.
The Trustee may be removed at any time with respect to the Notes by Act
of the Holders of a majority in principal amount of the Notes then outstanding,
delivered to the Trustee and to the Company. If the instrument of acceptance by
a successor Trustee required by Section 7.11 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of removal, the
Trustee being removed may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes.
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If at any time:
(1) the Trustee shall fail to comply with Section 7.08 after
written request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 7.09
and shall fail to resign after written request therefor by the Company or by any
such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company may remove the Trustee, or (B) subject
to Section 6.14, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee with
respect to all Notes and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, with respect
to the Notes, the Company shall promptly appoint a successor Trustee or Trustees
with respect to the Notes (it being understood that any such successor Trustee
may be appointed with respect to the Notes and that at any time there shall be
only one Trustee with respect to the Notes) and shall comply with the applicable
requirements of Section 7.11. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Notes shall be appointed by Act of the Holders of a majority
in principal amount of the Notes delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
7.11, become the successor Trustee with respect to the Notes and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Notes shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 7.11, any
Holder who has been a bona fide Holder of Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Notes.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee in the manner provided
in Section 10.02. Each notice shall include the name of the successor Trustee
with respect to the Notes and the address of its Corporate Trust Office.
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SECTION 7.11 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Notes, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 7.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
SECTION 7.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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SECTION 7.14 Appointment of Authenticating Agent.
The Trustee (upon notice to the Company) may appoint an Authenticating
Agent or Agents which shall be authorized to act on behalf of the Trustee to
authenticate the Notes (in accordance with procedures acceptable to the Trustee)
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 2.06, and Notes so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as
if authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Notes by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of such Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or such Authenticating
Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders, as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as
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an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Notes, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Notes.
THE FIRST NATIONAL BANK OF CHICAGO
As Trustee
By:
------------------------------------
As Authenticating Agent
By:
------------------------------------
Authorized Officer
SECTION 7.15 Reports by Trustee to Holders of the Notes.
(a) Within 60 days after each May 15 commencing July 15, 2000, the
Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture to the extent required pursuant to the Trust
Indenture Act at the times and in the manners provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Notes are listed, with the Commission and with the Company. The Company will
promptly notify the Trustee when the Notes are listed on any stock exchange.
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ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Management Committee evidenced by
a resolution set forth in an exhibit to an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02 Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Notes when such payments are due from
the trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith (iv) rights of registration of transfer and exchange of the
Notes and the Company's optional rights, (v) the obligations of the Company
under Section 4.02, (vi) rights of registration of transfer and exchange of the
Notes and the Company's optional right of redemption and (iv) the Legal
Defeasance provisions of this Indenture. For this purpose, Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due, (b) the Company's
obligations with respect to such Notes under Article 2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may
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exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03 Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.06, 4.07 and
Article 5 hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof
and Sections 6.01(c) through 6.01(g) hereof shall not constitute Events of
Default.
SECTION 8.04 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable Redemption Date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
Redemption Date;
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(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Section 6.01(d) or 6.01(e) hereof is concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
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SECTION 8.05 Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively, for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest and
Liquidated Damages, if any, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(h) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06 Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest and Liquidated Damages, if any, on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest and
Liquidated Damages, if any, has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter, as a secured creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
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SECTION 8.07 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. dollars or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest and Liquidated Damages, if
any, on any Note following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01 Without Consent of Holders of Notes.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger, consolidation or sale of
assets of the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any such Holder; or
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
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Upon the request of the Company accompanied by a resolution of its
Management Committee authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.03 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.02 With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a tender offer or exchange offer for the Notes),
and, subject to Sections 6.13 and 6.08 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest and Liquidated Damages, if any, on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Management Committee authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by a Responsible Officer of the Trustee of the documents
described in Section 7.03 hereof, the Trustee shall join with the Company in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or
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supplemental Indenture or waiver. Subject to Sections 6.13 and 6.08 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver may not (with respect to any Notes
held by a nonconsenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver of any provision of this Indenture
or the Notes;
(b) reduce the principal of or change the fixed maturity of
any Note or alter or waive in any manner that adversely affects the rights of
any Holder of Notes any of the provisions with respect to the redemption of the
Notes;
(c) reduce the rate of or change the time for payment of
interest, including default interest, or Liquidated Damages, if any, on any
Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest or Liquidated Damages, if any, on
the Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the then outstanding Notes and
a waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in
the Notes;
(f) make any change that adversely affects the rights of any
Holder of Notes in the provisions of this Indenture relating to waivers of past
Defaults or make any change to the rights of Holders of Notes to receive
payments of principal of or interest or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note; or
(h) make any change in Section 6.13 or 6.08 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
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SECTION 9.04 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company, in
exchange for all Notes, may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06 Trustee to Sign Amendments, Etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise. The Company may not sign an amendment or
supplemental Indenture until the Management Committee approves it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.01 hereof) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
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SECTION 10.02 Notices.
Any notice or communication by the Company or the Trustee to the others
is duly given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to the Company:
Northern Border Pipeline Company
1111 South 103rd Street
Omaha, Nebraska 68124-1000
Telecopier No.: (402) 398-7873
Attention: Director of Finance
If to the Trustee:
The First National Bank of Chicago
1 Banc One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Services Division
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03 Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 10.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 10.05 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
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(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 10.06 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07 No Personal Liability of Directors, Officers, Employees and
Stockholders.
None of the members of the Management Committee, the General Partners
or the General Partners' or Operator's directors, officers, employees, partners,
incorporators or stockholders, if any, shall have any liability for any of the
Company's obligations under the Notes or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the SEC that such a waiver is against public policy.
SECTION 10.08 Governing Law.
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 10.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10 Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
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SECTION 10.11 Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12 Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
SECTION 10.14 Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by (a) one or more instruments of
substantially similar tenor signed (either physically or by means of a facsimile
or an electronic transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such Holders in person or
by agent duly appointed in writing; (b) the record of the Holders voting in
favor thereof at any meeting of Holders duly called and held in accordance with
the provisions of Article IX, or (c) a combination of such instruments and
record. Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record are delivered (either
physically or by means of a facsimile or an electronic transmission, provided
that such electronic transmission is transmitted through the facilities of a
Depositary) to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments or record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments or of the Holders reflected
by such record. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of
the Trustee and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
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a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership, principal amount and serial numbers of Notes held by any
Person, and the date of commencement of such Person's holding the same, shall be
proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other action of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Note may do so with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any different part of such principal amount.
The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders, but the Company
shall have no obligation to do so. With regard to any record date set pursuant
to this paragraph, the Holders of Notes on such record date (or their duly
appointed agents), and only such Persons, shall be entitled to give or take the
relevant action, whether or not such Holders remain Holders after such record
date.
The record of any meeting of Holders shall be proved as provided in
Section 11.06.
ARTICLE XI
MEETINGS OF HOLDERS OF NOTES
SECTION 11.01 Purposes for Which Meetings May Be Called.
A meeting of Holders may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other act provided by this
Indenture to be made, given or taken by Holders.
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SECTION 11.02 Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders for any
purpose specified in Section 11.01, to be held at such time and at such place in
the Borough of Manhattan, The City of New York as the Trustee shall determine.
Notice of every meeting of Holders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 10.02, not less than 21 nor
more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company (by or pursuant to a board
resolution or Officers' Certificate) or the Holders of at least 10% in principal
amount of the Notes then outstanding have requested the Trustee to call a
meeting of the Holders for any purpose specified in Section 11.01, by written
request setting forth in reasonable detail the action proposed to be taken at
the meeting, and the Trustee shall not have mailed notice of such meeting within
21 days after receipt of such request (whichever shall be required pursuant to
Section 10.02) or shall not thereafter proceed to cause the meeting to be held
as provided herein, then the Company or the Holders in the amount above
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York for such meeting and may call such
meeting for such purposes by giving notice thereof as provided in clause (a) of
this Section 11.02.
SECTION 11.03 Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders, a Person shall be (1)
a Holder of one or more Notes, or (2) a Person appointed by an instrument in
writing as proxy for a Holder or Holders by such Holder or Holders. The only
Persons who shall be entitled to be present or to speak at any meeting of
Holders shall be the Persons entitled to vote at such meeting and their counsel,
any representatives of the Trustee and its counsel and any representatives of
the Company and its counsel.
SECTION 11.04 Quorum; Action.
The presence of Persons holding Notes in an aggregate principal amount
sufficient to take action upon the matter for which such meeting was called
shall constitute a quorum for a meeting of Holders. In the absence of a quorum
within 30 minutes after the time appointed for any such meeting, the meeting
shall, if convened at the request of Holders, be dissolved. In any other case,
the meeting may be adjourned for a period of not less than 10 days as determined
by the chairman of the meeting prior to the adjournment of such adjourned
meeting. Notice of the reconvening of any adjourned meeting shall be given as
provided in Section 11.02(a), except that such notice need be given only once
not less than five days prior to the date on which the meeting is scheduled to
be reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Notes that shall constitute a quorum.
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A resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted only by the
affirmative vote of the Holders of a majority in principal amount of the Notes;
provided, however, that any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other Act which this
Indentures expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less or more than a majority in principal amount
of the Notes may be adopted at a meeting or an adjourned meeting duly reconvened
and at which a quorum is present as aforesaid by the affirmative vote of the
Holders of such specified percentage in principal amount of the Notes.
Any resolution passed or decision taken at any meeting of Holders of
Notes duly held in accordance with this Section shall be binding on all the
Holders, whether or not such Holders were present or represented at the meeting.
SECTION 11.05 Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders in regard to proof of the holding of Notes and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Notes shall be proved in the manner specified in
Section 10.14 and the appointment of any proxy shall be proved in executing the
proxy witnessed or guaranteed by any trust company, bank or banker authorized by
Section 10.14 to certify to the holding of Notes. Such regulations may provide
that written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 10.14 or other
proof.
(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company, or by Holders as provided in Section 11.02(b), in which case the
Company or the Holders calling the meeting, as the case may be, shall in like
manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled to
vote a majority in principal amount of the Notes represented at the meeting.
(c) At any meeting each Holder of a Note or proxy shall be entitled to
one vote for each $1,000 principal amount of Notes held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not then outstanding and ruled by the chairman
of the meeting to be not then outstanding. The chairman of the meeting shall
have no right to vote, except as a Holder of a Note or proxy.
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(d) Any meeting of Holders duly called pursuant to Section 11.02 at
which a quorum is present may be adjourned from time to time by Persons entitled
to vote a majority in principal amount of the Notes then outstanding represented
at the meeting; and the meeting may be held as so adjourned without further
notice.
SECTION 11.06 Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the principal amounts and serial
numbers of the Notes held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record of the proceedings of each meeting of
Holders shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 11.02 and, if
applicable, Section 11.04. Such record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and a copy of
same shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
[Signatures Page(s) Follow]
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SIGNATURES
Dated as of August 17,1999
Issuer:
NORTHERN BORDER PIPELINE COMPANY
By: NORTHERN PLAINS NATURAL GAS
COMPANY, Operator
By: /s/ JERRY L. PETERS
----------------------------------------
Name: Jerry L. Peters
Title: Vice President, Finance and
Treasurer
Trustee:
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ SHARON MCGRATH
----------------------------------------
Name: Sharon McGrath
Title: Assistant Vice President
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EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D REGISTRATION RIGHTS AGREEMENT
<PAGE> 84
EXHIBIT A-1
(FACE OF NOTE)
CUSIP 664787-AA6
7.75% Senior Notes due 2009
No. _____ $__________
NORTHERN BORDER PIPELINE COMPANY
promises to pay to
--------------------------------------------------------------
or registered assigns,
the principal sum of
------------------------------------------------------------
Dollars on September 1, 2009
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
NORTHERN BORDER PIPELINE COMPANY
By: NORTHERN PLAINS NATURAL
GAS COMPANY, Operator
By:
------------------------------------
Name: Jerry L. Peters
Title: Vice President, Finance and
Treasurer
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: Dated:
------------------------------- -------------------
A1-2
<PAGE> 85
(Back of Note)
7.75% Senior Notes due 2009
[Insert the Global Note Legend, if applicable, pursuant to
the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable, pursuant to
the provisions of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Northern Border Pipeline Company, a Texas general
partnership (the "Company"), promises to pay interest on the principal amount of
this Note at 7.75% per annum, from August 17, 1999 until maturity and shall pay
the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay interest
and Liquidated Damages, if any, semiannually in arrears on March 1 and September
1 of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
March 1, 2000. The Company shall pay interest (including post-petition interest
in any proceeding under the Bankruptcy Code) on overdue principal and premium,
if any, from time to time on demand at the rate borne on the Notes; it shall pay
interest (including post-petition interest in any proceeding under the
Bankruptcy Code) on overdue installments of interest and Liquidated Damages, if
any, (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the February 15 or
August 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders
of which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
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<PAGE> 86
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of August 17, 1999 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended ("TIA").
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $200,000,000 in aggregate principal
amount.
5. Optional Redemption. The Notes will be subject to redemption at any
time at the option of the Company in whole or in part, at a redemption price
equal to the principal amount of the Notes to be redeemed, plus any accrued and
unpaid interest and any Liquidated Damages, if any, thereon to the applicable
Redemption Date plus the "make-whole premium" as defined below.
The "make-whole premium" or "premium," with respect to any
Note to be redeemed, shall be equal to the excess, if any, of: (a) the sum of
the present values, calculated as of the Redemption Date, of (A) each interest
payment that, but for such redemption, would have been payable on the Note or
portion thereof being redeemed on each Interest Payment Date occurring after the
Redemption Date (excluding any accrued interest for the period prior to the
Redemption Date); and (B) the principal amount that, but for such redemption,
would have been payable at the final maturity of the Note being redeemed; over
(b) the principal amount of the Note being redeemed.
The present values of interest and principal payments referred
to in clause (a) above will be determined in accordance with generally accepted
principles of financial analysis. These present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the comparable treasury yield (as
defined below) plus 25 basis points. The make-whole premium will be calculated
by an independent investment banking institution of national standing appointed
by the Company. If the Company fails to appoint an independent investment banker
at least 45 days prior to the Redemption Date, or if such independent investment
banker is unwilling or unable to make the calculation, the calculation will be
made by Lehman Brothers Inc. If Lehman Brothers Inc. is unwilling or unable to
make the calculation, the Company will appoint an independent investment banking
institution of national standing to make the calculation.
For purposes of determining the make-whole premium, comparable
treasury yield means a rate of interest per annum equal to the weekly average
yield to maturity of United States Treasury Securities that have a constant
maturity that corresponds to the remaining term to maturity of the Notes,
calculated to the nearest 1/12th of a year. The comparable treasury yield will
be determined as of the third business day immediately preceding the applicable
Redemption Date.
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<PAGE> 87
The weekly average yields of United States Treasury Securities
will be determined by reference to the most recent statistical release published
by the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release. If the H.15 statistical release sets
forth a weekly average yield for United States Treasury Securities having a
constant maturity that is the same as the remaining term calculated as set forth
above, then the comparable treasury yield will be equal to such weekly average
yield. In all other cases, the comparable treasury yield will be calculated by
interpolation on a straight-line basis, between the weekly average yields on the
United States Treasury Securities that have a constant maturity closest to and
greater than the remaining term and the United States Treasury Securities that
have a constant maturity closest to and less than the remaining term (in each
case as set forth in the H.15 statistical release or any successor release). Any
weekly average yields calculated by interpolation will be rounded to the nearest
1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward.
If weekly average yields for United States Treasury Securities are not available
in the H.15 statistical release or otherwise, then the comparable treasury yield
will be calculated by interpolation of comparable rates selected by an
independent investment banker selected in the manner described in the second
preceding paragraph.
6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the Redemption Date, interest and Liquidated Damages, if any, cease to
accrue on Notes or portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority
A1-5
<PAGE> 88
in principal amount of the then outstanding Notes. Without the consent of any
Holder of a Note, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of certificated Notes, to provide for the assumption
of the Company's obligations to Holders of the Notes in case of a merger or
consolidation or to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA.
11. Defaults and Remedies. Events of Default include: (a) default in
the payment of any interest or Liquidated Damages, if any, upon the Notes when
it becomes due and payable, and continuance of such default for a period of 30
days; or (b) default in the payment of the principal of (or premium, if any,
on), the Notes at their Stated Maturity; or (c) default in the performance, or
breach, of any term, covenant or warranty of the Company in this Indenture, and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Notes then outstanding a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" under the Indenture; or (d) the Company pursuant to or within the
meaning of the Bankruptcy Code (A) commences a voluntary case, (B) consents to
the entry of any order for relief against it in an involuntary case, (C)
consents to the appointment of a Custodian of it or for all or substantially all
of its property, or (D) makes a general assignment for the benefit of its
creditors; or (e) a court of competent jurisdiction enters an order or decree
under the Bankruptcy Code that (A) is for relief against the Company in an
involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 90 days; or (f) any
default by the Company or any of its Subsidiaries in the payment, at the final
maturity date and after the expiration of any applicable grace period, of
principal of, premium, if any, Liquidated Damages, if any, or interest on
indebtedness for money borrowed in the principal amount then outstanding of
$25,000,000 or more, or acceleration of any indebtedness of such amount, such
that such indebtedness becomes due and payable prior to its maturity date and
such acceleration is not rescinded within 60 days after notice to the Company;
or (g) any other Event of Default identified in the Indenture. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events (as described in (d) and (e) above)
of bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Notes. The
A1-6
<PAGE> 89
Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. None of the Company's management
committee members, or the Company's general partners or the Company's general
partners' and operator's directors, officers, employees, incorporators or
stockholders, if any, shall have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
14. Authentication. This Note shall not be valid until authenticated by
the manual signature of a Responsible Officer of the Trustee or an
Authenticating Agent.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to
Minors Act).
16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in and shall be bound by
the provisions of the Registration Rights Agreement dated as of August 17, 1999,
between the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
The Company will furnish to any Holder, upon written request, a copy of
the Indenture and/or the Registration Rights Agreement. Requests may be made to:
The First National Bank of Chicago
1 Banc One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Services Division
A1-7
<PAGE> 90
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE
- --------------------------------------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements
of the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may
be determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of
1934, as amended.
A1-8
<PAGE> 91
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL
NOTE**
The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SIGNATURE OF
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE AUTHORIZED
DECREASE IN INCREASE IN FOLLOWING SUCH SIGNATORY OF
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR NOTE
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN
- ----------------------- ----------------------- ---------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
- ------------------
** This should be included only if the Note is issued in global form.
A1-9
<PAGE> 92
EXHIBIT A-2
(FACE OF REGULATION S TEMPORARY GLOBAL NOTE)
CUSIP U66453AA6
7.75% Senior Notes due 2009
No. _____ $__________
NORTHERN BORDER PIPELINE COMPANY
promises to pay to
--------------------------------------------------------------
or registered assigns,
----------------------------------------------------------
the principal sum of
------------------------------------------------------------
Dollars on September 1, 2009
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
NORTHERN BORDER PIPELINE COMPANY
By: NORTHERN PLAINS NATURAL
GAS COMPANY, Operator
By:
------------------------------------
Name: Jerry L. Peters
Title: Vice President, Finance and
Treasurer
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By: Dated:
------------------------------- -------------------
A2-1
<PAGE> 93
(BACK OF REGULATION S TEMPORARY GLOBAL NOTE)
7.75% SENIOR NOTES DUE 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO ARTICLE 2 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.03 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF
U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (A) TO NORTHERN BORDER PIPELINE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB
A2-2
<PAGE> 94
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
904 UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
TRANSFER AGENT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO NORTHERN BORDER
PIPELINE COMPANY), OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND
"UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS
A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. Interest. Northern Border Pipeline Company, a Texas general
partnership (the "Company"), promises to pay interest on the principal amount of
this Note at 7.75% per annum from August 17, 1999 until maturity and shall pay
the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay interest
and Liquidated Damages, if any, semiannually in arrears on March 1 and September
1 of each year,
A2-3
<PAGE> 95
or if any such day is not a Business Day, on the next succeeding Business Day
(each an "Interest Payment Date"). Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be March 1, 2000.
The Company shall pay interest (including post-petition interest in any
proceeding under the Bankruptcy Code) on overdue principal and premium, if any,
from time to time on demand at the rate borne on the Notes; it shall pay
interest (including post-petition interest in any proceeding under the
Bankruptcy Code) on overdue installments of interest and Liquidated Damages, if
any, (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or
more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the Persons who
are registered Holders of Notes at the close of business on the February 15 or
August 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders
of which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. Paying Agent and Registrar. Initially, The First National Bank of
Chicago, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an Indenture dated as
of August 17, 1999 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended ("TIA").
The Notes are subject to all such terms, and Holders are referred to
A2-4
<PAGE> 96
the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express provisions of the Indenture,
the provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company limited to $200,000,000 in aggregate principal
amount.
5. Optional Redemption. The Notes will be subject to redemption at any
time at the option of the Company in whole or in part, at a redemption price
equal to the principal amount of the Notes to be redeemed, plus any accrued and
unpaid interest and any Liquidated Damages, if any, thereon to the applicable
Redemption Date plus the "make-whole premium" as defined below.
The "make-whole premium" or "premium," with respect to any
Note to be redeemed, shall be equal to the excess, if any, of: (a) the sum of
the present values, calculated as of the Redemption Date, of (A) each interest
payment that, but for such redemption, would have been payable on the Note or
portion thereof being redeemed on each Interest Payment Date occurring after the
Redemption Date (excluding any accrued interest for the period prior to the
Redemption Date); and (B) the principal amount that, but for such redemption,
would have been payable at the final maturity of the Note being redeemed; over
(b) the principal amount of the Note being redeemed.
The present values of interest and principal payments referred
to in clause (1) above will be determined in accordance with generally accepted
principles of financial analysis. These present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the comparable treasury yield (as
defined below) plus 25 basis points. The make-whole premium will be calculated
by an independent investment banking institution of national standing appointed
by the Company. If the Company fails to appoint an independent investment banker
at least 45 days prior to the Redemption Date, or if such independent investment
banker is unwilling or unable to make the calculation, the calculation will be
made by Lehman Brothers Inc. If Lehman Brothers Inc. is unwilling or unable to
make the calculation, the Company will appoint an independent investment banking
institution of national standing to make the calculation.
For purposes of determining the make-whole premium, comparable
treasury yield means a rate of interest per annum equal to the weekly average
yield to maturity of United States Treasury Securities that have a constant
maturity that corresponds to the remaining term to maturity of the Notes,
calculated to the nearest 1/12th of a year. The comparable treasury yield will
be determined as of the third business day immediately preceding the applicable
Redemption Date.
The weekly average yields of United States Treasury Securities
will be determined by reference to the most recent statistical release published
by the Federal Reserve Bank of New York and designated "H.15(519) Selected
Interest Rates" or any successor release. If the H.15 statistical release sets
forth a weekly average yield for United States Treasury Securities having a
constant maturity that is the same as the remaining term calculated as set forth
above, then the comparable treasury yield will be equal to such weekly average
yield. In all other cases, the
A2-5
<PAGE> 97
comparable treasury yield will be calculated by interpolation on a straight-line
basis, between the weekly average yields on the United States Treasury
Securities that have a constant maturity closest to and greater than the
remaining term and the United States Treasury Securities that have a constant
maturity closest to and less than the remaining term (in each case as set forth
in the H.15 statistical release or any successor release). Any weekly average
yields calculated by interpolation will be rounded to the nearest 1/100th of 1%,
with any figure of 1/200th of 1% or above being rounded upward. If weekly
average yields for United States Treasury Securities are not available in the
H.15 statistical release or otherwise, then the comparable treasury yield will
be calculated by interpolation of comparable rates selected by an independent
investment banker selected in the manner described in the second preceding
paragraph.
6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the Redemption Date, interest and Liquidated Damages, if any, cease to
accrue on Notes or portions thereof called for redemption.
8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
A2-6
<PAGE> 98
10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation or to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA.
11. Defaults and Remedies. Events of Default include: (a) default in
the payment of any interest or Liquidated Damages, if any, upon the Notes when
it becomes due and payable, and continuance of such default for a period of 30
days; or (b) default in the payment of the principal of (or premium, if any,
on), the Notes at their Stated Maturity; or (c) default in the performance, or
breach, of any term, covenant or warranty of the Company in this Indenture, and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in principal amount
of the Notes then outstanding a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" under the Indenture; or (d) the Company pursuant to or within the
meaning of the Bankruptcy Code (A) commences a voluntary case, (B) consents to
the entry of any order for relief against it in an involuntary case, (C)
consents to the appointment of a Custodian of it or for all or substantially all
of its property, or (D) makes a general assignment for the benefit of its
creditors; or (e) a court of competent jurisdiction enters an order or decree
under the Bankruptcy Code that (A) is for relief against the Company in an
involuntary case, (B) appoints a Custodian of the Company or for all or
substantially all of its property, or (C) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 90 days; or (f) any
default by the Company or any of its Subsidiaries in the payment, at the final
maturity date and after the expiration of any applicable grace period, of
principal of, premium, if any, Liquidated Damages, if any, or interest on
indebtedness for money borrowed in the principal amount then outstanding of
$25,000,000 or more, or acceleration of any indebtedness of such amount, such
that such indebtedness becomes due and payable prior to its maturity date and
such acceleration is not rescinded within 60 days after notice to the Company;
or (g) any other Event of Default identified in the Indenture. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately. Notwithstanding the foregoing, in the case of an
Event of Default arising from certain events (as described in (d) and (e) above)
of bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from
A2-7
<PAGE> 99
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes. The Company is required to deliver
to the Trustee annually a statement regarding compliance with the Indenture, and
the Company is required upon becoming aware of any Default or Event of Default,
to deliver to the Trustee a statement specifying such Default or Event of
Default.
12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
13. No Recourse Against Others. None of the Company's management
committee members, or the Company's general partners or the Company's general
partners' and operator's directors, officers, employees, incorporators or
stockholders, if any, shall have any liability for any obligations of the
Company under the Notes or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
14. Authentication. This Note shall not be valid until authenticated by
the manual signature of a Responsible Officer of the Trustee or an
authenticating agent.
15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in and shall be bound by
the provisions of the Registration Rights Agreement dated as of August 17, 1999,
between the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
A2-8
<PAGE> 100
The Company will furnish to any Holder, upon written request, a copy of
the Indenture and/or the Registration Rights Agreement. Requests may be made to:
The First National Bank of Chicago
1 Banc One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Services Division
A2-9
<PAGE> 101
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the face of this Note)
SIGNATURE GUARANTEE
- --------------------------------------------------------------------------------
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements
of the Registrar, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may
be determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of
1934, as amended.
A2-10
<PAGE> 102
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global Note for
an interest in another Global Note, or of other Restricted Global Notes for an
interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT SIGNATURE OF
AMOUNT OF AMOUNT OF OF THIS GLOBAL NOTE AUTHORIZED
DECREASE IN INCREASE IN FOLLOWING SUCH SIGNATORY OF
PRINCIPAL AMOUNT PRINCIPAL AMOUNT DECREASE (OR TRUSTEE OR NOTE
DATE OF EXCHANGE OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE INCREASE) CUSTODIAN
- ----------------------- ----------------------- ---------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE> 103
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Northern Border Pipeline Company
1111 South 103rd Street
Omaha, Nebraska 68124-1000
Telecopier No.: (402) 398-7780
Attention: Director of Finance
The First National Bank of Chicago
Banc One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Services Division
Re: 7.75% Senior Notes due 2009
Reference is hereby made to the Indenture, dated as of August 17, 1999 (the
"Indenture"), between Northern Border Pipeline Company, as issuer (the
"Company") and The First National Bank of Chicago, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.____________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $__________ in such Note[s] or interests (the "Transfer"),
to ____________________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
(1) [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement
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<PAGE> 104
Legend printed on the 144A Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
(2) [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed in,
on or through the facilities of a designated offshore securities market and
neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act and (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Note and in the
Indenture and the Securities Act.
(3) [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A DEFINITIVE NOTE
PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR
REGULATION S. The Transfer is being effected in compliance with the transfer
restrictions applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with
the prospectus delivery requirements of the Securities Act.
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<PAGE> 105
(4) [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws
of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of
the Indenture, the transferred beneficial interest or Definitive Note
will no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The transfer
is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky
securities laws of any state of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Restricted Definitive Notes
and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with the
transfer restrictions contained in the Indenture and any applicable
blue sky securities laws of any State of the United States and (ii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the
Restricted Global Notes or Restricted Definitive Notes and in the
Indenture.
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<PAGE> 106
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
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[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
-----------------
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<PAGE> 107
ANNEX A TO CERTIFICATE OF TRANSFER
The Transferor owns and proposes to transfer the following: [CHECK ONE]
[ ] a beneficial interest in the:
[ ] 144A Global Note (CUSIP __________); or
[ ] Regulation S Global Note (CUSIP _________); or
[ ] a Restricted Definitive Note.
After the Transfer the Transferee will hold: [CHECK ONE]
[ ] a beneficial interest in the:
[ ] 144A Global Note (CUSIP __________); or
[ ] Regulation S Global Note (CUSIP __________); or
[ ] Unrestricted Global Note (CUSIP __________); or
[ ] a Restricted Definitive Note; or
[ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
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<PAGE> 108
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Northern Border Pipeline Company
1111 South 103rd Street
Omaha, Nebraska 68124-1000
Telecopier No.: (402) 398-7780
Attention: Director of Finance
The First National Bank of Chicago
1 Banc One Plaza, Suite IL1-0126
Chicago, Illinois 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Services Division
Re: 7.75% Senior Notes due 2009
Reference is hereby made to the Indenture, dated as of August 17, 1999 (the
"Indenture"), between Northern Border Pipeline Company, as issuer (the
"Company"), and The First National Bank of Chicago, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.____________________ (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$__________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED
GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN
UNRESTRICTED GLOBAL NOTE
(1) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted
Global Note in an equal principal amount, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own
account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States
Securities Act of 1933, as amended (the "Securities Act"), (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest in an Unrestricted
Global Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
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<PAGE> 109
(2) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in
compliance with any applicable blue sky securities laws of any state of
the United States.
(3) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with
the Owner's Exchange of a Restricted Definitive Note for a beneficiary
interest in an Unrestricted Global Note, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the beneficial interest is being acquired
in compliance with any applicable blue sky securities laws of any state
of the United States.
(4) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is
being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and
(iv) the Unrestricted Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED
GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES
(5) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note
for a Restricted Definitive Note with an equal principal amount, the
Owner hereby certifies that the Restricted Definitive Note is being
acquired for the Owner's own account without transfer. Upon
consummation of the proposed Exchange in accordance with the terms of
the Indenture, the Restricted Definitive Note issued will
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<PAGE> 110
continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note
and in the Indenture and the Securities Act.
(6) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial
interest in the [CHECK ONE]
[ ] 144A Global Note [ ] Regulation S Global Note
with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account
without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of
the United States. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the relevant Restricted Global
Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Owner]
By:
---------------------------------
Name:
Title:
Dated:
--------------------
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<PAGE> 111
EXHIBIT D
SEE EXHIBIT 4.2 TO REGISTRATION STATEMENT.
<PAGE> 1
EXHIBIT 4.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of August 17, 1999 by and among Northern Border Pipeline
Company, a Texas general partnership (the "Company"), and Banc of America
Securities LLC ("BOA"), Lehman Brothers Inc. ("Lehman Brothers"), A.G. Edwards &
Sons, Inc. and Salomon Smith Barney Inc. (the "Initial Purchasers"), who have
agreed to purchase the Company's 7.75% Senior Notes due 2009 (the "Senior
Notes") pursuant to and subject to the terms and conditions of a certain
Purchase Agreement, dated August 11, 1999 (the "Purchase Agreement"), by and
among the Company and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Senior Notes, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligation of the Initial Purchasers to
purchase the Senior Notes pursuant to the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Advice: As defined in Section 6(d) hereof.
Affiliate: With respect to any specified person, "Affiliate" shall mean
any other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the purposes
of this definition, "control," when used with respect to any person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing, with
respect to the Company "Affiliate" shall mean Northern Border Partners, L.P., TC
PipeLines, LP, Northern Border Intermediate Limited Partnership, TC PipeLines
Intermediate Limited Partnership, the Operator, Pan Border Gas Company and
Northwest Border Pipeline Company.
Authorized Officer: Any of the President, the Vice President, Finance
or any vice president of the Operator, acting singly.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Notes that are
acquired by a Broker-Dealer in the Exchange Offer in exchange for Senior Notes
that such Broker-Dealer acquired
<PAGE> 2
for its own account as a result of market-making activities or other trading
activities (other than Senior Notes acquired directly from the Company or any of
its Affiliates).
Business Day: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "consummated" for
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the New Senior Notes to be issued in the Exchange Offer,
(ii) the maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Company to the Trustee under the Indenture of New Senior Notes
in the same aggregate principal amount as the aggregate principal amount of
Senior Notes that were tendered by Holders thereof pursuant to the Exchange
Offer.
Damages Payment Date: With respect to the Transfer Restricted
Securities, each Interest Payment Date until the earlier of (i) the date on
which "Liquidated Damages" are no longer payable and (ii) maturity of the Notes.
Definitive Notes: As defined in the Indenture.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
Exchange Offer: The registration by the Company under the Securities
Act of the New Senior Notes pursuant to an Exchange Offer Registration Statement
pursuant to which the Company offers the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities held by such Holders for New Senior Notes in an aggregate
principal amount equal to the aggregate principal amount of the Transfer
Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Senior Notes (a) to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Securities Act, (b) to
certain institutional "accredited investors" as such term is defined in
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<PAGE> 3
Rule 501(a)(1),(2),(3) or (7) of Regulation D under the Securities Act, and (c)
outside the United States to certain persons in reliance on Regulation S under
the Securities Act.
Global Note Holder: As defined in the Indenture.
Holders: As defined in Section 2(b) hereof.
Indemnified Party: As defined in Section 8(c) hereof.
Indemnifying Party: As defined in Section 8(c) hereof.
Indenture: The Indenture, dated as of the Closing Date, among the
Company and The First National Bank of Chicago, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Notes.
Liquidated Damages: As defined in Section 5 hereof.
Memorandum: As defined in the Purchase Agreement.
NASD: National Association of Securities Dealers, Inc.
Notes: The Senior Notes and the New Senior Notes.
New Senior Notes: The Company's 7.75% Senior Notes due 2009, Series A
to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any holder of Senior Notes covered by a Shelf Registration
Statement, in exchange for such Senior Notes.
Operator: Northern Plains Natural Gas Company.
Person: An individual, partnership, corporation, limited liability
company, joint venture, association, joint-stock company, trust or
unincorporated organization, or a government or agency or political subdivision
thereof or any other entity.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
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<PAGE> 4
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company
relating to (a) an offering of New Senior Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case (i) which is filed pursuant to
the provisions of this Agreement, and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.
Transfer Restricted Securities: Each Senior Note, until the earliest to
occur of (a) the date on which such Senior Note is exchanged in the Exchange
Offer and entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Securities Act, (b)
the date on which such Senior Note has been effectively registered under the
Securities Act and disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Senior Note is distributed to the public
pursuant to Rule 144 or is saleable pursuant to Rule 144(k) under the Securities
Act and (d) the date on which such Senior Note is distributed by a Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
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<PAGE> 5
(b) Holders of Transfer Restricted Securities. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 120 days after the Closing Date, the Exchange Offer Registration Statement
under the Securities Act relating to the New Senior Notes and the Exchange
Offer, (ii) use its reasonable best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 180 days after the Closing Date, (iii) in connection with
the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) if applicable, file a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Securities Act and (C) cause all necessary filings, if
any, in connection with the registration and qualification of the New Senior
Notes to be made under the Blue Sky laws of such jurisdictions as are necessary
to permit Consummation of the Exchange Offer and (iv) upon the effectiveness of
such Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer Registration Statement shall be on the appropriate
form permitting registration of the New Senior Notes to be offered in exchange
for the Transfer Restricted Securities and to permit sales of Broker- Dealer
Transfer Restricted Securities by Broker-Dealers as contemplated by Section 3(c)
below.
(b) The Company shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously for a period
of thirty (30) days from the date on which the Exchange Offer Registration
Statement is declared effective and shall keep the Exchange Offer open for a
period of not less than the minimum period required under applicable federal and
state securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 Business Days. The Company shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Notes shall be included in the
Exchange Offer Registration Statement. The Company shall use its reasonable best
efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
that any Restricted Broker-Dealer who holds Senior Notes that are Transfer
Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Transfer Restricted Securities acquired directly from the
Company or one of its Affiliates) may exchange such Senior Notes pursuant to the
Exchange Offer; however, such Broker-
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<PAGE> 6
Dealer may be deemed to be an "underwriter" within the meaning of the Securities
Act and must, therefore, deliver a prospectus meeting the requirements of the
Securities Act in connection with its initial sale of the New Senior Notes
received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of
Distribution" section shall also contain all other information with respect to
such resales of Broker-Dealer Transfer Restricted Securities that the Commission
may require in order to permit such sales pursuant thereto but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Broker-Dealer Transfer Restricted
Securities acquired by Restricted Broker-Dealers and to ensure that it conforms
with the requirements of this Agreement, the Securities Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 120 days from the date on which the Exchange Offer Registration
Statement is declared effective or, if shorter, until all Broker-Dealer Transfer
Restricted Securities have been sold thereunder.
The Company shall provide sufficient copies of the latest version of
such Prospectus to such Restricted Broker-Dealers promptly upon request at any
time during such 120 day period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within twenty (20) Business Days of the Consummation of the Exchange
Offer that (A) such Holder is prohibited by applicable law or Commission policy
from participating in the Exchange Offer, or (B) such Holder may not resell the
New Senior Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) such Holder is a Broker-Dealer and holds Senior Notes acquired
directly from the Company or one of its Affiliates, then the Company shall:
(x) cause to be filed a shelf registration statement pursuant
to Rule 415 under the Securities Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf
Registration Statement") on or prior to the earliest to occur of (1)
the 60th day after the date on which the Company receives notice from
the Commission or determines that it is not required to file the
Exchange Offer Registration Statement
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<PAGE> 7
pursuant to clause (i) above, (2) the 60th day after the date on which
the Company receives notice from a Holder of Transfer Restricted
Securities as contemplated by clause (ii) above, and (3) the 150th day
after the Closing Date (such earliest date being the "Shelf Filing
Deadline"), which Shelf Registration Statement shall provide for
resales of all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 4(b)
hereof; and
(y) use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on or
before the 60th day after the Shelf Filing Deadline.
The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by and subject to the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for sales of Transfer Restricted
Securities by the Holders thereof entitled to the benefit of this Section 4(a),
and to ensure that it conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least 18 months (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Securities Act or such shorter
period ending when all of the Transfer Restricted Securities available for sale
thereunder have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 15 Business Days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have provided all such reasonably requested information. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Holder
not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement
are not filed with the Commission on or prior to the date specified for such
filing in this Agreement then additional interest shall accrue on the principal
amount of the Senior Notes at a rate of 0.25% per annum from such date; (ii) any
of such Registration Statements have not been declared effective by the
Commission on or prior to the date specified for such effectiveness in this
Agreement (the "Effectiveness Target Date") then additional interest shall
accrue on the principal amount of the Senior Notes at a rate of 0.25% per annum
from the Effectiveness Target Date; (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Effectiveness Target Date with
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respect to the Exchange Offer Registration Statement then additional interest
shall accrue on the principal amount of the Senior Notes at a rate of 0.25% per
annum from the 31st Business Day after the Effectiveness Target Date; or (iv)
any Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within 30 days by a post-effective
amendment to such Registration Statement, the effectiveness of another
Registration Statement or the use of the Prospectus (as amended or supplemented)
is again permitted that cures such failure then additional interest shall accrue
on the principal amount of the Senior Notes at a rate of 0.25% per annum from
the 31st day following such Registration Statement ceasing to be effective (each
such event referred to in clauses (i) through (iv), a "Registration Default").
The additional interest rate owing pursuant to the preceding clauses (i) through
(iv) shall be increased by 0.25% per annum each 90-day period that such
Registration Default continues, provided such additional interest does not
exceed the Maximum Rate, as defined below.
All accrued Liquidated Damages (as defined below) shall be paid to the
Global Note Holders or Holders of certificated Notes by the Company on each
Interest Payment Date generally in accordance with the provisions in the
Indenture regarding payment of interest. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or the Prospectus to be made usable in the case
of (iv) above, the liquidated damages payable with respect to the Transfer
Restricted Securities as a result of such clause (i), (ii), (iii) or (iv)
("Liquidated Damages"), as applicable, shall cease. Liquidated Damages on the
Senior Notes may not exceed, in the aggregate, 1% of the face amount of the
Senior Notes per annum (the "Maximum Rate").
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 6(c) below, shall use its reasonable best efforts to effect such
exchange to permit the sale of Broker-Dealer Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof (which shall be in a manner consistent with the terms of this
Agreement), and shall comply with all of the following provisions:
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<PAGE> 9
(i) If, following the date hereof and prior to the
Consummation of the Exchange Offer, there has been published a change
in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange
Offer is permitted by applicable law or Commission policy, the Company
hereby agrees to seek a no-action letter or other favorable decision
from the Commission allowing the Company to Consummate an Exchange
Offer for such Senior Notes. The Company hereby agrees to pursue the
issuance of such a decision to the Commission staff level but shall not
be required to take commercially unreasonable action to effect a change
of Commission policy. The Company hereby agrees, however, to take all
such other actions as are reasonably requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission an
analysis prepared by counsel to the Company setting forth the legal
bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company,
prior to the Consummation thereof, a written representation to the
Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
New Senior Notes to be issued in the Exchange Offer and (C) it is
acquiring the New Senior Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise reasonably cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as
interpreted in the Commission's letter to Sherman & Sterling dated July
2, 1993, and similar no-action letters (including any no-action letter
obtained pursuant to clause (i) above), and (2) must comply with the
registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of New Senior Notes obtained by such Holder in
exchange for Senior Notes acquired by such Holder directly from the
Company or an Affiliate thereof.
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<PAGE> 10
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company shall provide a supplemental letter
to the Commission (A) stating that the Company is registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the New Senior Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer
is acquiring the New Senior Notes in its ordinary course of business
and has no arrangement or understanding with any Person to participate
in the distribution of the New Senior Notes received in the Exchange
Offer and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to
clause (i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 6(c) below and shall use its reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible, and in any event
within the time periods and otherwise in accordance with the provisions hereof,
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Securities Act, which form shall
be available for the sale of the Transfer Restricted Securities in accordance
with the intended method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement
and any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus required to permit
resales of Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall:
(i) use its reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this
Agreement, as applicable, or such shorter period as will terminate when
all Transfer Restricted Securities covered by such Registration
Statement have been sold; upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company shall (1)
file promptly an appropriate amendment to such Registration Statement,
in the case of clause (A), correcting any such misstatement or
omission, and (2) in the case of either clause (A) or (B), use its
reasonable best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as practicable
thereafter;
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<PAGE> 11
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with the applicable
provisions of Rules 424, 430A and 462, as applicable under the
Securities Act in a timely manner; and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the managing underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement
or post-effective amendment thereto has been filed, and, with respect
to any Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission
of the qualification of the Transfer Restricted Securities for offering
or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue in any material respect, or that requires the making of any
additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest practicable time;
(iv) upon written request, furnish to the Initial Purchasers,
and, upon written request, to each of the selling Holders and each of
the managing underwriter(s) in connection with such sale, if any,
before filing with the Commission, copies of any Registration Statement
or any Prospectus included therein or any amendments or supplements to
any such Registration Statement or Prospectus, which documents will be
subject to the review of such selling Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or
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<PAGE> 12
Prospectus to which a selling Holder of Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s) in
connection with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling Holder or managing
underwriter in connection with such sale, if any, shall be deemed to
have reasonably objected to such filing (A) if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains a material misstatement or omission or
fails to comply with the applicable requirements of the Securities Act
or (B) if any of the information furnished to the Company by the
selling Holder or managing underwriter in connection with such sale, if
any, and included in such Registration statement, amendment, Prospectus
or supplement, as applicable, as proposed to be filed is incorrect in
any respect;
(v) upon written request, promptly prior to the filing of any
document that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to the selling
Holders and to the underwriter(s) in connection with such sale, if any,
make the Company's representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such
selling Holders or underwriters, if any, reasonably may request;
(vi) in the case of a shelf registration, make available at
reasonable times for inspection by the selling Holders, any managing
underwriter participating in the disposition pursuant to such
Registration Statement, if any and any attorney or accountant retained
by such selling Holders or any of the underwriter(s), all relevant
financial and other records, pertinent corporate documents and
properties of the Company and cause the officers, directors and
employees of the Operator to supply all information reasonably
requested by any such underwriter, attorney or accountant in connection
with such Registration Statement or any post-effective amendment
thereto subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders or the managing
underwriter(s) in connection with such sale, if any, promptly
incorporate in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information
as such managing underwriter(s), if any, may request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer Restricted
Securities being sold to such underwriter(s), the purchase price being
paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated by the appropriate rating agencies,
if so requested by the Holders of a majority
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<PAGE> 13
in aggregate principal amount of Notes covered thereby or the managing
underwriter(s) in connection with such sale, if any, unless such
Transfer Restricted Securities are already so rated;
(ix) furnish to each selling Holder and each of the managing
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each selling Holder and each of the managing
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties with respect
to the business of the Company as are customarily addressed in
representations and warranties made by issuers to underwriters in
underwritten offerings, and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of the
Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement, all to such extent as may be requested
by the Initial Purchasers or by any Holder of Transfer Restricted
Securities or managing underwriter in connection with any sale or
resale pursuant to any Registration Statement contemplated by this
Agreement; and whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration,
the Company shall:
(A) furnish to each Initial Purchaser, each selling
Holder and each managing underwriter, if any, in such
substance and scope as they may reasonably request and as are
customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the Consummation of
the Exchange Offer and, if applicable, the effectiveness of
the Shelf Registration Statement:
(1) a certificate, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf
of the Company by any Authorized Officer, confirming, as of
the date thereof, the matters set forth in paragraph (g) of
Section 7 of the Purchase Agreement and such other matters as
such parties may reasonably request;
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<PAGE> 14
(2) opinions, dated the date of Consummation of the
Exchange Offer or of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel or counsels for the
Company, covering the matters set forth in paragraphs (c) and
(d) of Section 7 of the Purchase Agreement and such other
matters as such parties may reasonably request, and in any
event including a statement to the effect that such counsel
for the Company has participated in conferences with officers
of the Operator and other representatives of the Company,
representatives of the independent public accountants for the
Company and representatives of and counsel to the Initial
Purchasers at which the contents of such Registration
Statement and the related Prospectus were discussed and,
although such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained therein (except as specifically
stated in such opinion), on the basis of the foregoing, no
facts have come to the attention of such counsel that have
caused such counsel to believe that the applicable
Registration Statement, at the time such Registration
Statement or any post-effective amendment thereto became
effective, and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, or that the Prospectus
contained in such Registration Statement as of its date and,
in the case of the opinion dated the date of Consummation of
the Exchange Offer, as of the date of Consummation, contained
an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading (it being understood that such counsel
need make no comment as to the financial statements and
related statistical or financial information and schedules
included in any Registration Statement contemplated by this
Agreement or the related Prospectus); and
(3) customary comfort letters, dated as of the date
of Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as the case
may be, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters by underwriters in connection with
Underwritten Offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 7(e) and (f)
of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any
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<PAGE> 15
customary conditions contained in the underwriting agreement
or other agreement entered into by the Company pursuant to
this clause (xi), if any.
The above shall be done at each closing under such
underwriting or similar agreement, as and to the extent required
thereunder, and, if at any time the representations and warranties of
the Company contemplated in clause (A)(1) above cease to be true and
correct in any material respect, the Company shall so advise the
Initial Purchasers and the managing underwriter(s), if any, each
selling Holder and each Restricted Broker-Dealer promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the managing
underwriter(s), if any, and its counsel in connection with the
registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the
selling Holders or managing underwriter(s), if any, may request and do
any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however,
that the Company shall not be required to register or qualify as a
foreign entity where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) shall issue, upon the request of any Holder of Senior
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Notes, having an aggregate principal amount equal
to the aggregate principal amount of the Senior Notes surrendered to
the Company by such Holder in exchange therefor or being sold by such
Holder; such New Senior Notes to be registered in the name of such
Holder or in the name of the purchaser(s) of such Notes, as the case
may be; in return, the Senior Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiv) cooperate with the selling Holders and the managing
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two Business Days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use its reasonable best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xii) above;
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<PAGE> 16
(xvi) subject to Section 6(c)(i), if any fact or event
contemplated by clause 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter" that is required to be retained in accordance with the
rules and regulations of the NASD), and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xix) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or reasonable best
efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its
reasonable best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on
which similar securities issued by the Company
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<PAGE> 17
are then listed if requested by the Holders of a majority in aggregate
principal amount of Senior Notes or the managing underwriter(s), if
any; and
(xxii) promptly provide or make available to the Holders of
the Notes, all financial information and reports at the time and in the
manner provided for in Section 4.03 of the Indenture.
(d) Restrictions on Holders. (i) Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "Advice") by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof
or shall have received the Advice.
(ii) The Company may require a Holder of Transfer Restricted Securities
to be included in a Registration Statement to furnish to the Company such
information as required by law to be disclosed by such Holder in such
Registration Statement, and the Company may exclude from such Registration
Statement the Transfer Restricted Securities of any Holder who unreasonably
fails to furnish such information within a reasonable time after receiving such
request.
SECTION 7. REGISTRATION EXPENSES
All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including, without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter") and its counsel that may be required by
the rules and regulations of the NASD); (ii) all fees and expenses of compliance
with federal securities and state Blue Sky or securities laws; (iii) all
expenses of printing (including printing certificates for the New Senior Notes
to be issued in the Exchange Offer and printing of Prospectuses); (iv) all fees
and disbursements of counsel for the Company; (v) all messenger and delivery
services and telephone expenses of the Company; and (vi) all fees and
disbursements of independent certified public
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<PAGE> 18
accountants of the Company (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of any of the Operator's officers
and employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company.
SECTION 8. INDEMNIFICATION
(a) The Company shall indemnify and hold harmless each Holder, its
directors, officers and employees and each person, if any, who controls such
Holder within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities, judgments and actions, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability,
judgment or action relating to purchases and sales of Notes), to which that
Holder, its directors, officers, employees or controlling persons may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability, judgment or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Registration Statement, Preliminary Prospectus or Prospectus or in any
amendment or supplement thereto or (B) in any Blue Sky application or other
document prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of qualifying
any or all of the Notes under the securities laws of any state or other
jurisdiction (any such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged omission to state
in any Registration Statement, Preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (iii) any act or failure to act, or any alleged act or failure
to act, by any Initial Purchaser in connection with, or relating in any manner
to, the Notes or the offering contemplated hereby, and which is included as part
of or referred to in any loss, claim, damage, liability or action arising out of
or based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable in the case of any matter covered by this clause
(iii) to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or action
resulted directly from any such act or failure to act undertaken or omitted to
be taken by such Initial Purchaser through its gross negligence or willful
misconduct), and shall reimburse such Holder and each director, officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by such Holder, director, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability, judgment or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability, judgment or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Registration Statement, Preliminary Prospectus or Prospectus, or in any such
amendment or supplement or in any Blue Sky Application in reliance upon and in
conformity with written
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<PAGE> 19
information furnished to the Company by or on behalf of such Holder specifically
for inclusion therein.
(b) Each Holder, severally and not jointly, shall indemnify and hold
harmless the Company, the management committee of the Company, the employees and
officers of the Operator, the General Partners, the employees and officers of
the General Partners, and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act (collectively, the "Company Indemnitees"), from and against any and all
losses, claims, damages, liabilities, judgments or actions, joint or several, or
any action in respect thereof, to which the Company Indemnitees may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability, judgment or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, Preliminary Prospectus or Prospectus or in any amendment
or supplement thereto or (ii) the omission or alleged omission to state in any
Registration Statement, Preliminary Prospectus or Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Memorandum any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of such Holder specifically for inclusion therein and described in
Section 8(e), and shall reimburse the Company Indemnitee or controlling person
for any legal or other expenses reasonably incurred by the Company Indemnitee in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability, judgment or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Holder may otherwise have to the Company Indemnitees.
(c) Promptly after receipt by any indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party and the payment of all fees
and expenses of such counsel shall be the responsibility of the indemnifying
party. After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof other than reasonable costs of investigation, provided,
however, that the indemnified party shall have the right to employ separate
counsel to represent all indemnified parties who may be subject to liability
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<PAGE> 20
arising out of any claim in respect of which indemnity may be sought by the
indemnified parties against the indemnifying parties under this Section 8 if,
(i) the employment of such counsel shall have been specifically authorized in
writing by the indemnifying party, (ii) the indemnifying party shall have failed
to assume the defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) counsel for any of the indemnified parties
shall have reasonably concluded that there may be defenses available to the
indemnified parties that are in addition to or in conflict with those available
to the indemnifying party. In any case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) of all indemnified parties,
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by BOA and Lehman Brothers, in the case of
the parties indemnified pursuant to Section 8(a) and by the Company, in the case
of parties indemnified pursuant to Section 8(b). No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage, liability,
judgment or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability, judgment or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other, from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, on the one hand, and the Holders, on the
other, with respect to the statements or omissions which resulted in such loss,
claim, damage, liability, judgment or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Holders, on the other, with respect to such
offering shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes purchased under the Purchase Agreement (before
deducting expenses) received by the Company as set forth in the table on the
cover page of the Memorandum, on the one hand, and the total net proceeds
received by such Holder upon its resale of Notes less the amount paid by such
Holder for such Notes, on the other hand, bear to the total sum
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<PAGE> 21
of such amounts. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or such Holder, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contributions pursuant to this Section 8 were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage, liability, judgment
or action in respect thereof, referred to above in this Section 8 shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Holder, and none of its directors, officers,
employees or controlling persons, shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total net proceeds
received by such Holder upon its resale of Notes exceeds the sum of the amount
paid by such Holder for such Notes and the amount of any damages which such
Holder has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute as provided in this Section 8(d) are several in proportion to the
respective principal amount of Notes held by each of the Holders hereunder and
not joint.
(e) The Holders severally confirm, and the Company acknowledges, that
the statements with respect to the offering of the Notes set forth in the bottom
paragraph on the cover page of, and the disclosure in the second, fifth and
seventh through tenth paragraphs under the caption "Plan of Distribution" in the
Memorandum are correct and constitute the only information furnished in writing
to the Company by or on behalf of the Holders specifically for inclusion in the
Memorandum.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available to any Holder or beneficial owner of Transfer Restricted Securities in
connection with any sale thereof and any prospective purchaser of such Transfer
Restricted Securities from such Holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATION
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any
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<PAGE> 22
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer such offering will be
selected by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities included in such offering; provided, that such
investment bankers and managers must be reasonably satisfactory to the Company.
Such investment bankers and managers are referred to herein as the "managing
underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages (including the Liquidated Damages contemplated hereby) would
not be adequate compensation for any loss incurred by reason of a breach by them
of the provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company is not currently
bound by any agreement granting registration rights with respect to its
securities that conflicts with the registration rights set forth herein.
(c) Adjustments Affecting the Notes. The Company will not take any
action, or permit any change to occur, with respect to the Notes that would
materially and adversely affect the ability of the Holders to Consummate any
Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d), the Holders of all outstanding Transfer
Restricted Securities and (ii) in the case of all other provisions hereof, the
Company has obtained the written consent of Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities. Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may
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<PAGE> 23
be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
With a copy to:
Banc of America Securities, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Attention: Syndicate Operations
Telecopy No.: (704) 388-9212
And with a copy to:
Lehman Brothers Inc.
3 World Financial Center
New York, New York 10285-1600
Attention: Syndicate Registration
Telecopy No.: (212) 528-8822
(ii) if to the Initial Purchasers, to the Initial Purchasers'
address specified in Section 12(a) of the Purchase Agreement.
(iii) if to the Company, to the Operator:
Northern Plains Natural Gas Company
1111 South 103rd Street
Omaha, NE 68124-1000
Telephone No.: (402) 398-7700
Attention: Director of Finance
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
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<PAGE> 24
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Indenture. If any transferee of any Holder
shall acquire Transfer Restricted Securities in any manner, whether by operation
of law or otherwise, such Transfer Restricted Securities shall be held subject
to all of the terms of this Agreement, and by owning and holding such Transfer
Restricted Securities such person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable by a court of competent jurisdiction, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(l) No Personal Liability. None of the members of the Company's
management committee or the General Partners or the General Partners' or
Operator's directors, officers,
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<PAGE> 25
employees, partners, incorporators or stockholders, if any, shall have any
liability for any of the Company's obligations under the notes or the indenture
or hereunder or for any claim based on, in respect of, or by reason of, such
obligations or their creation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NORTHERN BORDER PIPELINE COMPANY
By: NORTHERN PLAINS NATURAL
GAS COMPANY, Operator
By: /s/ Jerry L. Peters
-------------------------------------
Name: Jerry L. Peters
Title: Vice President, Finance and Treasurer
BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.
A.G. EDWARDS & SONS, INC.
SALOMON SMITH BARNEY INC.
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Andrew McCarthy
-------------------------
Authorized Representative
Andrew McCarthy
Managing Director
By: LEHMAN BROTHERS INC.
By: /s/ Michael J. Cannon
-------------------------
Michael J. Cannon
Managing Director
<PAGE> 1
EXHIBIT 5.1
[CHAPMAN AND CUTLER LETTERHEAD]
October 7, 1999
Registration Statement on Form S-4
of Northern Border Pipeline Company
-----------------------------------
Northern Border Pipeline Company
1111 South 103rd Street
Omaha, Nebraska 68124-1000
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Northern Border Pipeline Company, a general
partnership formed under the laws of Texas (the "Company"), with the Securities
and Exchange Commission (the "Commission") on the date of this letter, as
provided by the Securities Act of 1933, as amended (the "Act"), and the rules
and regulations under the Act, we have been requested to render our opinion as
to the legality of the securities being registered under the Registration
Statement. The Registration Statement relates to the registration under the Act
of the Company's $200,000,000 aggregate principal amount of 7.75% Senior Notes
due 2009, Series A (the "New Notes"). The New Notes are to be offered in
exchange for the outstanding $200,000,000 aggregate principal amount of 7.75%
Senior Notes due 2009 (the "Existing Notes") issued and sold by the Company on
August 17, 1999, as part of an offering exempt from registration under the Act.
The New Notes will be issued by the Company under the Indenture (the
"Indenture"), dated as of August 17, 1999, between the Company and Bank One
Trust Company, N.A., successor to The First National Bank of Chicago, as trustee
(the "Trustee").
In connection with this opinion, we have examined originals, conformed
copies or photocopies, certified or otherwise identified to our satisfaction, of
the following documents (collectively, the "Documents"):
(i) the Registration Statement;
(ii) the Indenture included as Exhibit 4.1 to the
Registration Statement;
(iii) the form of the New Notes included in the Indenture; and
<PAGE> 2
(iv) The Registration Rights Agreement included as Exhibit
4.2 to the Registration Statement.
In addition, we have examined those certificates, agreements and
documents as we deemed relevant and necessary as a basis for the opinions
expressed below.
In our examination of the documents referred to above, we have assumed,
without independent investigation, (i) that the New Notes will be issued
substantially as described in the Registration Statement and in the form
reviewed by us and that any information omitted from the form will be properly
added; (ii) the genuineness of all signatures; (iii) the authenticity of all
documents submitted to us as originals; (iv) the conformity to the original
documents of all documents submitted to us as certified, photostatic, reproduced
or conformed copies of validly existing agreements or other documents; (v) the
authenticity of the latter documents; (vi) that the statements regarding matters
of fact in the certificates, records, agreements, instruments and documents that
we examined are accurate and complete; and (vii) the legal capacity of all
individuals who have executed any of the documents which we examined.
We have also assumed, without independent investigation, that (i) the
Indenture was duly authorized, executed and delivered by the Trustee; (ii) the
Indenture is a valid and binding obligation of the Trustee; (iii) the New Notes
will be issued in accordance with the Indenture as described in the Registration
Statement; and (iv) the New Notes will be duly authenticated by the Trustee in
accordance with the Indenture.
In expressing the opinion set forth below, we have relied upon the
factual matters contained in the representations and warranties of the Company
made in the documents and upon certificates of public officials and officers of
the Company.
Based on the foregoing, and subject to the stated assumptions,
exceptions and qualifications, we are of the opinion that:
1. The Indenture represents a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
enforceability may be subject to (a) bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and (b) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
2. When issued, authenticated and delivered in accordance with the
terms of the Indenture, the New Notes will be legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as enforceability may be limited by (a) bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization, moratorium and
other similar laws affecting creditors' rights generally, and (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
Our opinions are rendered only with respect to the laws, and the rules,
regulations and orders under those laws, that are currently in effect.
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<PAGE> 3
We consent to the use of our name in the Registration Statement and in
the prospectus in the Registration Statement as it appears in the caption "Legal
Matters" and to the use of this opinion as an exhibit to the Registration
Statement.
Respectfully submitted,
CHAPMAN AND CUTLER
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<PAGE> 1
EXHIBIT 8.1
[Chapman and Cutler Letterhead]
October 7, 1999
Northern Border Pipeline Company
1111 South 103rd Street
Omaha, Nebraska 68124-1000
Re: Northern Border Pipeline Company
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as United States federal income tax counsel for Northern
Border Pipeline Company, a Texas general partnership (the "Company"), in
connection with the offer to exchange up to $200,000,000 aggregate principal
amount of the Company's 7.75% Senior Notes due 2009, Series A (the "New Notes"),
which are proposed to be registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of the Company's issued and
outstanding 7.75% Senior Notes due 2009.
We are giving this opinion in connection with the Registration
Statement on Form S-4 (the "Registration Statement") filed by the Company with
the Securities and Exchange Commission (the "Commission") on the date of this
letter, in accordance with the Securities Act and the rules and regulations of
the Commission under the Securities Act, relating to the registration by the
Company of the New Notes. Capitalized terms used but not defined in this letter
have the respective meanings ascribed to them in the Registration Statement.
In rendering our opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Registration
Statement and those agreements and other documents which we have deemed relevant
and necessary and we have made those investigations of law which we have deemed
appropriate as a basis for the opinion expressed below. In our examination, we
have assumed the authenticity of original documents, the accuracy of copies and
the genuineness of signatures. We understand and assume that (i) each of these
agreements represents the valid and binding obligation of the respective parties
to the agreements, enforceable in accordance with its respective terms and the
entire agreement between the parties with respect to the subject matter of the
agreement, (ii) the parties to each agreement have complied, and will comply,
with all of their respective covenants, agreements and undertakings
<PAGE> 2
contained in the agreement and (iii) the transactions provided for by each
agreement were and will be carried out in accordance with their terms.
The opinion set forth in this letter is limited to the Internal Revenue
Code of 1986, as amended (the "Code"), administrative rulings, judicial
decisions, Treasury regulations and other applicable authorities, all as in
effect on the date of this letter. The statutory provisions, regulations and
interpretations upon which our opinion is based are subject to change, and any
change could apply retroactively. Any change could affect the continuing
validity of the opinion described in this letter. We assume no responsibility to
advise you of any subsequent changes in existing law or facts, nor do we assume
any responsibility to update this opinion with respect to any matters expressly
described in this letter, and no opinions are to be implied or may be inferred
beyond the matters expressly so stated.
The opinion in this letter has no binding effect on the United States
Internal Revenue Service or the courts of the United States. No assurance can be
given that, if the matter were contested, a court would agree with the opinion
in this letter.
Based upon and subject to the above, the discussion in the Registration
Statement under the heading "Certain United States Federal Income Tax
Considerations" constitutes our opinion with respect to those matters. While
this description discusses the material anticipated United States federal income
tax consequences applicable to particular holders who are United States Persons,
it does not purport to discuss all United States federal income tax consequences
and our opinion is limited to those United States federal income tax
consequences specifically discussed under that heading.
In giving the above opinion, we express no opinion other than as to the
federal income tax laws of the United States of America.
We are furnishing this letter in our capacity as United States federal
income tax counsel to the Company. This letter is not to be used, circulated,
quoted or otherwise referred to for any other purpose, except as described
below.
<PAGE> 3
We consent to the use of our name in the Registration Statement as our
name appears under the caption "Legal Matters" and to the use of this letter as
an exhibit to the Registration Statement.
Respectfully submitted,
CHAPMAN AND CUTLER
<PAGE> 1
EXHIBIT 10.15
EIGHTH SUPPLEMENT
AMENDING NORTHERN BORDER PIPELINE COMPANY
GENERAL PARTNERSHIP AGREEMENT
DATED MAY 21, 1999
This Agreement is dated as of May 21, 1999 (the "Eighth Supplement") by
and among (i) the "Divesting Partners," consisting of TransCanada Border
PipeLine Ltd., a Nevada corporation and TransCan Northern Ltd., a Delaware
corporation; (ii) Northern Border Intermediate Limited Partnership, a Delaware
limited partnership ("NBILP"); and (iii) TC PipeLines Intermediate Limited
Partnership, a Delaware limited partnership ("TCILP").
WITNESSETH THAT:
WHEREAS, the Divesting Partners and NBILP are parties to that certain
General Partnership Agreement for Northern Border Pipeline Company, a Texas
general partnership (the "Partnership"), effective as of March 9, 1978, as
amended by (i) the "First Supplement," dated as of October 25, 1979 (as amended
by Agreement dated April 20, 1990), (ii) the Phase I Partnership Commitment
Agreement dated December 12, 1980, (iii) the "Second Supplement," dated as of
December 15, 1980 (as amended by Agreement dated April 20, 1990), (iv) the
"Third Supplement," dated October 1, 1981, (v) the "Fourth Supplement," dated
February 17, 1984, (vi) the "Fifth Supplement," dated April 20, 1990, (vii) the
"Sixth Supplement," dated April 19, 1991, and (viii) the "Seventh Supplement,"
dated September 23, 1993, such General Partnership Agreement, as amended or
supplemented, being herein referred to as the "Partnership Agreement"; and
WHEREAS, the Divesting Partners intend to transfer, pursuant to Section
10.1 of the Partnership Agreement, each of their respective partnership
interests in the Partnership to TCILP;
WHEREAS, to facilitate the admission of TCILP as a general partner in
the Partnership, the Divesting Partners, NBILP and TCILP desire to evidence
herein (i) the consent of NBILP to the transfer by the Divesting Partners of
their respective partnership interest in the Partnership to TCILP, (ii) the
admission of TCILP as a general partner in the Partnership, and (iii) certain
amendments to the Partnership Agreement; and
WHEREAS, NBILP and the members of the Management Committee of the
Partnership have unanimously consented to and approved the transfer, admission
and amendments referred to herein pursuant to an Agreement dated March 17, 1999,
by and among the general partners of NBILP, the Divesting Partners, the
Partnership, NBILP,
<PAGE> 2
Northern Border Partners, L.P., the members of the Management Committee of the
Partnership and the Operator.
NOW, THEREFORE, the Divesting Partners, NBILP and TCILP for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms
shall have the meanings set forth in the Partnership Agreement.
2. Consent of NBILP. NBILP hereby consents to the transfer by each of
the Divesting Partners to TCILP of its interest in and to the Partnership and
agrees that each such transfer shall be permitted notwithstanding the terms of
Section 10.5 of the Partnership Agreement or any other terms thereof that might
prohibit such transfer.
3. Admission of TCILP. The Divesting Partners and NBILP hereby consent
to the admission of TCILP as a partner in the Partnership (notwithstanding the
terms of Section 11 of the Partnership Agreement or any other terms thereof that
might restrict such admission of TCILP) and TCILP shall become a Partner in the
Partnership effective as of the closing date of the transactions contemplated by
that certain Registration Statement on Form S-1 (File No. 333-69947), as filed
with the Securities and Exchange Commission by TC PipeLines, L.P. and as amended
from time to time (hereinafter called the "Approval Date"). From and after the
Approval Date, TCILP agrees to be bound by all of the terms, obligations and
conditions of the Partnership Agreement. The Partnership shall pay the
distribution to its partners for the quarter ending June 30, 1999 (that would,
but for this sentence, be payable to TCILP) proportionately as between the
Divesting Partners, on the one hand, and TCILP, on the other hand, based on the
number of days these entities are actually partners of the Partnership during
the quarter ending June 30, 1999.
4. Amendment of Partnership Agreement. Effective the Approval Date, the
Divesting Partners, NBILP and TCILP hereby agree that the Partnership Agreement
shall be amended, effective as of the Approval Date, as follows:
(a) Section 1 of the Partnership Agreement is amended and is restated
in its entirety as follows:
1. Parties. The following are the parties to this Agreement:
1.1 Northern Border Intermediate Limited Partnership
(hereinafter referred to as "NBILP"), a limited partnership
organized under the laws of the State of Delaware with its
principal place of business located at 1400 Smith Street,
Houston, Texas 77002.
<PAGE> 3
1.2 TC PipeLines Intermediate Limited Partnership (hereinafter
called "TCILP") a limited partnership organized under the
laws of the State of Delaware with its principal place of
business located at Four Greenspoint Plaza, 16945
Northchase Drive, Houston, Texas 77060.
(b) Section 2.45 of the Partnership Agreement is amended to delete the
reference to Sections 1.1 through 1.3 and replace it with "...Sections 1.1 and
1.2."
(c) Section 2 of the Partnership Agreement is amended to add the
following:
2.61 Eighth Supplement. The Agreement dated as of May 21, 1999
among the Partners.
(d) Section 3.6.1 of the Partnership Agreement is amended and restated
to read as follows (and TCILP and NBILP shall each be deemed, as of the Approval
Date, to have made the representations set forth in Section 3.6.1):
3.6.1 Representations and Warranties Concerning 1999 Change in
Composition of Partnership. Each Partner represents and
warrants that the execution and delivery by such Partner
of the Seventh Supplement, the change in the composition
of the Partnership to admit NBILP in lieu of the Divesting
Partners, and the performance by such Partner of its
obligations under the Partnership Agreement, as amended,
will not contravene any provision of, or constitute a
default under, any indenture, mortgage or other agreement
of such Partner or any order of any court, commission or
government agency having jurisdiction. Each Partner
represents and warrants that the execution and delivery by
such Partner of the Eighth Supplement, the change in the
composition of the Partnership to admit TCILP in lieu of
the Divesting Partners, and the performance by such
Partner of its obligations under the Partnership
Agreement, as amended, will not contravene any provision
of, or constitute a default under, any indenture, mortgage
or other agreement of such Partner or any order of any
court, commission or government agency having
jurisdiction. Each Partner further (i) represents and
warrants that it is a limited partnership duly organized
and existing under the laws of its state of incorporation
or organization, and (ii) covenants that it will do or
cause to be done all
<PAGE> 4
things necessary to preserve and keep in full force and
effect its limited partnership existence for so long as it
shall remain a Partner.
(e) Section 7.6 of the Partnership Agreement is amended by amending the
last paragraph to read in its entirety as follows:
The Parties intend that all tax items arising from or
attributable to any change in the tax basis of Partnership
properties occasioned by the admission of NBILP in 1993, or TCILP
in 1999, as a Partner and related transaction shall be allocated
solely to NBILP or TCILP, respectively. Accordingly, to the extent
deemed necessary by the Management Committee, income, gain, loss
and deduction shall be allocated for federal (and any applicable
state) income tax purposes among the Partners in such manner (using
any reasonable method, including curative allocations, consistent
with Section 704(c) of the Internal Revenue Code of 1986 and the
regulations promulgated or proposed thereunder) as will achieve
such intent.
(f) Sections 8.2.1 and 8.2.5(ii) of the Partnership Agreement are
amended and restated in their entirety to read as follows:
8.2.1 The Management Committee shall consist of four members
(the "Representatives"), one of whom shall be designated
by TCILP and three of whom shall be designated by NBILP
with one Representative being selected by each general
partner of NBILP. Each Partner shall designate, by
notice to each other Partner and the Partnership, its
Representative(s) to serve on the Management Committee.
By like notice, each Partner may designate an alternate
Representative for each Representative appointed by it,
who shall have authority to act on behalf of such
appointed Representative in the event of such appointed
Representative's absence or inability to serve. Any
Partner may at any time, by written notice to all other
Partners and to the Partnership, remove its appointed
Representative(s) on the Management Committee and
designate a new Representative(s).
8.2.5(ii) the Partner's Percentages on all matters determined on
or after the Commitment Date. For this purpose, the
Representative(s) designated by NBILP shall have, in the
aggregate, a number of votes equal to the Partner's
Percentage of NBILP. Until NBILP provides written
notification to the other Partner(s) of a change in
allocation of its number of votes, the Representative of
NBILP
<PAGE> 5
selected by Northern Plains shall have a number of
votes equal to 35%; the Representative of NBILP
selected by Pan Border Gas Company shall have a
number of votes equal to 22.75%; and the
Representative of NBILP selected by Northwest Border
Pipeline Company shall have a number of votes equal
to 12.25%. The representative appointed by TCILP
shall have a number of votes equal to 30%. The
majority of such votes cast by the Representatives of
the Partners shall constitute a majority of the
Partner's Percentages. Each Representative agrees not
to enter into a voting agreement with another
Representative pursuant to which such Representatives
would vote as a block, but this sentence shall not be
construed to prohibit two or more Representatives
from agreeing with each other concerning particular
projects, issues or subjects.
(g) Section 8.2.6 is hereby amended to replace the word
"Section 8.5.10" with "Section 8.4.10."
(h) Section 8.4.1 is hereby amended to replace the words
"Section 8.5.2 and Section 8.5.10," with "Section
8.4.2 and Section 8.4.10."
(i) Section 8.4.5 is hereby amended to replace the words
"Section 8.5 with "Section 8.4."
(j) Section 8.4.9 is hereby amended to replace the word
"Section 8.5" with "Section 8.4."
(k) Section 8.4.10 is hereby amended to replace the words
"Section 8.5" with "Section 8.4."
(l) Section 10.6 of the Partnership Agreement is amended
to add the following as a second paragraph:
"If the general partner of TCILP desires to transfer
its general partnership interest in TCILP to a party
other than an Affiliate of such general partner, such
selling general partner of TCILP must first provide
NBILP and the general partners of NBILP with notice
of such intent to transfer and for a period of 30
days following the receipt by NBILP and the general
partners of NBILP, NBILP and/or any general partner
of NBILP shall have the right to submit an offer for
the general partner interest of such selling general
partner of TCILP (and any other interests in TCILP
proposed to be sold by such selling general partner
of TCILP). Such selling general partner of TCILP
shall have no
<PAGE> 6
obligation to consider or accept any offers received
from NBILP and/or any general partner of NBILP, and
from and after such 30 day period, such selling
general partner of TCILP shall be free to consummate
the proposed transaction referred to in its notices
to NBILP and the general partners of NBILP."
5. Amendment of the Partnership Agreement Effective March 17, 1999. The parties
affirm that effective March 17, 1999, Section 9 of the Partnership Agreement was
amended to add the following:
9.3 Business Opportunities. The Partners and their
Affiliates are free to pursue any business
opportunity without first offering such business
opportunity to the Partnership (and such pursuit
shall not be a breach of any duty to the Partnership
or to any other Partner), except that no Partner and
no Affiliate of a Partner may pursue the project
known as Project 2000 filed with the Federal Energy
Regulatory in Docket No. CP99-21 or any business
opportunity that consists of an expansion, addition,
betterment, improvement, renewal or replacement of
the Line as it existed on January 15, 1999 (the
"Effective Date") unless the party desiring to pursue
such opportunity first offers to the Partnership the
opportunity to pursue such business opportunity and
the Partnership declines to do so. The terms
"expansion, addition, betterment, improvement,
renewal or replacement" shall not include any
extension of the Line beyond its terminus as it
existed on the Effective Date or the construction or
acquisition of any pipeline (including any lateral or
any other extension) that connects with the Line as
it existed on the Effective Date. The parties hereto
agree that the waivers and agreements in this Section
9.3 constitute an agreement among the partners of the
Partnership that governs the management of the
business and affairs of the Partnership and the
relationship among the Partners and the Partnership,
as contemplated by Article 6132b-1.03 of the Texas
Revised Partnership Act. The parties hereto further
agree that the waivers and agreements in this Section
9.3 identify certain types and categories of
activities which do not violate the duty of loyalty
to the Partnership, and that such types and
categories and the waivers and agreements in this
Section 9.3 are not manifestly unreasonable.
<PAGE> 7
6. Miscellaneous.
(a) Except as amended hereby, the terms and provisions of the
Partnership Agreement shall remain in full force and effect.
(b) The Eighth Supplement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) Each party hereto represents and warrants to every other party
hereto that (i) it has the full corporate or partnership power and authority to
execute and deliver this Eighth Supplement and to consummate the transactions
contemplated hereunder, (ii) the execution, delivery and performance by such
party of this Eighth Supplement has been duly authorized by all necessary
corporate or partnership action on the part of such party, and (iii) this Eighth
Supplement has been duly executed and delivered by such party and constitutes
the legal, valid and binding obligation of such party, enforceable against such
party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Supplement to be executed by their respective duly authorized officers.
TRANSCANADA BORDER PIPELINE LTD.
(Divesting Partner)
By: /s/ Paul MacGregor By: /s/ Rhondda E.S. Grant
Name: Paul MacGregor Name: Rhondda E.S. Grant
Title: Vice President Title: Secretary
TRANSCAN NORTHERN LTD.
(Divesting Partner)
By: /s/ Paul MacGregor By: /s/ Rhondda E.S. Grant
Name: Paul MacGregor Name: Rhondda E.S. Grant
Title: Vice President Title: Secretary
NORTHERN BORDER INTERMEDIATE LIMITED
PARTNERSHIP (NBILP)
By: /s/ Jerry L. Peters
Name: Jerry L. Peters
Title: Chief Financial and Accounting Officer
TC PIPELINES INTERMEDIATE LIMITED
PARTNERSHIP (TCILP)
By: TC PipeLines GP, Inc., its General
Partner
By: /s/ Paul MacGregor By: /s/ Rhondda E.S. Grant
Name: Paul MacGregor Name: Rhondda E.S. Grant
Title: Vice President, Business Development Title: Secretary
<PAGE> 1
EXHIBIT 12.1
<TABLE>
<CAPTION>
Northern Border Pipeline Company Six months
Ratio of earnings to fixed charges Year ended December 31, ended June 30,
------------------------------------------------------------ -----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
<S> <C> <C> <C> <C> <C> <C> <C>
Interest expensed and capitalized 38,424 35,205 33,117 33,020 44,542 18,680 28,990
Estimate of interest within rental expense 400 397 404 393 397 198 203
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges 38,824 35,602 33,521 33,413 44,939 18,878 29,193
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings:
Pretax income from continuing operations 77,158 74,535 73,843 72,772 100,231 45,106 59,248
Fixed charges 38,824 35,602 33,521 33,413 44,939 18,878 29,193
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total earnings 115,982 110,137 107,364 106,185 145,170 63,984 88,441
---------- ---------- ---------- ---------- ---------- ---------- ----------
Ratio of earnings to fixed charges 2.99 3.09 3.20 3.18 3.23 3.39 3.03
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report,
dated January 19, 1999, relating to the Northern Border Pipeline Company
balance sheet as of December 31, 1998 and 1997, and the related statements of
income, cash flows, and changes in partners' capital for each of the three
years in the period ended December 31, 1998, and to all references to our Firm
included in or made a part of this Registration Statement on Form S-4.
ARTHUR ANDERSEN LLP
Omaha, Nebraska,
October 4, 1999
<PAGE> 1
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----
-----------------------
BANK ONE TRUST COMPANY, NA
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 31-0838515
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
100 EAST BROAD STREET, COLUMBUS, OHIO 43271-0181
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
BANK ONE TRUST COMPANY, NA
100 EAST BROAD STREET
COLUMBUS, OHIO 43271-0181
ATTN: LINDA J. PATTERSON, SENIOR MANAGING DIRECTOR, (614) 248-5193
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------------
NORTHERN BORDER PIPELINE COMPANY
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
TEXAS 74-2684967
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1111 SOUTH 103RD STREET
OMAHA, NEBRASKA 68124-1000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEBT SECURITIES
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; The Board of
Governors of the Federal Reserve System, Washington D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART
OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now
in effect.
2. A copy of the certificate of authority of the trustee to
commence business.
3. A copy of the authorization of the trustee to exercise
corporate trust powers.
4. A copy of the existing by-laws of the trustee.
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
2
<PAGE> 3
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bank One Trust Company, NA, a national banking
association organized and existing under the laws of the United States
of America, has duly caused this Statement of Eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago and State of Illinois on the 27th day of
September, 1999.
BANK ONE TRUST COMPANY, NA
TRUSTEE
By /s/ John R. Prendiville
------------------------------
John R. Prendiville
Vice President
3
<PAGE> 4
EXHIBIT 1
A COPY OF THE ARTICLES OF ASSOCIATION OF THE
TRUSTEE NOW IN EFFECT
AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
BANK ONE TRUST COMPANY, NA
FIRST. The title of this Association shall be BANK ONE TRUST COMPANY, NA.
SECOND. The main office of the Association shall be in the City of Columbus,
County of Franklin, State of Ohio.
The business of the Association will be limited to the fiduciary powers and the
support of activities incidental to the exercise of those powers. The
Association will not expand or alter its business beyond that stated in this
article without the prior approval of the Comptroller of the Currency.
THIRD. The Board of Directors of this Association shall consist of not less
than five nor more than twenty-five persons, the exact number to be fixed and
determined from time to time by resolution of a majority of the full Board of
Directors or by resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director shall own common or preferred stock of
the Association, or of a holding company owning the Association, with an
aggregate par, fair market or equity value of not less than $1,000, as of
either (i) the date of purchase, (ii) the date the person became a director, or
(iii) the date of that person's most recent election to the Board of Directors,
whichever is more recent. Any combination of common or preferred stock of the
Association or holding company may be used.
Any vacancy in the Board of Directors may be filled by action of a majority of
the remaining directors between meetings of shareholders. The Board of
Directors may not increase the number of directors between meetings of
shareholders to a number which: (1) exceeds by more than two the number of
directors last elected by shareholders where the number was 15 or less; or (2)
exceeds by more than four the number of directors last elected by shareholders
where the number was 16 or more, but in no event shall the number of directors
exceed 25.
Terms of directors, including directors selected to fill vacancies, shall
expire at the next regular meeting of shareholders at which directors are
elected, unless the directors resign or are removed from office.
Despite the expiration of a director's term, the director shall continue to
serve until his or her successor is elected and qualifies or until there is a
decrease in the number of directors and his or her position is eliminated.
Honorary or advisory members of the Board of Directors, without voting power or
power of final decision in matters concerning the business of the Association,
may be appointed by resolution of a majority of the full Board of Directors, or
by resolution of shareholders at any annual or special meeting. Honorary or
advisory directors shall not be counted to determine the number of
4
<PAGE> 5
directors of the Association or the presence of a quorum in connection with any
board action, and shall not be required to own qualifying shares.
FOURTH. There shall be an annual meeting of the shareholders to elect directors
and transact whatever other business may be brought before the meeting. It
shall be held at the main office or any other convenient place the Board of
Directors may designate, on the day of each year specified therefor in the
Bylaws or, if that day falls on a legal holiday in the state in which the
Association is located, on the next following banking day. If no election is
held on the day fixed or in the event of a legal holiday on the following
banking day, an election may be held on any subsequent day within 60 days of
the day fixed, to be designated by the Board of Directors or, if the directors
fail to fix the day, by shareholders representing two-thirds of the shares
issued and outstanding. In all cases at least 10 days advance notice of the
meeting shall be given to the shareholders by first class mail.
In all elections of directors, the number of votes each common shareholder may
cast will be determined by multiplying the number of shares such shareholder
owns by the number of directors to be elected. Those votes may be cumulated and
cast for a single candidate or may be distributed among two or more candidates
in the manner selected by the shareholder. On all other questions, each common
shareholder shall be entitled to one vote for each share of stock held by such
shareholder. If the issuance of preferred stock with voting rights has been
authorized by a vote of shareholders owning a majority of the common stock of
the association, preferred shareholders will have cumulative voting rights and
will be included within the same class as common shareholders, for purposes of
elections of directors.
A director may resign at any time by delivering written notice to the Board of
Directors, its chairperson, or to the Association, which resignation shall be
effective when the notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called to remove him or
her, when notice of the meeting stating that the purpose or one of the purposes
is to remove him or her is provided, if there is a failure to fulfill one of
the affirmative requirements for qualification, or for cause, provided,
however, that a director may not be removed if the number of votes sufficient
to elect him or her under cumulative voting is voted against his or her
removal.
FIFTH. The authorized amount of capital stock of this Association shall be
eighty thousand shares of common stock of the par value of ten dollars ($10.00)
each; but said capital stock may be increased or decreased from time to time,
according to the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association shall
have any preemptive or preferential right of subscription to any shares of any
class of stock of the Association, whether now or hereafter authorized, or to
any obligations convertible into stock of the Association, issued or sold, nor
any right of subscription to any thereof other than such, if any, as the Board
of Directors, in its discretion, may from time to time determine and at such
price as the Board of Directors may from time to time fix.
Unless otherwise specified in the Articles of Association or required by law,
(1) all matters requiring shareholder action, including amendments to the
Articles of Association, must be approved by shareholders owning a majority
voting interest in the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
5
<PAGE> 6
Unless otherwise specified in the Articles of Association or required by law,
all shares of voting stock shall be voted together as a class on any matters
requiring shareholder approval. If a proposed amendment would affect two or
more classes or series in the same or a substantially similar way, all the
classes or series so affected must vote together as a single voting group on
the proposed amendment.
Shares of the same class or series may be issued as a dividend on a pro rata
basis and without consideration. Shares of another class or series may be
issued as share dividends in respect of a class or series of stock if approved
by a majority of the votes entitled to be cast by the class or series to be
issued unless there are no outstanding shares of the class or series to be
issued. Unless otherwise provided by the Board of Directors, the record date
for determining shareholders entitled to a share dividend shall be the date the
Board of Directors authorizes the share dividend.
Unless otherwise provided in the Bylaws, the record date for determining
shareholders entitled to notice of and to vote at any meeting is the close of
business on the day before the first notice is mailed or otherwise sent to the
shareholders, provided that in no event may a record date be more than 70 days
before the meeting.
If a shareholder is entitled to fractional shares pursuant to preemptive
rights, a stock dividend, consolidation or merger, reverse stock split or
otherwise, the Association may: (a) issue fractional shares or; (b) in lieu of
the issuance of fractional shares, issue script or warrants entitling the
holder to receive a full share upon surrendering enough script or warrants to
equal a full share; (c) if there is an established and active market in the
Association's stock, make reasonable arrangements to provide the shareholder
with an opportunity to realize a fair price through sale of the fraction, or
purchase of the additional fraction required for a full share; (d) remit the
cash equivalent of the fraction to the shareholder; or (e) sell full shares
representing all the fractions at public auction or to the highest bidder after
having solicited and received sealed bids from at least three licensed stock
brokers, and distribute the proceeds pro rata to shareholders who otherwise
would be entitled to the fractional shares. The holder of a fractional share is
entitled to exercise the rights for shareholder, including the right to vote,
to receive dividends, and to participate in the assets of the Association upon
liquidation, in proportion to the fractional interest. The holder of script or
warrants is not entitled to any of these rights unless the script or warrants
explicitly provide for such rights. The script or warrants may be subject to
such additional conditions as: (1) that the script or warrants will become void
if not exchanged for full shares before a specified date; and (2) that the
shares for which the script or warrants are exchangeable may be sold at the
option of the Association and the proceeds paid to scriptholders.
The Association, at any time and from time to time, may authorize and issue
debt obligations, whether or not subordinated, without the approval of the
shareholders. Obligations classified as debt, whether or not subordinated,
which may be issued by the Association without the approval of shareholders, do
not carry voting rights on any issue, including an increase or decrease in the
aggregate number of the securities, or the exchange or reclassification of all
or part of securities into securities of another class or series.
SIXTH. The Board of Directors shall appoint one of its members president of
this Association, and one of its members chairperson of the board and shall
have the power to appoint one or more vice presidents, a secretary who shall
keep minutes of the directors' and shareholders' meetings and be responsible
for authenticating the records of the Association, and such other officers and
employees as may be required to transact the business of this Association. A
duly appointed
6
<PAGE> 7
officer may appoint one or more officers or assistant officers if authorized by
the Board of Directors in accordance with the Bylaws.
The Board of Directors shall have the power to:
(1) Define the duties of the officers, employees, and agents of the
Association.
(2) Delegate the performance of its duties, but not the responsibility for
its duties, to the officers, employees, and agents of the Association.
(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions consistent
with applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and to fix the penalty
thereof.
(6) Ratify written policies authorized by the Association's management or
committees of the board.
(7) Regulate the manner in which any increase or decrease of the capital
of the Association shall be made, provided that nothing herein shall
restrict the power of shareholders to increase or decrease the capital
of the association in accordance with law, and nothing shall raise or
lower from two-thirds the percentage for shareholder approval to
increase or reduce the capital.
(8) Manage and administer the business and affairs of the Association.
(9) Adopt initial Bylaws, not inconsistent with law or the Articles of
Association, for managing the business and regulating the affairs of
the Association.
(10) Amend or repeal Bylaws, except to the extent that the Articles of
Association reserve this power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally perform all acts that are legal for a Board of Directors to
perform.
SEVENTH. The Board of Directors shall have the power to change the location of
the main office of this Association to any other place within the limits of the
City of Columbus, State of Ohio, without the approval of the shareholders; and
shall have the power to change the location of the main office of this
Association to any other place outside the limits of the City of Columbus,
State of Ohio, but not more than thirty miles beyond such limits, with the
affirmative vote of shareholders owning two-thirds of the stock of the
Association, subject to receipt of a certificate of approval from the
Comptroller of the Currency. The Board of Directors shall have the power to
establish or change the location of any branch or branches of the Association
to any other location permitted under applicable law without the approval of
the shareholders, subject to approval by the Office of the Comptroller of the
Currency. The Board of Directors shall have the power to establish or change
the location of any nonbranch office or facility of the Association without the
approval of the shareholders.
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EIGHTH. The corporate existence of this Association shall continue until
termination according to the laws of the United States.
NINTH. The Board of Directors of this Association, or any shareholders owning,
in the aggregate, not less than 20 percent of the stock of this Association,
may call a special meeting of shareholders at any time. Unless otherwise
provided by the Bylaws or the laws of the United States, or waived by
shareholders, a notice of the time, place, and purpose of every annual and
special meeting of the shareholders shall be given by first-class mail, postage
prepaid, mailed at least 10, and no more than 60, days prior to the date of the
meeting to each shareholder of record at his/her address as shown upon the
books of this Association. Unless otherwise provided by the Bylaws, any action
requiring approval of shareholders must be effected at a duly called annual or
special meeting.
TENTH. The Association shall provide indemnification as set forth below:
Every person who is or was a Director, officer or employee of the Association
or of any other corporation which he served as a Director, officer or employee
at the request of the Association as part of his regularly assigned duties may
be indemnified by the Association in accordance with the provisions of this
Article against all liability (including, without limitation, judgments, fines,
penalties, and settlements) and all reasonable expenses (including, without
limitation, attorneys' fees and investigative expenses) that may be incurred or
paid by him in connection with any claim, action, suit or proceeding, whether
civil, criminal or administrative (all referred to hereafter in this Article as
"Claims") or in connection with any appeal relating thereto in which he may
become involved as a party or otherwise or with which he may be threatened by
reason of his being or having been a Director, officer or employee of the
Association or such other corporation, or by reason of any action taken or
omitted by him in his capacity as such Director, officer or employee, whether
or not he continues to be such at the time such liability or expenses are
incurred; provided that nothing contained in this Article shall be construed to
permit indemnification of any such person who is adjudged guilty of, or liable
for, willful misconduct, gross neglect of duty or criminal acts, unless, at the
time such indemnification is sought, such indemnification in such instance is
permissible under applicable law and regulations, including published rulings
of the Comptroller of the Currency or other appropriate supervisory or
regulatory authority; and provided further that there shall be no
indemnification of Directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association.
Every person who may be indemnified under the provisions of this Article and
who has been wholly successful on the merits with respect to any Claim shall be
entitled to indemnification as of right. Except as provided in the preceding
sentence, any indemnification under this Article shall be at the sole
discretion of the Board of Directors and shall be made only if the Board of
Directors or the Executive Committee acting by a quorum consisting of Directors
who are not parties to such Claim shall find or if independent legal counsel
(who may be the regular counsel of the Association) selected by the Board of
Directors or Executive Committee whether or not a disinterested quorum exists
shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or
non-existence of a contract of insurance or indemnity under which the
Association would be wholly or partially reimbursed for such indemnification,
but the existence or non-existence of such insurance is not the sole
circumstance to be considered nor
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shall it be wholly determinative of whether such indemnification shall be made.
In addition to such finding or opinion, no indemnification under this Article
shall be made unless the Board of Directors or the Executive Committee acting
by a quorum consisting of Directors who are not parties to such Claim shall
find or if independent legal counsel (who may be the regular counsel of the
Association) selected by the Board of Directors or Executive Committee whether
or not a disinterested quorum exists shall render their opinion that the
Directors, officer or employee acted in good faith in what he reasonably
believed to be the best interests of the Association or such other corporation
and further in the case of any criminal action or proceeding, that the
Director, officer or employee reasonably believed his conduct to be lawful.
Determination of any Claim by judgment adverse to a Director, officer or
employee by settlement with or without Court approval or conviction upon a plea
of guilty or of nolo contendere or its equivalent shall not create a
presumption that a Director, officer or employee failed to meet the standards
of conduct set forth in this Article. Expenses incurred with respect to any
Claim may be advanced by the Association prior to the final disposition thereof
upon receipt of an undertaking satisfactory to the Association by or on behalf
of the recipient to repay such amount unless it is ultimately determined that
he is entitled to indemnification under this Article.
The rights of indemnification provided in this Article shall be in addition to
any rights to which any Director, officer or employee may otherwise be entitled
by contract or as a matter of law. Every person who shall act as a Director,
officer or employee of this Association shall be conclusively presumed to be
doing so in reliance upon the right of indemnification provided for in this
Article.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount. The Association's Board of Directors may
propose one or more amendments to the Articles of Association for submission to
the shareholders.
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EXHIBIT 2
A COPY OF THE CERTIFICATE OF AUTHORITY OF THE
TRUSTEE TO COMMENCE BUSINESS
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Bank One Trust Company, National Association," Columbus, Ohio, (Charter No.
16235) is a National Banking Association formed under the laws of the United
States and is authorized thereunder to transact the business of banking on the
date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at the
Treasury Department in the City of
Washington and District of Columbia, this
24th day of March, 1999.
/s/ John D. Hawke, Jr.
---------------------------------
Comptroller of the Currency
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EXHIBIT 3
A COPY OF THE AUTHORIZATION OF THE TRUSTEE
TO EXERCISE CORPORATE TRUST POWERS
CERTIFICATE
I, John D. Hawke, Jr., Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "Bank One Trust Company, National Association," Columbus, Ohio, (Charter No.
16235) was granted, under the hand and seal of the Comptroller, the right to
act in all fiduciary capacities authorized under the provisions of the Act of
Congress approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the
authority so granted remains in full force and effect on the date of this
Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal of
office to be affixed to these presents at the
Treasury Department in the City of
Washington and District of Columbia, this
24th day of March, 1999.
/s/ John D. Hawke, Jr.
------------------------------------
Comptroller of the Currency
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EXHIBIT 4
A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE
BANK ONE TRUST COMPANY, N.A.
BY-LAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the shareholders of
the Bank for the election of Directors and for the transaction of such business
as may properly come before the meeting shall be held at its main office, or
other convenient place duly authorized by the Board of Directors, on the same
day upon which any regular or special Board meeting is held from and including
the first Monday of January to, and including, the fourth Monday of February of
each year, or on the next succeeding banking day, if the day fixed falls on a
legal holiday. If from any cause, an election of Directors is not made on the
day fixed for the regular meeting of the shareholders or, in the event of a
legal holiday, on the next succeeding banking day, the Board of Directors shall
order the election to be held on some subsequent day, as soon thereafter as
practicable, according to the provisions of law; and notice thereof shall be
given in the manner herein provided for the annual meeting. Notice of such
annual meeting shall be given by or under the direction of the Secretary, or
such other officer as may be designated by the Chief Executive Officer, by
first-class mail, postage prepaid, to all shareholders of record of the Bank at
their respective addresses as shown upon the books of the Bank mailed not less
than ten days prior to the date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of the
Bank may be called at any time by the Board of Directors or by any three or
more shareholders owning, in the aggregate, not less than ten percent of the
stock of the Bank. Notice of any special meeting of the shareholders called by
the Board of Directors, stating the time, place and purpose of the meeting,
shall be given by or under the direction of the Secretary, or such other
officer as is designated by the Chief Executive Officer, by first-class mail,
postage prepaid, to all shareholders of record of the Bank at their respective
addresses as shown upon the books of the Bank mailed not less than ten days
prior to the date fixed for such meeting. Any special meeting of shareholders
shall be conducted and its proceedings recorded in the manner prescribed in
these By-Laws for annual meetings of shareholders.
SECTION 1.03. SECRETARY OF MEETING OF SHAREHOLDERS. The Board of Directors may
designate a person to be the secretary of the meeting of shareholders. In the
absence of a presiding officer, as designated by these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as secretary
of the meeting. The secretary of the meeting of shareholders shall cause the
returns made by the judges of election and other proceedings to be recorded in
the minute books of the Bank. The presiding officer shall notify the
Directors-elect of their election and to meet forthwith for the organization
of the
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new Board of Directors. The minutes of the meeting shall be signed by the
presiding officer and the secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many as
three shareholders to be judges of the election, who shall hold and conduct the
same, and who shall, after the election has been held, notify, in writing over
their signatures, the secretary of the meeting of shareholders of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
Directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election, at
the request of the chairman of the meeting, shall act as tellers of any other
vote by ballot taken at such meeting, and shall notify, in writing over their
signature, the secretary of the Board of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall
have the right to vote the number of shares of record in such shareholder's
name for as many persons as there are Directors to be elected, or to cumulate
such shares as provided by Federal Law. In deciding all other questions at
meetings of shareholders, each shareholder shall be entitled to one vote on
each share of stock of record in such shareholder's name. Shareholders may vote
by proxy duly authorized in writing. All proxies used at the annual meeting
shall be secured for that meeting only, or any adjournment thereof, and shall
be dated, if not dated by the shareholder, as of the date of the receipt
thereof. No officer or employee of this Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to
time until a quorum is obtained. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
ARTICLE II
DIRECTORS
SECTION 2.01. QUALIFICATIONS. Each Director shall have the qualifications
prescribed by law. No person elected as a Director may exercise any of the
powers of office until such Director has taken the oath of such office.
SECTION 2.02. VACANCIES. Directors of the Bank shall hold office for one year
or until their successors are elected and qualified. Any vacancy in the Board
shall be filled by appointment of the remaining Directors, and any Director so
appointed shall hold office until the next election.
SECTION 2.03. ORGANIZATION MEETING. The Directors elected by the shareholders
shall meet for organization of the new Board of Directors at the time and place
fixed by the presiding officer of the annual meeting. If at the time fixed for
such meeting there is no quorum present, the Directors in attendance may
adjourn from time to time until a quorum is obtained. A
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majority of the number of Directors elected by the shareholders shall
constitute a quorum for the transaction of business.
SECTION 2.04. REGULAR MEETINGS. The regular meetings of the Board of Directors
shall be held at such date, time and place as the Board may previously
designate, or should the Board fail to so designate, at such date, time and
place as the Chairman of the Board, Chief Executive Officer, or President may
fix. Whenever a quorum is not present, the Directors in attendance shall
adjourn the meeting to a time not later than the date fixed by the By-Laws for
the next succeeding regular meeting of the Board. Members of the Board of
Directors may participate in such meetings through use of conference telephone
or similar communications equipment, so long as all members participating in
such meetings can hear one another.
SECTION 2.05. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at the call of the Chairman of the Board, Chief Executive
Officer, or President, or at the request of two or more Directors. Any special
meeting may be held at such place and at such time as may be fixed in the call.
Written or oral notice shall be given to each Director not later than the day
next preceding the day on which the special meeting is to be held, which notice
may be waived in writing. The presence of a Director at any meeting of the
Board of Directors shall be deemed a waiver of notice thereof by such Director.
Whenever a quorum is not present, the Directors in attendance shall adjourn the
special meeting from day to day until a quorum is obtained. Members of the
Board of Directors may participate in such meetings through use of conference
telephone or similar communications equipment, so long as all members
participating in such meetings can hear one another.
SECTION 2.06. QUORUM. A majority of the Directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a lesser number may
adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as herein
defined, but at least one-third and not less than two of the authorized number
of Directors are present at a meeting of the Directors, business of the Bank
may be transacted and matters before the Board approved or disapproved by the
unanimous vote of the Directors present.
SECTION 2.07. COMPENSATION. Each member of the Board of Directors shall receive
such fees for attendance at Board and Board committee meetings and such fees
for service as a Director, irrespective of meeting attendance, as from time to
time are fixed by resolution of the Board; provided, however, that payment
hereunder shall not be made to a Director for meetings attended and/or Board
service which are not for the Bank's sole benefit and which are concurrent and
duplicative with meetings attended or Board service for an affiliate of the
Bank for which the Director receives payment; and provided further that fees
hereunder shall not be paid in the case of any Director in the regular
employment of the Bank or of one of its affiliates. Each member of the Board of
Directors, whether or not such Director is in the regular employment of the
Bank or of one of its affiliates, shall be reimbursed for travel expenses
incident to attendance at Board and Board committee meetings.
SECTION 2.08. EXECUTIVE COMMITTEE. There may be a standing committee of the
Board of Directors known as the Executive Committee which shall possess and
exercise, when the Board is not in session, all the powers of the Board that
may lawfully be delegated. The Executive Committee shall consist of at least
three Board members, one of whom shall be the Chairman of the Board, Chief
Executive Officer or the President. The other members of the
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Executive Committee shall be appointed by the Chairman of the Board, the Chief
Executive Officer, or the President, with the approval of the Board, and who
shall continue as members of the Executive Committee until their successors are
appointed, provided, however, that any member of the Executive Committee may be
removed by the Board upon a majority vote thereof at any regular or special
meeting of the Board. The Chairman, Chief Executive Officer, or President shall
fill any vacancy in the Executive Committee by the appointment of another
Director, subject to the approval of the Board of Directors. The Executive
Committee shall meet at the call of the Chairman, Chief Executive Officer, or
President or any two members thereof at such time or times and place as may be
designated. In the event of the absence of any member or members of the
Executive Committee, the presiding member may appoint a member or members of
the Board to fill the place or places of such absent member or members to serve
during such absence. Two members of the Executive Committee shall constitute a
quorum. When neither the Chairman of the Board, the Chief Executive Officer,
nor President are present, the Executive Committee shall appoint a presiding
officer. The Executive Committee shall report its proceedings and the action
taken by it to the Board of Directors.
SECTION 2.09. OTHER COMMITTEES. The Board of Directors may appoint such special
committees from time to time as are in its judgment necessary in the interest
of the Bank.
ARTICLE III
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
(a) The executive officers of the Bank shall include a Chairman of the Board,
Chief Executive Officer, President, Chief Financial Officer, Secretary,
Security Officer, and may include one or more Senior Managing Directors or
Managing Directors. The Chairman of the Board, Chief Executive Officer,
President, any Senior Managing Director, any Managing Director, Chief Financial
Officer, Secretary, and Security Officer shall be elected by the Board. The
Chairman of the Board, Chief Executive Officer, and the President shall be
elected by the Board from their own number. Such officers as the Board shall
elect from their own number shall hold office from the date of their election
as officers until the organization meeting of the Board of Directors following
the next annual meeting of shareholders, provided, however, that such officers
may be relieved of their duties at any time by action of the Board of
Directors, in which event all the powers incident to their office shall
immediately terminate. The Chairman of the Board, Chief Executive Officer, or
the President shall preside at all meetings of shareholders and meetings of the
Board of Directors.
(b) The management staff of the Bank shall include officers elected by the
Board, officers appointed by the Chairman of the Board, the Chief Executive
Officer, the President, any Senior Managing Director, any Managing Director,
the Chief Financial Officer, and such other persons in the employment of the
Bank who, pursuant to authorization by a duly authorized officer of the Bank,
perform management functions and have management responsibilities. Any two or
more offices may be held by the same person except that no person shall hold
the office of Chairman of the Board, Chief Executive Officer and/or President
and at the same time also hold the office of Secretary.
(c) Except as provided in the case of the elected officers who are members of
the Board, all officers and employees, whether elected or appointed, shall hold
office at the pleasure of the
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Board. Except as otherwise limited by law or these By-Laws, the Board assigns
to the Chairman of the Board, the Chief Executive Officer, the President, any
Senior Managing Director, any Managing Director, the Chief Financial Officer,
and/or each of their respective designees the authority to control all
personnel, including elected and appointed officers and employees of the Bank,
to employ or direct the employment of such officers and employees as he or she
may deem necessary, including the fixing of salaries and the dismissal of such
officers and employees at pleasure, and to define and prescribe the duties and
responsibilities of all officers and employees of the Bank, subject to such
further limitations and directions as he or she may from time to time deem
appropriate.
(d) The Chairman of the Board, the Chief Executive Officer, the President, any
Senior Managing Director, any Managing Director, the Chief Financial Officer,
and any other officer of the Bank, to the extent that such officer is
authorized in writing by the Chairman of the Board, the Chief Executive
Officer, the President, any Senior Managing Director, any Managing Director, or
the Chief Financial Officer may appoint persons other than officers who are in
employment of the Bank to serve in management positions and in connection
therewith, the appointing officer may assign such title, salary,
responsibilities and functions as are deemed appropriate, provided, however,
that nothing contained herein shall be construed as placing any limitation on
the authority of the Chairman of the Board, the Chief Executive Officer, the
President, any Senior Managing Director, any Managing Director, or the Chief
Financial Officer as provided in this and other sections of these By-Laws.
(e) The Senior Managing Directors and the Managing Directors of the Bank shall
have general and active authority over the management of the business of the
Bank, shall see that all orders and resolutions of the Board of Directors are
carried into effect, and shall do or cause to be done all things necessary or
proper to carry on the business of the Bank in accordance with provisions of
applicable law and regulations. Each Senior Managing Director and Managing
Director shall perform all duties incident to his or her office and such other
and further duties, as may from time to time be required by the Chief Executive
Officer, the President, the Board of Directors, or the shareholders. The
specification of authority in these By-Laws wherever and to whomever granted
shall not be construed to limit in any manner the general powers of delegation
granted to a Senior Managing Director or a Managing Director in conducting the
business of the Bank. In the absence of a Senior Managing Director or a
Managing Director, such officer as is designated by the Senior Managing
Director or the Managing Director shall be vested with all the powers and
perform all the duties of the Senior Managing Director or the Managing Director
as defined by these By-Laws.
(f) Each Managing Director who is assigned oversight of one or more trust
service offices shall appoint a management committee known as the Investment
Management and Trust Committee consisting of the Managing Director of the trust
service offices and at least three other members who shall be capable and
experienced officers of the Bank appointed from time to time by the Managing
Director and who shall continue as members of the Investment Management and
Trust Committee until their successors are appointed, provided, however, that
any member of the Investment Management and Trust Committee may be removed by
the Managing Director as provided in this and other sections of these By-Laws.
The Managing Director shall fill any vacancy in the Investment Management and
Trust Committee by the appointment of another capable and experienced officer
of the Bank. Each Investment Management and Trust Committee shall meet at such
date, time and place as the Managing Director shall fix. In the event of the
absence of any member or members of the Investment Management and Trust
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Committee, the Managing Director may, in his or her discretion, appoint another
officer of the Bank to fill the place or places of such absent member or
members to serve during such absence. A majority of each Investment Management
and Trust Committee shall constitute a quorum. Each Investment Management and
Trust Committee shall carry out the policies of the Bank, as adopted by the
Board of Directors, which shall be formulated and executed in accordance with
State and Federal Law, Regulations of the Comptroller of the Currency, and
sound fiduciary principles. In carrying out the policies of the Bank, each
Investment Management and Trust Committee is hereby authorized to establish
management teams whose duties and responsibilities shall be specifically set
forth in the policies of the Bank. Each such management team shall report such
proceedings and the actions taken thereby to the Investment Management and
Trust Committee. Each Managing Director shall then report such proceedings and
the actions taken thereby to the Board of Directors.
SECTION 3.02. POWERS AND DUTIES OF MANAGEMENT STAFF. Pursuant to the fiduciary
powers granted to this Bank under the provisions of Federal Law and Regulations
of the Comptroller of the Currency, the Chairman of the Board, the Chief
Executive Officer, the President, the Senior Managing Directors, the Managing
Directors, the Chief Financial Officer, and those officers so designated and
authorized by the Chairman of the Board, the Chief Executive Officer, the
President, the Senior Managing Directors, the Managing Directors, or the Chief
Financial Officer are authorized for and on behalf of the Bank, and to the
extent permitted by law, to make loans and discounts; to purchase or acquire
drafts, notes, stocks, bonds, and other securities for investment of funds held
by the Bank; to execute and purchase acceptances; to appoint, empower and
direct all necessary agents and attorneys; to sign and give any notice required
to be given; to demand payment and/or to declare due for any default any debt
or obligation due or payable to the Bank upon demand or authorized to be
declared due; to foreclose any mortgages; to exercise any option, privilege or
election to forfeit, terminate, extend or renew any lease; to authorize and
direct any proceedings for the collection of any money or for the enforcement
of any right or obligation; to adjust, settle and compromise all claims of
every kind and description in favor of or against the Bank, and to give
receipts, releases and discharges therefor; to borrow money and in connection
therewith to make, execute and deliver notes, bonds or other evidences of
indebtedness; to pledge or hypothecate any securities or any stocks, bonds,
notes or any property real or personal held or owned by the Bank, or to
rediscount any notes or other obligations held or owned by the Bank, whenever
in his or her judgment it is reasonably necessary for the operation of the
Bank; and in furtherance of and in addition to the powers hereinabove set forth
to do all such acts and to take all such proceedings as in his or her judgment
are necessary and incidental to the operation of the Bank.
SECTION 3.03. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Secretary as
Assistant Secretary to perform the duties of the Secretary.
SECTION 3.04. EXECUTION OF DOCUMENTS. Any member of the Bank's management staff
or any employee of the Bank designated as an officer on the Bank's payroll
system is hereby authorized for and on behalf of the Bank to sell, assign,
lease, mortgage, transfer, deliver and convey any real or personal property,
including shares of stock, bonds, notes, certificates of indebtedness
(including the assignment and redemption of registered United States
obligations) and all other forms of intangible property now or hereafter owned
by or standing in the name of the Bank, or its nominee, or held by the Bank as
collateral security, or standing in the name of
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the Bank, or its nominee, in any fiduciary capacity or in the name of any
principal for whom this Bank may now or hereafter be acting under a power of
attorney or as agent, and to execute and deliver such partial releases from any
discharges or assignments of mortgages and assignments or surrender of
insurance policies, deeds, contracts, assignments or other papers or documents
as may be appropriate in the circumstances now or hereafter held by the Bank in
its own name, in a fiduciary capacity, or owned by any principal for whom this
Bank may now or hereafter be acting under a power of attorney or as agent;
provided, however, that, when necessary, the signature of any such person shall
be attested or witnessed in each case by another officer of the Bank.
Any member of the Bank's management staff or any employee of the Bank
designated as an officer on the Bank's payroll system is hereby authorized for
and on behalf of the Bank to execute any indemnity and fidelity bonds, trust
agreements, proxies or other papers or documents of like or different character
necessary, desirable or incidental to the appointment of the Bank in any
fiduciary capacity, the conduct of its business in any fiduciary capacity, or
the conduct of its other banking business; to sign and issue checks, drafts,
orders for the payment of money and certificates of deposit; to sign and
endorse bills of exchange, to sign and countersign foreign and domestic letters
of credit, to receive and receipt for payments of principal, interest,
dividends, rents, fees and payments of every kind and description paid to the
Bank, to sign receipts for money or other property acquired by or entrusted to
the Bank, to guarantee the genuineness of signatures on assignments of stocks,
bonds or other securities, to sign certifications of checks, to endorse and
deliver checks, drafts, warrants, bills, notes, certificates of deposit and
acceptances in all business transactions of the Bank; also to foreclose any
mortgage, to execute and deliver receipts for any money or property; also to
sign stock certificates for and on behalf of this Bank as transfer agent or
registrar, and to authenticate bonds, debentures, land or lease trust
certificates or other forms of security issued pursuant to any indenture under
which this Bank now or hereafter is acting as trustee or in any other fiduciary
capacity; to execute and deliver various forms of documents or agreements
necessary to effectuate certain investment strategies for various fiduciary or
custody customers of the Bank, including, without limitation, exchange funds,
options, both listed and over-the-counter, commodities trading, futures
trading, hedge funds, limited partnerships, venture capital funds, swap or
collar transactions and other similar investment vehicles for which the Bank
now or in the future may deem appropriate for investment of fiduciary customers
or in which non-fiduciary customers may direct investment by the Bank.
Without limitation on the foregoing, the Chief Executive Officer, Chairman of
the Board, or President of the Bank shall have the authority from time to time
to appoint officers of the Bank as Vice President for the sole purpose of
executing releases or other documents incidental to the conduct of the Bank's
business in any fiduciary capacity where required by state law or the governing
document. In addition, other persons in the employment of the Bank or its
affiliates may be authorized by the Chief Executive Officer, Chairman of the
Board, President, Senior Managing Directors, Managing Directors, or Chief
Financial Officer to perform acts and to execute the documents described in the
paragraph above, subject, however, to such limitations and conditions as are
contained in the authorization given to such person.
SECTION 3.05. PERFORMANCE BOND. All officers and employees of the Bank shall be
bonded for the honest and faithful performance of their duties for such amount
as may be prescribed by the Board of Directors.
18
<PAGE> 19
ARTICLE IV
STOCKS AND STOCK CERTIFICATES
SECTION 4.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of the
Board, the Chief Executive Officer, or the President (which signature may be
engraved, printed or impressed), and shall be signed manually by the Secretary,
or any other officer appointed by the Chief Executive Officer for that purpose.
In case any such officer who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Bank with the same effect as if
such officer had not ceased to be such at the time of its issue. Each such
certificate shall bear the corporate seal of the Bank, shall recite on its face
that stock represented thereby is transferable only upon the books of the Bank
when properly endorsed and shall recite such other information as is required
by law and deemed appropriate by the Board. The corporate seal may be facsimile
engraved or printed.
SECTION 4.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank shall
be transferable only upon the stock transfer books of the Bank and, except as
hereinafter provided, no transfer shall be made or new certificates issued
except upon the surrender for cancellation of the certificate or certificates
previously issued therefor. In the case of the loss, theft, or destruction of
any certificate, a new certificate may be issued in place of such certificate
upon the furnishing of an affidavit setting forth the circumstances of such
loss, theft, or destruction and indemnity satisfactory to the Chairman of the
Board, the Chief Executive Officer, or the President. The Board of Directors or
the Chairman of the Board, Chief Executive Officer, or the President may
authorize the issuance of a new certificate therefor without the furnishing of
indemnity. Stock transfer books, in which all transfers of stock shall be
recorded, shall be provided. The stock transfer books may be closed for a
reasonable period and under such conditions as the Board of Directors may at
any time determine, for any meeting of shareholders, the payment of dividends
or any other lawful purpose. In lieu of closing the transfer books, the Board
of Directors may, in its discretion, fix a record date and hour constituting a
reasonable period prior to the day designated for the holding of any meeting of
the shareholders or the day appointed for the payment of any dividend, or for
any other purpose at the time as of which shareholders entitled to notice of
and to vote at any such meeting or to receive such dividend or to be treated as
shareholders for such other purpose shall be determined, and only shareholders
of record at such time shall be entitled to notice of or to vote at such
meeting or to receive such dividends or to be treated as shareholders for such
other purpose.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.01. SEAL. The seal of the Bank shall be circular in form with "SEAL"
in the center, and the name "BANK ONE TRUST COMPANY, NA" located clockwise
around the upper half of the seal.
SECTION 5.02. MINUTE BOOK. The organization papers of this Bank, the Articles
of Association, the returns of judges of elections, the By-Laws and any
amendments thereto, the proceedings of all regular and special meetings of the
shareholders and of the Board of Directors,
19
<PAGE> 20
and reports of the committees of the Board of Directors shall be recorded in
the minute books of the Bank. The minutes of each such meeting shall be signed
by the presiding officer and attested by the secretary of the meeting.
SECTION 5.03. CORPORATE POWERS. The corporate existence of the Bank shall
continue until terminated in accordance with the laws of the United States. The
purpose of the Bank shall be to carry on the general business of a commercial
bank trust department and to engage in such activities as are necessary,
incident, or related to such business. The Articles of Association of the Bank
shall not be amended, or any other provision added elsewhere in the Articles
expanding the powers of the Bank, without the prior approval of the Comptroller
of the Currency.
SECTION 5.04. AMENDMENT OF BY-LAWS. The By-Laws may be amended, altered or
repealed, at any regular or special meeting of the Board of Directors, by a
vote of a majority of the Directors.
As amended April 24, 1991 Section 3.01 (Officers and Management Staff)
Section 3.02 (Chief Executive Officer)
Section 3.03 (Powers and Duties of
Officers and Management Staff)
Section 3.05 (Execution of Documents)
As amended January 27, 1995 Section 2.04 (Regular Meetings)
Section 2.05 (Special Meetings)
Section 3.01(f) (Officers and Management Staff)
Section 3.03(e) (Powers and Duties of Officers
and Management Staff)
Section 5.01 (Seal)
Amended and restated in its entirety effective May 1, 1996
As amended August 1, 1996 Section 2.09 (Trust Examining Committee)
Section 2.10 (Other Committees)
As amended October 16, 1997 Section 3.01 (Officers and Management Staff)
Section 3.02 (Powers and Duties of Officers and
Management Staff)
Section 3.04 (Execution of Documents)
As amended January 1, 1998 Section 1.01 (Annual Meeting)
20
<PAGE> 21
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
September 27, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Northern Border
Pipeline Company and BANK ONE TRUST COMPANY, NA, as Trustee, the undersigned,
in accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, hereby consents that the reports of examinations of the undersigned,
made by Federal or State authorities authorized to make such examinations, may
be furnished by such authorities to the Securities and Exchange Commission upon
its request therefor.
Very truly yours,
BANK ONE TRUST COMPANY, NA
By /s/ John R. Prendiville
-------------------------------
John R. Prendiville
Vice President
21
<PAGE> 22
EXHIBIT 7
<TABLE>
<S> <C> <C>
Legal Title of Bank: Bank One Trust Company, NA Call Date: 12/31/98 ST-BK: 17-1630 FFIEC0 32
Address: 100 Broad Street Page RC-1
City, State Zip: Columbus, OH 43271
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C300
RCON BIL MIL THOU
---- ------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCON
----
a. Noninterest-bearing balances and currency and coin(1)......................... 0081 159,911 1.a
b. Interest-bearing balances(2).................................................. 0071 16,874 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)............... ..... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).................. 1773 7,403 2.b
3. Federal funds sold and securities purchased under agreements to resell........... 1350 576,473 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RCON
----
RC-C)............................................................................ 2122 32,603 4.a
b. LESS: Allowance for loan and lease losses..................................... 3123 10 4.b
c. LESS: Allocated transfer risk reserve......................................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and
RCON
----
reserve (item 4.a minus 4.b and 4.c).......................................... 2125 32,593 4.d
5. Trading assets (from Schedule RD-D).............................................. 3545 0 5.
6. Premises and fixed assets (including capitalized leases) 2145 18,685 6.
7. Other real estate owned (from Schedule RC-M) 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................................... 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 0 9.
10. Intangible assets (from Schedule RC-M)........................................... 2143 31,392 10.
11. Other assets (from Schedule RC-F)................................................ 2160 127,322 11.
12. Total assets (sum of items 1 through 11)......................................... 2170 970,653 12.
</TABLE>
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
22
<PAGE> 23
<TABLE>
<S> <C> <C>
Legal Title of Bank: Bank One Trust Company, N.A. Call Date: 12/31/98 ST-BK: 171630 FFIEC 032
Address: 100 East Broad Street Page RC-2
City, State Zip: Columbus, OH 43271
FDIC Certificate No.: 0/3/6/1/8
</TABLE>
SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN
THOUSANDS
-----------------
<S> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
----
from Schedule RC-E, part 1).................................................... 2200 802,791 13.a
(1) Noninterest-bearing(1)..................................................... 6631 727,720 13.a1
(2) Interest-bearing............................................................... 6636 75,071 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)...
(1) Noninterest bearing.......................................................
(2) Interest-bearing..........................................................
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 0 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 0 15.a
b. Trading Liabilities (from Schedule RC-D)....................................... RCFD 3548 0 15.b
16. Other borrowed money: RCON
----
a. With original maturity of one year or less ................................... 2332 0 16.a
b. With original maturity of more than one year ................................ A547 0 16.b
c. With original maturity of more than three years .............................. A548 0 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding 2920 0 18.
19. Subordinated notes and debentures................................................ 3200 0 19.
20. Other liabilities (from Schedule RC-G)........................................... 2930 64,642 20.
21. Total liabilities (sum of items 13 through 20)................................... 2948 867,433 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................... 3838 0 23.
24. Common stock..................................................................... 3230 800 24.
25. Surplus (exclude all surplus related to preferred stock) ........................ 3839 35,157 25.
26. a. Undivided profits and capital reserves........................................ 3632 67,207 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities.................................................................... 8434 56 26.b
27. Cumulative foreign currency translation adjustments ............................. 3284 0 27.
28. Total equity capital (sum of items 23 through 27) ............................... 3210 103,220 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)............................................ 3300 970,653 29.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
To be reported only with the March Report of Condition.
<S> <C> <C>
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for N/A Number
the bank by independent external auditors as of any date during 1996.......RCFD 6724 . .... M.1.
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering authority)
</TABLE>
- ---------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
23
<PAGE> 1
EXHIBIT 99.1
INSTRUCTIONS
TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
NORTHERN BORDER PIPELINE COMPANY
7.75% SENIOR NOTES DUE 2009
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
________, 1999 (the "Prospectus") of Northern Border Pipeline Company, a general
partnership formed under the laws of Texas (the "Company"), and the accompanying
Letter of Transmittal (the "Letter of Transmittal"), that together constitute
the Company's offer (the "Exchange Offer") of 7.75% Senior Notes due 2009,
Series A (the "New Notes") in exchange for outstanding 7.75% Senior Notes due
2009 (the "Existing Notes"). Capitalized terms used but not defined herein have
the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to action to be taken by you relating to the
Exchange Offer with respect to the Existing Notes held by you for the account of
the undersigned.
The aggregate face amount of the Existing Notes held by you for the
account of the undersigned is (fill in amount):
$______________ of the 7.75% Senior Notes due 2009
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[ ] TO TENDER any Existing Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT OF EXISTING NOTES TO BE TENDERED, IF ANY):
$__________________
[ ] NOT TO TENDER the following Existing Notes held by you for the
account of the undersigned.
If the undersigned instructs you to tender the Existing Notes held by
you for the account of the undersigned, it is understood that you are
authorized (a) to make, on behalf of the undersigned (and the undersigned, by
its signature below, hereby makes to you), the representations and warranties
contained in the Letter of Transmittal that are to be made with respect to the
undersigned as a beneficial owner, including but not limited to the
representations that (i) the undersigned's principal residence is in the state
of ___________ (FILL IN STATE), (ii) the undersigned is acquiring the New Notes
in the ordinary course of business of the undersigned, (iii) the undersigned is
not participating, does not participate, and has no arrangement or
understanding with any person to participate in the distribution of the New
Notes, (iv) the undersigned acknowledges that any person participating in the
Exchange Offer for the purpose of distributing the New Notes must comply with
the registration and prospectus delivery requirements of the Securities Act of
1933, as amended (the "Securities Act"), in connection with a secondary resale
transaction of the New Notes acquired by such person and cannot rely on the
position of the Staff of the Securities and Exchange Commission set forth in
no-action letters that are discussed in the section of the Prospectus entitled
"The Exchange Offer--Resale of the New Notes," and (v) the undersigned is not
an "affiliate," as defined in Rule 405 under the Securities Act, of the
Company; (b) to agree, on behalf of the undersigned, as set forth in the Letter
of Transmittal; and (c) to take such other action as necessary under the
Prospectus or the Letter of Transmittal to effect the valid tender of such
Existing Notes.
[ ] Check this box if the Beneficial Owner of the Existing Notes is a
Participating Broker-Dealer and such Participating Broker-Dealer acquired the
Existing Notes for its own account as a result of market-making activities or
other trading activities.
<PAGE> 2
LETTER OF TRANSMITTAL
NORTHERN BORDER PIPELINE COMPANY
TO TENDER 7.75% SENIOR NOTES DUE 2009
("EXISTING NOTES") IN EXCHANGE FOR REGISTERED 7.75%
SENIOR NOTES DUE 2009, SERIES A ("NEW NOTES")
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON ________, 2000,
UNLESS THE OFFER IS EXTENDED
TO BANK ONE TRUST COMPANY, NA (THE "EXCHANGE AGENT")
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
By Registered or Certified Mail: By Facsimile Transmission By Overnight Mail or Hand:
Bank One Trust Company, NA (for Eligible Institutions Only): Bank One Trust Company, NA
One First National Plaza Bank One Trust Company, NA 1 North State Street
Suite 0126 (402) 496-2014 9th floor
Chicago, Illinois 60670 Attention: Corporate Trust Chicago, Illinois 60602
Attention: Sharon McGrath Services Attention: Sharon McGrath
For confirmation and/or
information call: (402) 496-1960
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Delivery of this instrument to an address other than as set forth
above or transmission of instructions via a facsimile number other than the one
listed above will not constitute a valid delivery. The instructions
accompanying this Letter of Transmittal should be read carefully before this
Letter of Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated
________, 1999 (the "Prospectus") of Northern Border Pipeline Company (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount of its 7.75% Senior Notes due 2009, Series A (the "New
Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus is a part, for each $1,000 principal amount of its outstanding
7.75% Senior Notes due 2009 (the "Existing Notes"). The terms of the New Notes
are identical in all material respects (including principal amount, interest
rate and maturity) to the terms of the Existing Notes for which they may be
exchanged pursuant to the Exchange Offer, except that, among other things, (i)
the New Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof and (ii) holders of New
Notes will not be entitled to certain rights of holders of Existing Notes under
the Registration Rights Agreement. The term "Expiration Date" shall mean 5:00
p.m., New York City time, on ________, 2000, unless the Company, in its sole
discretion extends the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
Holders who wish to tender their Existing Notes must, at a minimum,
fill in the necessary account information in the table below entitled "Account
Information" (the "Account Information Table"), complete columns (1) through
(3) in the table below entitled "Description of Existing Notes Tendered" (the
"Description Table"), complete and sign in the box below entitled "Registered
Holder(s) of Existing Notes Sign Here" and complete the Substitute Form W-9. If
a holder wishes to tender less than all of such Existing Notes delivered to the
Exchange Agent, column (4) of the Description Table must be completed in full.
See Instruction 3.
Holders of Existing Notes that are tendering by book-entry transfer to
the Exchange Agent's account at The Depository Trust Company ("DTC") can
execute the exchange through the DTC Automated Tender Offer Program
<PAGE> 3
("ATOP"), for which the transaction will be eligible. DTC participants that are
accepting the exchange should transmit their acceptance to DTC, which will edit
and verify the acceptance and execute a book-entry delivery to the Exchange
Agent's account at DTC. DTC will then send an Agent's Message to the Exchange
Agent for its acceptance. Delivery of the Agent's Message, by DTC will satisfy
the terms of the exchange as to the execution and delivery of a Letter of
Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the exchange by submitting a notice of guaranteed
delivery through ATOP.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned agree to take with respect
to the Exchange Offer. Holders who wish to tender their Existing Notes must
complete this Letter of Transmittal in its entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE
ACCOMPANYING INSTRUCTIONS, AND THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX
BELOW.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
SEE INSTRUCTION 9.
-2-
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer,
the undersigned hereby tenders to the Company the principal amount of the
Existing Notes indicated above in exchange for a like principal amount of the
New Notes. Subject to, and effective upon, the acceptance for exchange of such
Existing Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to such Existing Notes as are being tendered hereby, including all
rights to accrued and unpaid interest thereon as of the Expiration Date and any
and all claims in respect of or arising or having arisen as a result of the
undersigned's status as a holder of, all Existing Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent acts as the agent of the Company in
connection with the Exchange Offer) to cause the Existing Notes to be assigned,
transferred and exchanged. The undersigned represents and warrants that (a) it
has full power and authority to tender, exchange, assign and transfer the
Existing Notes and to acquire New Notes issuable upon the exchange of such
tendered Existing Notes; and (b) when the same are accepted for exchange, the
Company will acquire good and unencumbered title to the tendered Existing
Notes, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim.
The undersigned is the registered owner of all tendered Existing Notes
and the undersigned represents that it has received from each beneficial owner
of tendered Existing Notes ("Beneficial Owners") a duly completed and executed
form of "Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner" accompanying this Letter of Transmittal,
instructing the undersigned to take the action described in this Letter of
Transmittal.
The undersigned understands that, subject to the terms and conditions
of the Exchange Offer, Existing Notes properly tendered and not withdrawn will
be exchanged for New Notes. If any amount of tendered Existing Notes is not
exchanged for any reason, or if certificates are submitted that evidence a
greater principal amount of Existing Notes than the principal amount to be
tendered, such unexchanged Existing Notes or Existing Notes for untendered
amounts, as the case may be, will be returned, without expense, to the
undersigned, either to the book-entry transfer facility account from which
tender was effected or to the address below if Existing Notes were tendered in
physical form.
The undersigned hereby represents to the Company that (i) the New
Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the undersigned, and (ii) neither the undersigned nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes. If the undersigned or the person receiving the
New Notes covered hereby is a broker-dealer that is receiving the New Notes for
its own account in exchange for Existing Notes that were acquired as a result of
market-making activities or other trading activities, the undersigned
acknowledges that it or such other person will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. The undersigned
and any such other person acknowledge that, if they are participating in the
Exchange Offer for the purpose of distributing the New Notes, (i) they cannot
rely on the position of the staff of the Securities and Exchange Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley & Co., Incorporated (available June 5, 1991) or similar no-action
letters and, in the absence of an exemption therefrom, must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with the resale transaction and (ii) failure to comply with such
requirements in such instance could result in the undersigned or any such other
person incurring liability under the Securities Act for which such persons are
not indemnified by the Company. If the undersigned or the person receiving the
New Notes covered by this letter is an affiliate (as defined under Rule 405 of
the Securities Act) of the Company, the undersigned represents to the Company
that the undersigned
<PAGE> 5
understands and acknowledges that such New Notes may not be offered for resale,
resold or otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable, to complete the exchange, assignment and transfer of
tendered Existing Notes or transfer ownership of such Existing Notes on the
account books maintained by a book-entry transfer facility. The undersigned
further agrees that acceptance of any tendered Existing Notes by the Company
and the issuance of New Notes in exchange therefor shall constitute performance
in full by the Company of its obligations under the Registration Rights
Agreement and that the Company shall have no further obligations or liabilities
thereunder for the registration of the Existing Notes or the New Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company), as more particularly set
forth in the Prospectus, the Company may not be required to exchange any of
the Existing Notes tendered hereby and, in such event, the Existing Notes not
exchanged will be returned to the undersigned at the address show below the
signature of the undersigned.
TENDERS OF EXISTING NOTES MADE PURSUANT TO THE EXCHANGE OFFER MAY NOT
BE WITHDRAWN AFTER 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. A
PURPORTED NOTICE OF WITHDRAWAL WILL BE EFFECTIVE ONLY IF DELIVERED TO THE
EXCHANGE AGENT IN ACCORDANCE WITH THE SPECIFIC PROCEDURES SET FORTH IN THE
PROSPECTUS UNDER THE HEADING "THE EXCHANGE OFFER--WITHDRAWAL OF TENDERS."
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Tendered Existing
Notes may be withdrawn at any time prior to the Expiration Date only in
accordance with the procedures set forth in the Instructions contained in the
Letter of Transmittal and the Prospectus.
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this
Letter of Transmittal, certificates for all New Notes delivered in exchange for
tendered Existing Notes, and any Existing Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned, at the address shown below the signature of the
undersigned. If a New Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the New Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal
or to the person(s) signing this Letter of Transmittal at an address different
than the address shown on this Letter of Transmittal, the appropriate boxes of
this Letter of Transmittal should be completed. IF EXISTING NOTES ARE
SURRENDERED BY HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL
REGISTRATION INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS"
IN THIS LETTER OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST
BE GUARANTEED BY AN ELIGIBLE INSTITUTION (DEFINED IN INSTRUCTION 2).
-2-
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Existing Notes. All
physically delivered Existing Notes or confirmation of any book-entry transfer
to the Exchange Agent's account at a book-entry transfer facility of Existing
Notes tendered by book-entry transfer, as well as a properly completed and duly
executed copy of this Letter of Transmittal or facsimile thereof, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). THE METHOD OF DELIVERY OF THIS
LETTER OF TRANSMITTAL, THE EXISTING NOTES AND ANY OTHER REQUIRED DOCUMENTS,
INCLUDING DELIVERY BY BOOK-ENTRY TRANSFER AND ANY ACCEPTANCE OR AGENT'S MESSAGE
DELIVERED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE HOLDER, AND, EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance
of the Existing Notes for exchange.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS
VIA A FACSIMILE NUMBER OTHER THAN THE ONE SET FORTH HEREIN, WILL NOT CONSTITUTE
A VALID DELIVERY.
2. Guaranteed Delivery Procedures. Holders who wish to tender their
Existing Notes, but whose Existing Notes are not immediately available and thus
cannot deliver their Existing Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an
office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent
receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the
Holder, the registration number(s) of such Existing Notes and the
principal amount of Existing Notes tendered, stating that the tender
is being made thereby and guaranteeing that, within three New York
Stock Exchange trading days after the Expiration Date, the Letter of
Transmittal (or facsimile thereof), together with the Existing Notes
(or a confirmation of book-entry transfer of such Existing Notes into
the Exchange Agent's account at the book-entry transfer facility) and
any other documents required by the Letter of Transmittal, will be
deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of
Transmittal (or facsimile thereof), as well as all tendered Existing
Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Existing Notes into the Exchange Agent's account at
the book-entry transfer facility) and all other documents required by
the Letter of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery
will be sent to Holders who wish to tender their Existing Notes according to
the guaranteed delivery procedures set forth above. Any holder who wishes
<PAGE> 7
to tender Existing Notes pursuant to the guaranteed delivery procedures
described above must ensure that the Exchange Agent receives the Notice of
Guaranteed Delivery relating to such Existing Notes prior to the Expiration
Date. Failure to complete the guaranteed delivery procedures outlined above
will not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedures.
3. Partial Tenders; Withdrawals. Tenders of Existing Notes will be
accepted only in integral multiples of $1,000. The aggregate principal amount
of all Existing Notes delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated in the Description Table. If less than
the entire principal amount of Existing Notes evidenced by a submitted
certificate is tendered, the tendering Holder should fill in the principal
amount tendered in the column entitled "Principal Amount Tendered (if less than
all)" in the Description Table. A newly issued Existing Note for the principal
amount of Existing Notes submitted but not tendered will be sent to such Holder
as soon as practicable after the Expiration Date unless otherwise provided in
the appropriate box on this Letter of Transmittal. Book-entry transfer to the
Exchange Agent should be made in the exact principal amount of Existing Notes
tendered.
Existing Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date, after which tenders of
Existing Notes are irrevocable. To be effective, a written telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Existing Notes to be withdrawn (the "Depositor"),
(ii) identify the Existing Notes to be withdrawn (including the registration
number(s) and principal amount of such Existing Notes, or, in the case of
Existing Notes transferred by book-entry transfer, the name and number of the
account at the book-entry transfer facility to be credited), (iii) be signed by
the Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Existing Notes register the transfer of such Existing Notes into the name of
the person withdrawing the tender and (iv) specify the name in which any such
Existing Notes are to be registered, if different from that of the Depositor.
If Existing Notes have been tendered pursuant to the procedures for book-entry
transfer, any notice of withdrawal must also comply with DTC's procedures. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company, whose determination shall be
final and binding on all parties. Any Existing Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
no New Notes will be issued with respect thereto unless the Existing Notes so
withdrawn are validly retendered. Any Existing Notes which have been tendered
but which are not accepted for exchange will be returned to the Holder thereof
without cost to such Holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer, unless otherwise provided in
the appropriate box on this Letter of Transmittal.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. IF THIS LETTER OF TRANSMITTAL IS SIGNED
BY THE REGISTERED HOLDER(S) OF THE EXISTING NOTES TENDERED HEREBY, THE
SIGNATURE MUST CORRESPOND WITH THE NAME(S) AS WRITTEN ON THE FACE OF THE
CERTIFICATES WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. IF
THIS LETTER OF TRANSMITTAL IS SIGNED BY A PARTICIPANT IN A BOOK-ENTRY TRANSFER
FACILITY, THE SIGNATURE MUST CORRESPOND WITH THE NAME AS IT APPEARS ON THE
SECURITY POSITION LISTING AS THE OWNER OF THE EXISTING NOTES.
If any of the Existing Notes tendered hereby are owned of record by
two or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Existing Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Existing Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by an Eligible Institution unless the
Existing Notes tendered hereby are tendered (i) by a registered Holder who has
-2-
<PAGE> 8
not completed the box entitled "Special Registration Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or
Holders of Existing Notes (which term, for the purpose described herein, shall
include a participant in a book-entry transfer facility whose name appears on a
security listing as the owner of the Existing Notes) listed and tendered
hereby, no endorsements of the tendered Existing Notes or separate written
instruments of transfer or exchange are required. In any other case, the
registered Holder (or acting Holder) must either properly endorse the Existing
Notes or transmit properly completed bond powers with this Letter of
Transmittal (in either case, executed exactly as the name(s) of the registered
Holder(s) appears(s) on the Existing Notes, and, with respect to a participant
in a book-entry transfer facility whose name appears on a security position
listing as the owner of Existing Notes, exactly as the name of the participant
appears on such security position listing), with the signature on the Existing
Notes or bond power guaranteed by an Eligible Institution (except where the
Existing Notes are tendered for the account of an Eligible Institution).
Only a Holder in whose name tendered Existing Notes are registered on
the books of the registrar (or the legal representative or attorney-in-fact of
such registered Holder) may execute and deliver this Letter of Transmittal. Any
Beneficial Owner of tendered Existing Notes who is not the registered Holder
must arrange promptly with the registered Holder to execute and deliver this
Letter of Transmittal on his or her behalf through the execution and delivery
to the registered Holder of the Instructions to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner form
accompanying this Letter of Transmittal.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. Special Registration and Delivery Instructions. Tendering Holders
should indicate, in the applicable box, the name and address (or account at a
book-entry facility) in which the New Notes or substitute Existing Notes for
principal amounts not tendered or not accepted for exchange are to be issued
(or deposited), if different from the names and addresses or accounts of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the tendering Holder should
complete the applicable box.
If no instructions are given, the New Notes (and any Existing Notes
not tendered or not accepted ) will be issued in the name of and sent to the
acting Holder of the Existing Notes or deposited at such Holder's account at a
book-entry transfer facility.
6. Transfer Taxes. The Company shall pay or cause to be paid all
security transfer taxes, if any, applicable to the transfer and exchange of
Existing Notes to it or its order pursuant to the Exchange Offer. If a transfer
tax is imposed for any reason other than the transfer and exchange of Existing
Notes to the Company or its order pursuant to the Exchange Offer, the amount of
any such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exception therefrom is not submitted herewith, the
amount of such transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Existing Notes listed in this Letter of
Transmittal.
7. Waiver of Conditions. The Company reserves the absolute right to
waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
-3-
<PAGE> 9
8. Mutilated, Lost, Stolen or Destroyed Existing Notes. Any Holder
whose Existing Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated above for further
instructions.
9. Requests for Assistance or Additional Copies. Questions relating
to the procedure for tendering as well as requests for additional copies of the
Prospectus and this Letter of Transmittal may be directed to the Exchange Agent
at the address and telephone number(s) set forth above. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at Corporate Trust Office, One First National
Plaza, Suite 0126, Chicago, Illinois 60670, Attention: Sharon McGrath
(telephone: (402) 496-1960 or fax: (402) 496-2014).
10. Validity and Form. All questions as to the validity, form,
eligibility (including time of receipt), acceptance of tendered Existing Notes
and withdrawal of tendered Existing Notes will be determined by the Company in
its sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject any and all Existing Notes not properly
tendered or any Existing Notes the Company's acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
right to waive any defects, irregularities or conditions of tender as to
particular Existing Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Existing Notes must be
cured within such time as the Company shall determine. Although the Company
intends to notify Holders of defects or irregularities with respect to tenders
of Existing Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Existing Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Existing Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders as soon as practicable following the Expiration
Date, unless otherwise provided in the appropriate box on this Letter of
Transmittal.
11. Substitute Form W-9. Federal income tax laws require each
tendering Holder to provide the Company with a correct taxpayer identification
number ("TIN") on the Substitute Form W-9 which is provided under "Important
Tax Information" below, and to indicate whether or not the Holder is subject to
backup withholding by checking the box in Part 2 of the Form. Failure to
provide the information on the Form or to check the box in Part 2 of the Form
may subject the tendering Holder to 31% Federal income tax withholding on the
payments made to the Holder. The box in Part 3 of the Form may be checked if
the tendering Holder has not been issued a TIN and has applied for the TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked
and the Holder does not provide the Company with a TIN within sixty (60) days,
the Company will withhold 31% on all such payments thereafter until a TIN is
provided to the Company.
12. Conflicts. In the event of any conflict between the terms of the
Prospectus and the terms of this Letter of Transmittal, the terms of the
Prospectus will control.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER
WITH EXISTING NOTES OR CONFIRMATION OF BOOK ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
The Federal income tax discussion set forth below is included for
general information only. Each Holder is urged to consult a tax adviser to
determine the particular tax consequences to it (including the application and
effect of foreign, state and local tax laws) of the offer. Certain Holders
(including insurance companies, tax exempt organizations and foreign tax
payers) may be subject to special rules not discussed below. The discussion
does not consider the effect of any applicable foreign, state and local tax
laws. Under Federal income tax law, a Holder
-4-
<PAGE> 10
tendering Existing Notes is required to provide the Exchange Agent with such
Holder's correct TIN on Substitute Form W-9 below. If such Holder is an
individual, the TIN is the Holder's social security number. The Certificate of
Awaiting Tax Identification Number should be completed if the tendering Holder
has not been issued a TIN and has applied for a number or intends to apply for
a number in the near future. If the Exchange Agent is not provided with the
correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, payments that are made to such Holder with
respect to tendered Existing Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals and foreign entities) are not subject to these backup
withholding and reporting requirements. A corporation, however, must complete
the Substitute Form W-9, including providing its TIN and indicating that it is
exempt from backup withholding, in order to establish its exemption from backup
withholding. In order for a foreign individual to qualify as an exempt
recipient, that holder must submit to the Exchange Agent a properly completed
Internal Revenue Service Form W-8, signed under penalties of perjury, attesting
to the Holder's exempt status. Such forms can be obtained from the Exchange
Agent.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any amounts otherwise payable to the Holder. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder
with respect to Existing Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) such Holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified such Holder that he or she is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the
Existing Notes. If Existing Notes are in more than one name or are not in the
name of the actual Holder, consult the instructions on Internal Revenue
Service, Form W-9, which way be obtained from the Exchange Agent, for
additional guidance on which number to report
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future, check the box in
Part 3 on Substitute Form W-9, sign and date the form and the Certificate of
Awaiting Taxpayer Identification Number and return them to the Exchange Agent.
If such certificate is completed and the Exchange Agent is not provided with
the TIN within 60 days, the Exchange Agent will withhold 31% of all payments
made thereafter until a TIN is provided to the Exchange Agent.
-5-
<PAGE> 11
NORTHERN BORDER PIPELINE COMPANY
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in the Prospectus dated ________, 1999 (the "Prospectus")
in the section entitled "THE EXCHANGE Offer--Procedures for Tendering Existing
Notes" and in the accompanying Letter of Transmittal (the "Letter of
Transmittal") and Instruction 2 thereto, this form or one substantially
equivalent hereto must be used to accept the Exchange Offer if certificates
representing 7.75% Senior Notes due 2009 of Northern Border Pipeline Company
(the "Existing Notes") are not immediately available or time will not permit
such holder's Existing Notes or other required documents to reach the Exchange
Agent, or complete the procedures for book-entry transfer, prior to the
Expiration Date (as defined in the Prospectus) of the Exchange Offer. This form
may be delivered by hand or sent by overnight courier, facsimile transmission
or registered or certified mail to the Exchange Agent and must be received by
the Exchange Agent prior to 5:00 p.m., New York City time on ________, 2000.
TO BANK ONE TRUST COMPANY, NA
(THE "EXCHANGE AGENT")
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY OVERNIGHT MAIL OR HAND:
Bank One Trust Company, NA Bank One Trust Company NA
One First National Plaza 1 North State Street
Suite 0126 9th floor
Chicago, Illinois 60670 Chicago, Illinois 60602
Attention: Sharon McGrath Attention: Sharon McGrath
</TABLE>
By Facsimile Transmission
(for Eligible Institutions Only):
Bank One Trust Company, NA
(402) 496-2014
Attention: Corporate Trust Services
For confirmation and/or information call: (402) 496-1960
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE
A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature an
a Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
<PAGE> 12
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office in the United States, or otherwise an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, guarantees that, within three (3)
New York Stock Exchange trading days from the date of this Notice of Guaranteed
Delivery, a properly completed and validly executed Letter of Transmittal (or a
facsimile thereof), together with Existing Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Existing Notes
into the Exchange Agent's account at The Depository Trust Company pursuant to
the procedures for book-entry transfer set forth in the Prospectus under the
caption "THE EXCHANGE OFFER--Procedures for Tendering Existing Notes") and all
other required documents will be deposited by the undersigned with the Exchange
Agent at its address act forth above.
The institution that completes this form must communicate the guarantee to the
Exchange Agent and must deliver the Letter of Transmittal and Existing Notes to
the Exchange Agent within the time period shown herein. Failure to do so could
result in a financial loss to the undersigned.
<TABLE>
<S> <C>
- ------------------------------------ -----------------------------------
Name of Firm Authorized Signature
- ------------------------------------ -----------------------------------
Address Title
- ------------------------------------ Name
Zip Code -------------------------------
Please Type or Print
- ------------------------------------ Name
Area Code and Tel. No. -------------------------------
Dated , 1999
------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES REPRESENTING EXISTING NOTES WITH THIS FORM.
CERTIFICATES REPRESENTING EXISTING NOTES SHOULD BE SENT ONLY WITH A
LETTER OF TRANSMITTAL.
<PAGE> 13
SIGN HERE
Name of beneficial owner(s):
--------------------------------------------------
Signature(s):
-----------------------------------------------------------------
Name (please print):
----------------------------------------------------------
Address:
----------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Telephone Number:
-------------------------------------------------------------
Taxpayer Identification or Social Security Number:
----------------------------
Date:
-------------------------------------------------------------------------
<PAGE> 14
List below the Existing Notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the Certificate Numbers
and Principal Amounts should be listed on a separately signed schedule affixed
hereto.
- -------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES TENDERED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(3) (4)
Aggregate Principal Principal Amount
(1) (2) Amount Tendered
Name(s) and Address(es) of Registered Holder(s) Registration Represented by (if less than
(Please fill in) Numbers* Existing Notes** all)**
<S> <C> <C> <C>
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
- ------------------------------------------------------- -------------------- -------------------- --------------------
Total
- ------------------------------------------------------- -------------------- -------------------- --------------------
</TABLE>
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by such Existing
Notes. All tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used (i) if certificates of
Existing Notes are to be forwarded herewith, (ii) if delivery of Existing Notes
is to be made by book-entry transfer to an account maintained by the Exchange
Agent at DTC, pursuant to the procedures set forth in the "The Exchange
Offer--Procedures for Tendering Existing Notes" in the Prospectus or (iii) if
tender of the Existing Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." See Instruction 2. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person
in whose name Existing Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder.
<PAGE> 15
- -------------------------------------------------------------------------------
ACCOUNT INFORMATION
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING.
Name of Tendering Institution
-------------------------------------------------
If delivered by book-entry transfer:
Account Number Transaction Code Number
------------------------ --------------
Holders whose Existing Notes are not immediately available or who cannot
deliver their Existing Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Existing
Notes according to the guaranteed delivery procedure set forth in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 2.
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING.
Name of Registered Holder(s)
--------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
-------------------------
If delivered by book-entry transfer:
Account Number Transaction Code Number
------------------------ --------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name Address:
------------------------------------- ----------------------------
- -------------------------------------------------------------------------------
-2-
<PAGE> 16
- -------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the New Notes and any Existing New Notes and any
Existing Notes delivered herewith but not exchanged are to be issued in the
name of someone other than the undersigned or are to be returned by credit to
an account maintained by a book-entry transfer facility.
Issue New Notes and any Existing Notes delivered herewith but not exchanged to:
Name
--------------------------------------------------------------------------
Address:
----------------------------------------------------------------------
(Please print or type)
Credit New Notes and any Existing Notes delivered herewith but not exchanged to
the following book-entry transfer facility account:
- -------------------------------------------------------------------------------
(Name of book-entry transfer facility)
- -------------------------------------------------------------------------------
(Account Number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REGISTERED HOLDER(S) OF EXISTING NOTES
SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
-----------------------------------------------------------------------------
X
-----------------------------------------------------------------------------
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Existing Notes or on a security position listing as the owner of the Existing
Notes or by person(s) authorized to become registered holder(s) by properly
completed bond powers transmitted herewith. If signature is by
attorney-in-fact, trustee, executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide the
following information (Please print or type):
Name and Capacity (full title):
- -------------------------------------------------------------
Address (including zip code):
- -------------------------------------------------------------
Area Code and Telephone Number:
- -------------------------------------------------------------
Dated:
------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the New Notes and any Existing Notes delivered herewith
but not exchanged are to be sent to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Existing Notes Tendered."
Mail New Notes and any Existing Notes delivered herewith but not exchanged to:
Name
- -------------------------------------------------------------------------------
Address:
- -------------------------------------------------------------------------------
(Please print or type)
- -------------------------------------------------------------------------------
<PAGE> 17
- -------------------------------------------------------------------------------
SIGNATURE GUARANTEE (If required--See Instruction 4)
Authorized Signature:
---------------------------------------------------------
(Signature of Representative of Signature Guarantor)
Name and Title:
---------------------------------------------------------------
Name of Firm:
-----------------------------------------------------------------
Area Code and Telephone Number:
-----------------------------------------------
(Please print or type)
Dated:
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 18
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
DOES NOT CONSIDER THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY HOLDER'S
SITUATION OR STATUS. THE SUMMARY IS BASED ON THE PROVISIONS OF THE CODE,
REGULATIONS, PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN
EFFECT, ALL OF WHICH ARE SUBJECT TO CHANGE, POSSIBLY ON A RETROACTIVE BASIS.
HOLDERS OF EXISTING NOTES (INCLUDING HOLDERS OF EXISTING NOTES WHO DO NOT
EXCHANGE THEIR EXISTING NOTES FOR NEW NOTES) SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER LAWS, OF THE EXCHANGE OF
EXISTING NOTES FOR NEW NOTES. FOR ADDITIONAL INFORMATION, SEE "CERTAIN UNITED
STATES FEDERAL TAX CONSEQUENCES" IN THE PROSPECTUS.
PAYOR'S NAME: BANK ONE TRUST COMPANY, NA
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer
identification number on the following Substitute Form W-9 and certify therein
that you are not subject to backup withholding.
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<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW. ----------------------
DEPARTMENT OF THE TREASURY SOCIAL SECURITY
INTERNAL REVENUE SERVICE PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO NUMBER OR
BACKUP WITHHOLDING UNDER THE PROVISIONS OF EMPLOYER
SECTION 3206(A)(1)(C) OF THE INTERNAL REVENUE IDENTIFICATION
CODE BECAUSE (1) YOU HAVE NOT BEEN NOTIFIED NUMBER
THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING AS
A RESULT OF FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS OR (2) THE INTERNAL REVENUE SERVICE
HAS NOTIFIED YOU THAT YOU ARE NO LONGER SUBJECT
TO BACKUP WITHHOLDING. [ ]
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CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I PART 3
PAYOR'S REQUEST FOR CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS
TAXPAYER TRUE, CORRECT AND COMPLETE.
IDENTIFICATION SIGNATURE:
-----------------------------------
DATED: AWAITING TIN [ ]
NUMBER ("TIN") ---------------------------------------
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NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY
CASH PAYMENTS MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9
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<PAGE> 19
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CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS
NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN APPLICATION
TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE
SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B) I INTEND TO
MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO
NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A
NUMBER.
1999
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SIGNATURE DATE
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<PAGE> 20
Ladies and Gentlemen
The undersigned hereby tender(s) to Northern Border Pipeline Company
the principal amount of the Existing Notes listed below, upon the terms of and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal and the instructions thereto (which together constitute the
"Exchange Offer"), receipt of which is hereby acknowledged, pursuant to the
guaranteed delivery procedures set forth in the Prospectus, as follows:
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<CAPTION>
AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
AMOUNT REPRESENTED TENDERED (MUST BE IN INTEGRAL
CERTIFICATE NOS. BY CERTIFICATE(S) MULTIPLES OF $1,000)
<S> <C> <C>
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This Notice of Guaranteed Delivery must be signed by the Holder(s)
exactly as their name(s) appear on certificates for Existing Notes or on a
security position listing as the owner of Existing Notes, or by person(s)
authorized to become Holder(s) by endorsements and documents transmitted with
this Notice of Guaranteed Delivery.
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The Book-Entry Transfer Facility Account Number (if the Existing Notes will be
tendered by book-entry transfer)
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Sign Here
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Account Number
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Principal Amount Tendered
(must be in integral multiples of $1,000)
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Number and Street or P.O. Box
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City, State, Zip Code
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Signature(s)
Dated: , 1999
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