As filed with the Securities and Exchange Commission on December 3, 1997
Registration No. 333-40601
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_________________
NORTHERN BORDER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 93-1120873
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
_________________
1400 Smith Street, Houston, Texas 77002
Telephone No. (713) 853-6161
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
_________________
Janet K. Place
1111 South 103rd Street
Omaha, Nebraska 68124-1000
(402) 398-7886
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
Registration Statement as determined in light of market
conditions and other factors.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, please check the following box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please 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(c) 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 delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
_________________
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 this registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1997
NORTHERN BORDER PARTNERS, L.P.
Common Units
Representing Limited Partner Interests
_____________
This Prospectus relates to Common Units representing limited
partner interests in Northern Border Partners, L.P., a
Delaware limited partnership (the "Partnership"), which may be
offered from time to time by the Partnership at prices and on
terms to be determined at the time of each offering hereunder
and to be set forth in a supplement to this Prospectus (a
"Prospectus Supplement").
The Common Units may be offered through underwriters,
brokers or dealers, or directly to investors at a fixed price
or prices, which may be changed from time to time, at market
prices prevailing at the time of such sale, at prices related
to such market prices or at negotiated prices, and in
connection therewith distributors' or sellers' commissions may
be paid or allowed, which will not exceed those customary in
the types of transactions involved. Brokers or dealers may
act as agent for the Partnership, or may purchase Common Units
from the Partnership as principal and thereafter resell such
units from time to time in or through transactions or
distributions (which may involve crosses and block
transactions) on the New York Stock Exchange or other United
States or foreign stock exchanges where unlisted trading
privileges are available, in the over-the-counter market, in
private transactions or in some combination of the foregoing.
The Partnership will receive the net proceeds of any such
sale which will be set forth in the Prospectus Supplement.
See "Plan of Distribution."
The Partnership's Common Units are listed on the New York
Stock Exchange under the symbol "NBP". On December 1, 1997,
the last reported sales price of the Common Units on the New
York Stock Exchange was $34.375 per Common Unit.
_____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
_____________
The date of this Prospectus is December __, 1997.
No dealer, salesman or other person has been authorized to
give any information or to make any representation not contained
in, or incorporated by reference in, this Prospectus, and, if
given or made, such information or representation must not be
relied upon as having been authorized by the Partnership. This
Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein
is correct as of any time subsequent to the date hereof or that
there has been no change in the affairs of the Partnership since
such date.
AVAILABLE INFORMATION
The Partnership is subject to the informational requirements
of the Securities Exchange Act of 1934 (the "Exchange Act"), and
in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the following
Regional Offices of the Commission: Midwest Regional Office, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661; and
Northeast Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at
prescribed rates or from the site maintained by the Commission on
the Internet World Wide Web at http://www.sec.gov. The
Partnership's Common Units are listed on the New York Stock
Exchange, and reports, proxy statements and other information
concerning the Partnership can be inspected and copied at the
offices of such exchange at 20 Broad Street, New York, New York
10005.
This Prospectus constitutes a part of a Registration
Statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") filed by the Partnership
with the Commission under the Securities Act of 1933 (the
"Securities Act") with respect to the Common Units offered
hereby. This Prospectus does not contain all of the information
set forth in such Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the
Commission. Reference is made to such Registration Statement and
to the exhibits relating thereto for further information with
respect to the Partnership and the Common Units offered hereby.
Any statements contained herein concerning the provisions of any
document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission or incorporated by reference
herein are not necessarily complete, and in each instance
reference is made to the copy of such document so filed for a
more complete description of the matter involved. Each such
statement is qualified in its entirety by such reference.
IN CONNECTION WITH THIS OFFERING, UNDERWRITERS, BROKERS OR
DEALERS PARTICIPATING IN THE OFFERING MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON UNITS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW
YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the
Partnership (File No. 1-12202) pursuant to Section 13(a) of the
Exchange Act are incorporated herein by reference as of their
respective dates:
(a) Annual Report on Form 10-K for the year ended
December 31, 1996; and
(b) Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997, and September 30,
1997.
Each document filed by the Partnership pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the
offering of the Common Units pursuant hereto shall be deemed to
be incorporated herein by reference and to be a part hereof from
the date of filing of such document. Any statement contained
herein or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Partnership will provide without charge to each person
to whom a copy of this Prospectus is delivered, on the request of
any such person, a copy of any or all of the foregoing documents
incorporated herein by reference other than exhibits to such
documents (unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates).
Written or telephone requests for such copies should be directed
to Secretary Division, Northern Border Partners, L.P., at its
principal executive offices, 1400 Smith Street, Houston, Texas
77002 (telephone: 713-853-6161).
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
The statements in this Prospectus that are not historical
are forward looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. Such
forward looking statements include the discussions in "The
Chicago Project", "Demand For Transportation Capacity" and
"Description of Units". Although the Partnership believes that
its expectations regarding future events are based on reasonable
assumptions within the bounds of its knowledge of its business,
it can give no assurance that its goals will be achieved or that
its expectations regarding future expansions and distribution
increases will be realized. Important factors that could cause
actual results to differ materially from those in the forward
looking statements herein include political and regulatory
developments that impact the Federal Energy Regulatory Commission
(the "FERC") and state utility commission proceedings, success of
Northern Border Pipeline Company ("Northern Border Pipeline") in
sustaining its positions in such proceedings or the success of
intervenors in opposing Northern Border Pipeline's positions,
Northern Border Pipeline's timely completion and start of
operations with no significant cost overruns for The Chicago
Project, competitive developments by Canadian and other U.S.
natural gas transmission companies, political and regulatory
developments in Canada and conditions of the capital markets and
equity markets during the periods covered by the forward looking
statements.
BUSINESS
General
Northern Border Partners, L.P. through a subsidiary limited
partnership, Northern Border Intermediate Limited Partnership,
collectively referred to herein as "Partnership", owns a 70%
general partner interest in Northern Border Pipeline, a Texas
general partnership. The remaining general partner interests in
Northern Border Pipeline are owned by TransCanada Border PipeLine
Ltd. (6%) and TransCan Northern Ltd. (24%), both of which are
wholly-owned subsidiaries of TransCanada PipeLines Limited
("TransCanada"). Northern Plains Natural Gas Company ("Northern
Plains"), Pan Border Gas Company ("Pan Border") and Northwest
Border Pipeline Company ("Northwest Border") serve as the general
partners (the "General Partners") of the Partnership. Northern
Plains is a wholly-owned subsidiary of Enron Corp., Pan Border is
a wholly-owned subsidiary of Duke Energy Corporation, and
Northwest Border is a wholly-owned subsidiary of The Williams
Companies, Inc. The General Partners hold an aggregate 2%
general partner interest in the Partnership. The General
Partners also own in the aggregate an effective 24% subordinated
limited partner interest ("Subordinated Units") in the
Partnership. The combined general and limited partner interests
in the Partnership of Northern Plains, Pan Border and Northwest
Border are 13.0%, 8.5% and 4.5%, respectively.
Northern Border Pipeline owns a 969-mile U.S. interstate
pipeline system (the "Pipeline System") that transports natural
gas from the Montana-Saskatchewan border near Port of Morgan,
Montana, to interconnecting pipelines in the state of Iowa. The
Pipeline System has pipeline access to natural gas reserves in
the provinces of Alberta, British Columbia and Saskatchewan, as
well as the Williston Basin in the United States. The Pipeline
System also has access to production of synthetic gas from the
Dakota Gasification Plant in North Dakota.
Management of Northern Border Pipeline is overseen by the
Northern Border Management Committee, which is comprised of three
representatives from the Partnership (one selected by each
General Partner) and one representative from the TransCanada
subsidiaries. The Pipeline System is operated by Northern Plains
pursuant to an operating agreement. Northern Plains employs
approximately 185 individuals. These employees are located at
the operating headquarters in Omaha, Nebraska, and at locations
along the pipeline route.
Northern Border Pipeline's revenues are derived from
agreements for the receipt and delivery of gas at points along
the Pipeline System as specified in each shipper's individual
transportation contract. Northern Border Pipeline transports gas
for shippers under a tariff regulated by the FERC.
As a result of acquisitions during 1996 and 1997, the
Partnership has an ownership position of 71.75% in Black Mesa
Holdings, Inc. Black Mesa Holdings, Inc., through its wholly-
owned subsidiary, Black Mesa Pipeline Company, owns a 273-mile,
18-inch diameter coal slurry pipeline which originates at a coal
mine in Kayenta, Arizona. The pipeline traverses westward
through northern Arizona to the 1,500 megawatt Mohave Power
Station located in Laughlin, Nevada. The pipeline is operated by
Williams Technologies, Inc., a wholly-owned subsidiary of the
Partnership, that was acquired in May 1997.
Following is a chart showing the organization and structure
of the Partnership and its interest in Northern Border Pipeline.
At this point, a chart was provided showing the organization
structure of the Partnership. The chart showed the General Partners
respective ownership percentages in the Partnership including their
subordinated limited partner interests. The parent corporatin of
each general partner was also shown on the chart. Finally, the
ownership of Northern Border Pipeline by the Partnership and the
TransCanada subsidiaries was included.
The Pipeline System
The 822-mile portion of the Pipeline System from the
Canadian border to Ventura, Iowa was completed and placed in
service in 1982. It was built to transport large quantities of
natural gas through large diameter, high operating pressure pipe.
In 1992, a 30-inch diameter pipeline, approximately 147 miles in
length, was acquired and placed in service. This pipeline
interconnects with the original system near Ventura, Iowa and
terminates near Harper, Iowa where it interconnects with the
facilities of Natural Gas Pipeline Company of America ("NGPL").
There are seven existing compressor stations on the Pipeline
System. Other facilities include three pipeline field offices
and warehouses, five measurement stations and 39 microwave tower
sites. The throughput capacity of the Pipeline System is 1,675
million cubic feet per day ("MMCFD").
At its northern end, the Pipeline System is connected to the
Foothills Pipe Lines (Sask.) Ltd. system in Canada, which in turn
is connected to the pipeline systems of NOVA Gas Transmission
Ltd. in Alberta and of Transgas Limited in Saskatchewan. The
Pipeline System also connects with the 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. The
Pipeline System interconnects at multiple points with the
pipeline facilities of an Enron subsidiary, Northern Natural Gas
Company. At its southern end, the Pipeline System interconnects
with the pipeline facilities of NGPL near Harper, Iowa.
The Chicago Project
Northern Border Pipeline has commenced construction pursuant
to a certificate of public convenience and necessity issued by
the FERC on August 1, 1997 authorizing the construction and
operation of facilities ("The Chicago Project") to extend and
expand its existing system. The estimated cost of the facilities
to be constructed is approximately $839 million. New
transportation contracts provide for receipts into the Pipeline
System of 700 MMCFD with 648 MMCFD to be transported through the
pipeline extension and 516 MMCFD to be delivered at Harper, Iowa
for transport by NGPL on its pipeline. Requests for rehearing of
the August 1, 1997 order were filed by five parties requesting
the FERC to reconsider the determination of how the rates and
charges for the extension of the pipeline from Harper, Iowa to
Chicago, Illinois will be calculated and the determination of
certain locations of the pipeline route. On November 17, 1997,
the FERC issued an order which denied all rehearing requests.
Any petitions for judicial review of the November 17, 1997 order
must be filed within 60 days of the date of the order.
NGPL received a companion certificate of public convenience
and necessity from the FERC on August 1, 1997 to construct and
operate certain facilities to increase its pipeline system
capacity to accommodate the new deliveries at Harper, Iowa from
Northern Border Pipeline.
Funds required to meet The Chicago Project capital
expenditures for 1997 and 1998 are expected to be provided
primarily by a $750 million revolving credit facility
of Northern Border Pipeline, capital contributions from the
Partnership and the TransCanada subsidiaries and internal
sources. The Partnership capital contributions will be funded
through an interim credit facility of $175 million and proceeds
of offerings pursuant to the registration statement of which this
prospectus is a part.
Demand For Transportation Capacity
Based upon existing contracts and capacity, 100% of the
Pipeline System's firm capacity (at current compression) is
contractually committed through October 2001. In conjunction
with a settlement of a rate issue on an upstream pipeline,
Northern Border Pipeline's largest shipper, Pan-Alberta Gas
(U.S.) Inc., has indicated its intent to enter into a two year
extension of its transportation contracts covering 741 MMCFD of
capacity. If these contract extensions are implemented, the term
of the contracts would be extended to October 31, 2003. At the
present time, 6% of the firm capacity (based on annual cost of
service obligations) is contracted by interstate pipelines, 91%
by producers/marketers, and 3% by local distribution companies.
In 1996, approximately 87% of the natural gas transported by
the Pipeline System was produced in the Western Canadian
Sedimentary Basin located in the provinces of Alberta, British
Columbia and Saskatchewan. The Pipeline System's share of
Canadian gas exported to the United States was approximately 20%
in 1996.
On November 17, 1997 Northern Border Pipeline announced to
its customers the commencement of an open season during which
customers may submit requests for capacity on a new expansion of
the Pipeline System. If sufficient requests are submitted, a
specific project may be proposed with a targeted in-service date
of November 1, 2000. The results of this open season should be
known at the end of January 1998, unless the open season is
further extended. It is within Northern Border Pipeline's
discretion to determine the scope of and to design the proposed
project and Northern Border Pipeline intends to limit the size of
this project, if necessary, in order to maintain its competitive
rates and a high level of contracted capacity.
Currently two potentially competitive natural gas pipeline
projects are pending regulatory approval, financing and
construction. If either or both of these projects were to be
authorized, financed and constructed they would directly compete
with Northern Border Pipeline in the transportation of natural
gas from the Western Canadian Sedimentary Basin to markets in the
United States. The first proposed project, known as the Alliance
Pipeline, received preliminary, non-environmental approval from
the FERC in August 1997. The FERC determination was subject to
final environmental analysis and approval and the receipt by
Alliance Pipeline of regulatory approval from the National Energy
Board of Canada (the "NEB"). Requests for rehearing of the
FERC's preliminary order are currently pending before the FERC.
Regulatory proceedings before the NEB have commenced; however a
decision from the NEB is not expected before the second quarter
of 1998. Environmental analysis of the Alliance Pipeline is
ongoing at the FERC and will likely be completed in 1998. The
second competitive proposal is known as Transvoyageur-Viking-
Voyageur project. The application for this project was filed at
the FERC in November 1997. Project sponsors have indicated that
the application for the Canadian segment of this project is
expected to be filed with the NEB in 1998. Both Alliance
Pipeline and the Transvoyageur-Viking-Voyageur project proposed to
originate their respective pipelines in western Canada and
terminate in the vicinity of Chicago, Illinois. Either of these
projects could be in-service by the year 2000 if timely
regulatory approvals are received and if other conditions
are satisfied.
FERC Regulation
General
Northern Border Pipeline is subject to extensive regulation
by the FERC as a "natural gas company" under the Natural Gas Act
(the "NGA"). Under the NGA and the Natural Gas Policy Act, the
FERC has jurisdiction over Northern Border Pipeline with respect
to virtually all aspects of its business, including
transportation of 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, the initiation and
discontinuation of services, and certain other matters.
Cost of Service Tariff
Northern Border Pipeline's firm transportation shippers
contract to pay for an allocable share of the cost of service
associated with the Pipeline System's capacity. During any
given month, all such shippers pay a uniform charge per
dekatherm-mile of capacity contracted, calculated under a
cost of service tariff. Similarly during any given month,
the shippers' obligations to pay their allocable share of
the cost of service is not dependent upon the percentage
of available capacity actually used. Northern Border
Pipeline may not charge or collect more than its cost of
service determined pursuant to its tariff on file with the FERC.
Northern Border Pipeline also provides interruptible
transportation service. The maximum rate charged to
interruptible shippers is calculated from cost of service
estimates on the basis of contracted capacity. All revenue from
the interruptible transportation service is credited to the cost
of service.
In November 1995, Northern Border Pipeline filed a rate case
in compliance with its FERC tariff for the determination of its
allowed equity rate of return. In this proceeding, Northern
Border Pipeline reached a settlement accord with shippers holding
in excess of 90% of the aggregate contracted firm capacity as of
October 15, 1996 (the "Shippers") and filed for FERC approval of
a Stipulation and Agreement ("Stipulation") to settle its rate
case. The Stipulation was approved by the FERC in August 1997.
The Stipulation allows Northern Border Pipeline to retain its
12.75% equity rate of return through September 30, 1996, and a
12% rate beginning October 1, 1996. In addition, the
depreciation rates applied to Northern Border Pipeline's gross
transmission plant were reduced effective June 1, 1996, from 3.6%
to 2.7%. Beginning January 1, 1997, the depreciation rate is
reduced to 2.5%. Under the Stiputation, the Shippers agreed
that for at least seven years following the completion of The
Chicago Project, Northern Border Pipeline may continue to
calculate its allowance for income taxes as part of its cost
of service in the manner it has historically used. Also,
under the Stipulation, in connection with the completion of
The Chicago Project, Northern Border Pipeline will implement a
new depreciation schedule with an extended depreciable life, a
capital project cost containment mechanism and a $31 million
settlement adjustment mechanism. The settlement adjustment
mechanism would effectively reduce the allowed return on rate
base. In October 1997, Northern Border Pipeline made refunds to
its shippers in the amount of $52.6 million reflected as an
accumulated provision for rate refund in the September 30, 1997
consolidated balance sheet drawing on an existing $750 million
revolving credit facility and utilizing cash on hand.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus
Supplement, the net proceeds to be received by the Partnership
from the sale of the Common Units will be available for capital
contribution to Northern Border Pipeline by the Partnership for
The Chicago Project and for general business purposes and may be
used for repayment of debt, future acquisitions, capital
expenditures and working capital.
DESCRIPTION OF THE UNITS
Generally, the Common Units and the Subordinated Units
represent limited partner interests in the Partnership, which
entitle the holders thereof to participate in Partnership
distributions and exercise the rights or privileges available to
limited partners under the Amended and Restated Partnership
Agreement of the Partnership. The Subordinated Units are a
separate class of interests in the Partnership, and their rights
to participate in distributions differ from those rights of the
holders of Common Units.
The primary objective of the Partnership is to generate cash
from Partnership operations and to distribute Available Cash to
its partners in the manner described herein. "Available Cash"
generally means, with respect to any calendar quarter, the sum of
all of the cash received by the Partnership from all sources,
adjusted for cash disbursements and net changes to cash reserves.
The Partnership Policy Committee's decisions regarding
amounts to be placed in or released from cash reserves will have
a direct impact on the amount of Available Cash because increases
and decreases in cash reserves are taken into account in
computing Available Cash. The Partnership Policy Committee may,
in its reasonable discretion (subject to certain limits),
determine the amounts to be placed in or released from cash
reserves each quarter.
Cash distributions will be characterized as either
distributions of Cash from Operations or Cash from Interim
Capital Transactions. This distinction affects the amounts
distributed to Unitholders relative to the General Partners, and
under certain circumstances it determines whether holders of
Subordinated Units receive any distributions.
Cash from Operations generally refers to the cash balance of
the Partnership on the date the Partnership commenced operations,
plus all cash generated by the operations of the Partnership's
businesses (which consists primarily of cash distributions to the
Partnership by Northern Border Pipeline attributable to
operations of the Pipeline System), after deducting related cash
expenditures, cash reserves, debt service and certain other
items.
For any given quarter, Available Cash will be distributed to
the General Partners and to the holders of Common Units, and it
may also be distributed to the holders of Subordinated Units
depending upon the amount of Available Cash for the quarter,
amounts distributed in prior quarters and other factors discussed
below.
The Partnership will make distributions to its partners with
respect to each calendar quarter prior to liquidation of the
Partnership in an amount equal to 100% of its Available Cash for
such quarter. The distribution of Available Cash that constitutes
Cash from Operations with respect to each calendar quarter during
the Subordination Period is subject to the rights of the holders
of the Common Units to receive the Minimum Quarterly Distribution
($0.55 per Unit), plus any Common Unit Arrearages, prior to any
distribution of Available Cash to holders of Subordinated Units
with respect to such quarter. The terms "Subordination Period"
and "Common Unit Arrearages" are defined in the Amended and
Restated Agreement of Limited Partnership. Common Units will not
accrue Common Unit Arrearages for any quarter after the
Subordination Period, and Subordinated Units will not accrue any
arrearages with respect to distributions for any quarter.
On November 19 ,1997, the Partnership announced its
intention to increase its quarterly cash distribution by $0.05
per Unit by the fourth quarter 1998, with half of this increase
effected with the fourth quarter, 1997 distribution payable in
February 1998. The Partnership anticipates the increase will
result from the effects of The Chicago Project and will be
dependent upon its timely completion with no significant cost
overruns. The indicated annual rate would increase from $2.20 to
$2.40.
The Subordination Period extends from October 1, 1993 until
the Conversion Date. The "Conversion Date" is the date on
which the first of any one of the following occurs:
the first day of any calendar quarter that occurs on or
after January 1, 1999 and prior to January 1, 2004 and
on which both of the following tests are met: (i)
cumulative capital expenditures by the Partnership
(directly or through its 70% interest in Northern
Border Pipeline) subsequent to October 1, 1993 and
prior to such day equal or exceed $248 million, and
(ii) the Partnership has distributed the Minimum
Quarterly Distribution on all Common Units and
Subordinated Units for each of the eight consecutive
calendar quarters immediately prior to such day;
the first day of any calendar quarter that occurs on or
after January 1, 2004 and on which the following tests
are met: (i) cumulative capital expenditures by the
Partnership (directly or through its 70% interest in
Northern Border Pipeline) subsequent to October 1, 1993
and prior to such day equal or exceed $248 million and
(ii) there are no Common Unit Arrearages; and
the first day of any calendar quarter that occurs on or
after January 1, 2004 and on which the following test
is met: the Partnership has distributed the Minimum
Quarterly Distribution on all Common Units and
Subordinated Units for each of the 20 consecutive
calendar quarters immediately prior to such day.
In addition, the Partnership Agreement contains provisions
intended to discourage a person or group from attempting to
remove the General Partners as general partners of the
Partnership or otherwise change management of the Partnership.
Among them is a provision that if a General Partner is removed
other than for cause the Subordination Period will end.
As of the end of the Subordination Period, each Subordinated
Unit will convert into a Common Unit and will participate pro
rata with other outstanding Common Units in all cash
distributions on Common Units.
The transfer agent and registrar for the Common Units is
First Chicago Trust Company of New York.
TAX CONSIDERATIONS
This section is a summary of certain federal income tax
considerations that may be relevant to prospective Unitholders
and, to the extent set forth below under "Tax
Considerations-Legal Opinions and Advice," represents the opinion
of Vinson & Elkins L.L.P., counsel to the Partnership
("Counsel"), insofar as it relates to matters of law and legal
conclusions. This section is based upon current provisions of
the Internal Revenue Code of 1986, as amended ("Code"), existing
and proposed regulations thereunder and current administrative
rulings and court decisions, all of which are subject to change.
Subsequent changes may cause the tax consequences to vary
substantially from the consequences described below. Unless the
context otherwise requires, references in this section to
"Partnership" are references to both the Partnership and the
Northern Border Intermediate Limited Partnership (The
"Intermediate Partnership").
No attempt has been made in the following discussion to
comment on all federal income tax matters affecting the
Partnership or the Unitholders. Moreover, the discussion focuses
on Unitholders who are individual citizens or residents of the
United States and has only limited application to corporations,
estates, trusts or non-resident aliens. Accordingly, each
prospective Unitholder should consult, and should depend on, his
own tax advisor in analyzing the federal, state, local and
foreign tax consequences of the purchase, ownership or
disposition of Common Units.
Legal Opinions and Advice
Counsel has expressed its opinion that, based on the
representations and subject to the qualifications set forth in
the detailed discussion that follows, for federal income tax
purposes (i) the Partnership (including the Intermediate
Partnership) and Northern Border Pipeline each will be treated as
a partnership, and (ii) owners of Common Units (with certain
exceptions, as described in "Limited Partner Status" below) will
be treated as partners of the Partnership (but not the
Intermediate Partnership). In addition, all statements as to
matters of law and legal conclusions contained in this section,
unless otherwise noted, reflect the opinion of Counsel. Counsel
has also advised the Partnership that, based on current law, the
following general description of the principal federal income tax
consequences that should arise from the purchase, ownership and
disposition of Common Units, insofar as it relates to matters of
law and legal conclusions, addresses all material tax
consequences to Unitholders who are individual citizens or
residents of the United States.
No ruling has been requested from the Internal Revenue
Service (the "IRS") with respect to the foregoing issues or any
other matter affecting the Partnership or the Unitholders. An
opinion of counsel represents only such counsel's best legal
judgment and does not bind the IRS or the courts. Thus, no
assurance can be provided that the opinions and statements set
forth herein would be sustained by a court if contested by the
IRS. The costs of any contest with the IRS will be borne
directly or indirectly by the Unitholders and the General
Partners. Furthermore, no assurance can be given that the
treatment of the Partnership or an investment therein will not be
significantly modified by future legislative or administrative
changes or court decisions. Any such modification may or may not
be retroactively applied.
Recent Tax Legislation
Congress recently enacted, and the President signed into law
on August 5, 1997, the Taxpayer Relief Act of 1997 (the "TRA of
1997"). The new legislation contains several provisions which
have an impact on the Partnership and its Partners. The TRA of
1997 generally reduces the maximum capital gains rate for an
individual from 28% to 20% for capital assets held at least
eighteen months. In addition, the TRA of 1997 would
alter the tax reporting system and the deficiency collection
system applicable to large partnerships and would make certain
additional changes to the treatment of large partnerships, such
as the Partnership. These provisions are intended to simplify the
administration of the tax rules governing such entities. The
application of some of these new provisions are optional and the
Partnership Policy Committee has not determined whether the
Partnership will elect to have these provisions apply to the
Partnership and its Partners.
Partnership Status
A partnership is not a taxable entity and incurs no federal
income tax liability. Instead, each partner is required to take
into account his allocable share of items of income, gain, loss,
deduction and credit of the Partnership in computing his federal
income tax liability, regardless of whether cash distributions
are made. Distributions by a partnership to a partner are
generally not taxable unless the amount of any cash distributed
is in excess of the partner's adjusted basis in his partnership
interest.
Pursuant to Treasury Regulations 301.7701-1, 301.7702-1 and
301.7701-3, effective January 1, 1997 (the "Check-the-Box
Regulations"), an entity in existence on January 1, 1997, will
generally retain its current classification for federal income
tax purposes. As of January 1, 1997, the Partnership and
Northern Border Pipeline were each classified and taxed as a
partnership. Pursuant to the Check-the-Box Regulations this
prior classification will be respected for all periods prior to
January 1, 1997, if (1) the entity had a reasonable basis for the
claimed classification; (2) the entity recognized the federal tax
consequences of any change in classification within five years
prior to January 1, 1997; and (3) the entity was not notified
prior to May 8, 1996, that the entity classification was under
examination. Based on these regulations and the applicable
federal income tax law, Counsel has opined that the Partnership
and Northern Border Pipeline each have been and will be classified
as a partnership for federal income tax purposes.
In rendering its opinion, Counsel has relied on certain
factual representations and covenants made by the Partnership and
the General Partners, including:
(a) Neither the Partnership nor Northern Border
Pipeline will elect to be treated as an association taxable
as a corporation;
(b) A representation and covenant of the Partnership
that, the Partnership has been and will be operated in
accordance with all applicable partnership statutes and the
Partnership Agreement and in the manner described herein;
(c) A representation and covenant of the Partnership
that, except as otherwise required by Section 704 of the
Code and regulations promulgated thereunder, the General
Partners have had and will have, in the aggregate, an
interest in each material item of income, gain, loss,
deduction or credit of the Partnership and the Intermediate
Partnership equal to at least 1% at all times during the
existence of the Partnership and the Intermediate
Partnership;
(d) A representation and covenant of the General
Partners that the General Partners have and will maintain,
in the aggregate, a minimum capital account balance in the
Partnership and in the Intermediate Partnership equal to 1%
of the total positive capital account balances of the
Partnership and the Intermediate Partnership;
(e) A representation and covenant of the Partnership
that, for each taxable year, less than 10% of the gross
income of the Partnership has been and will be derived from
sources other than (i) the exploration, development,
production, processing, refining, transportation or
marketing of any mineral or natural resource, including oil,
gas or products thereof and naturally occurring carbon
dioxide or (ii) other items of "qualifying income" within
the meaning of Section 7704(d) of the Code; and
(f) A representation and covenant of the Partnership
that Northern Border Pipeline is organized and will be
operated in accordance with the Texas Uniform Partnership
Act and the Northern Border Pipeline Partnership Agreement.
Counsel's opinion as to the partnership classification of
the Partnership in the event of a change in the general partners
is based upon the assumption that the new general partners will
satisfy the foregoing representations and covenants.
Section 7704 of the Code provides that publicly-traded
partnerships will, as a general rule, be taxed as corporations.
However, an exception (the "Natural Resource Exception") exists
with respect to publicly-traded partnerships 90% or more of the
gross income of which for every taxable year consists of
"qualifying income." "Qualifying income" includes income and
gains derived from the transportation of natural gas and coal.
Other types of "qualifying income" include interest, dividends,
gains from the sale of real property and gains from the sale or
other disposition of capital assets held for the production of
income that otherwise constitutes "qualifying income." The
Partnership has represented that in excess of 90% of its gross
income has been and will be derived from fees and charges for
transporting (through the Pipeline System) natural gas. Based
upon that representation, Counsel is of the opinion that the
Partnership's gross income derived from these sources constitutes
"qualifying income."
If the Partnership fails to meet the Natural Resource
Exception (other than a failure determined by the IRS to be
inadvertent which is cured within a reasonable time after
discovery), the Partnership will be treated as if it had
transferred all of its assets (subject to liabilities) to a newly-
formed corporation (on the first day of the year in which it
fails to meet the Natural Resource Exception) in return for stock
in such corporation, and then distributed such stock to the
partners in liquidation of their interests in the Partnership.
This contribution and liquidation should be tax-free to
Unitholders and the Partnership, so long as the Partnership, at
such time, does not have liabilities in excess of the basis of
its assets. Thereafter, the Partnership would be treated as a
corporation for federal income tax purposes.
If the Partnership were treated as an association or
otherwise taxable as a corporation in any taxable year, as a
result of a failure to meet the Natural Resource Exception or
otherwise, its items of income, gain, loss, deduction and credit
would be reflected only on its tax return rather than being
passed through to the Unitholders, and its net income would be
taxed at the entity level at corporate rates. In addition, any
distribution made to a Unitholder would be treated as either
taxable dividend income (to the extent of the Partnership's
current or accumulated earnings and profits), in the absence of
earnings and profits as a nontaxable return of capital (to the
extent of the Unitholder's basis in his Common Units) or taxable
capital gain (after the Unitholder's basis in the Common Units is
reduced to zero). Accordingly, treatment of either the
Partnership or the Intermediate Partnership as an association
taxable as a corporation would result in a material reduction in
a Unitholder's cash flow and after-tax return.
The discussion below is based on the assumption that the
Partnership will be classified as a partnership for federal
income tax purposes.
Limited Partner Status
Unitholders who have become limited partners will be treated
as partners of the Partnership for federal income tax purposes.
Moreover, the IRS has ruled that assignees of partnership
interests who have not been admitted to a partnership as
partners, but who have the capacity to exercise substantial
dominion and control over the assigned partnership interests,
will be treated as partners for federal income tax purposes. On
the basis of this ruling, except as otherwise described herein,
Counsel is of the opinion that (a) assignees who have executed
and delivered Transfer Applications, and are awaiting admission
as limited partners and (b) Unitholders whose Common Units are
held in street name or by another nominee and who have the right
to direct the nominee in the exercise of all substantive rights
attendant to the ownership of their Common Units will be treated
as partners of the Partnership for federal income tax purposes.
As this ruling does not extend, on its facts, to assignees of
Common Units who are entitled to execute and deliver Transfer
Applications and thereby become entitled to direct the exercise
of attendant rights, but who fail to execute and deliver Transfer
Applications, Counsel's opinion does not extend to these persons.
Income, gain, deductions, losses or credits would not appear to
be reportable by such a Unitholder, and any cash distributions
received by such a Unitholder would therefore be fully taxable as
ordinary income. These holders should consult their own tax
advisors with respect to their status as partners in the
Partnership for federal income tax purposes. A purchaser or
other transferee of Common Units who does not execute and deliver
a Transfer Application may not receive certain federal income tax
information or reports furnished to record holders of Common
Units unless the Common Units are held in a nominee or street
name account and the nominee or broker has executed and delivered
a Transfer Application with respect to such Common Units.
A beneficial owner of Common Units whose Common Units have
been transferred to a short seller to complete a short sale would
appear to lose his status as a partner with respect to such
Common Units for federal income tax purposes. See "Tax
Considerations-Tax Treatment of Operations-Treatment of Short
Sales."
Tax Consequences of Unit Ownership
Flow-through of Taxable Income
No federal income tax will be paid by the Partnership.
Instead, each Unitholder will be required to report on his income
tax return his allocable share of the income, gains, losses and
deductions of the Partnership without regard to whether
corresponding cash distributions are received by such Unitholder.
Consequently, a Unitholder may be allocated income from the
Partnership although he has not received a cash distribution in
respect of such income.
Treatment of Partnership Distributions
Distributions by the Partnership to a Unitholder generally
will not be taxable to the Unitholder for federal income tax
purposes to the extent of his basis in his Common Units
immediately before the distribution. Cash distributions in
excess of a Unitholder's basis generally will be considered to be
gain from the sale or exchange of the Common Units, taxable in
accordance with the rules described under "Tax
Considerations-Disposition of Common Units." Any reduction in a
Unitholder's share of the Partnership's liabilities for which no
partner, including the General Partners, bears the economic risk
of loss ("nonrecourse liabilities") will be treated as a
distribution of cash to such Unitholder.
Basis of Common Units
A Unitholder's initial tax basis for his Common Units will
be the amount paid for the Common Unit plus his share of
Partnership nonrecourse liabilities. The initial tax basis for a
Common Unit will be increased by the Unitholder's share of
Partnership income and by any increase in the Unitholder's share
of Partnership nonrecourse liabilities. The basis for a Common
Unit will be decreased (but not below zero) by distributions from
the Partnership, including any decrease in the Unitholder's share
of Partnership nonrecourse liabilities, by the Unitholder's share
of Partnership losses and by the Unitholder's share of
expenditures of the Partnership that are not deductible in
computing its taxable income and are not required to be
capitalized. A Unitholder's share of nonrecourse liabilities
will be generally based on the Unitholder's share of the
Partnership's profits.
Limitations on Deductibility of Partnership Losses
To the extent losses are incurred by the Partnership, a
Unitholder's share of deductions for the losses will be limited
to the tax basis of the Unitholder's Units or, in the case of an
individual Unitholder or a corporate Unitholder if more than 50%
in the value of its stock is owned directly or indirectly by five
or fewer individuals or certain tax-exempt organizations, to the
amount which the Unitholder is considered to be "at risk" with
respect to the Partnership's activities, if that is less than the
Unitholder's basis. A Unitholder must recapture losses deducted
in previous years to the extent that Partnership distributions
cause the Unitholder's at risk amount to be less than zero at the
end of any taxable year. Losses disallowed to a Unitholder or
recaptured as a result of these limitations will carry forward
and will be allowable to the extent that the Unitholder's basis
or at risk amount (whichever is the limiting factor) is
increased.
In general, a Unitholder will be at risk to the extent of
the purchase price of his Units, but this will be less than the
Unitholder's basis for his Units by the amount of the
Unitholder's share of any nonrecourse liabilities of the
Partnership. A Unitholder's at risk amount will increase or
decrease as the basis of the Unitholder's Units increases or
decreases except that changes in nonrecourse liabilities of the
Partnership will not increase or decrease the at risk amount.
The passive loss limitations generally provide that
individuals, estates, trusts and certain closely held
corporations and personal service corporations can only deduct
losses from passive activities (generally, activities in which
the taxpayer does not materially participate) that are not in
excess of the taxpayer's income from such passive activities or
investments. The passive loss limitations are to be applied
separately with respect to each publicly-traded partnership.
Consequently, the losses generated by the Partnership, if any,
will only be available to offset future income generated by the
Partnership and will not be available to offset income from other
passive activities or investments (including other publicly-
traded partnerships) or salary or active business income.
Passive losses which are not deductible because they exceed the
Unitholder's income generated by the Partnership may be deducted
in full when the Unitholder disposes of his entire investment in
the Partnership in a fully taxable transaction to an unrelated
party. The passive activity loss rules are applied after other
applicable limitations on deductions such as the at risk rules
and the basis limitation.
A Unitholder's share of net income from the Partnership may
be offset by any suspended passive losses from the Partnership,
but it may not be offset by any other current or carryover losses
from other passive activities, including those attributable to
other publicly-traded partnerships. The IRS has announced that
Treasury Regulations will be issued which characterize net
passive income from a publicly-traded partnership as investment
income for purposes of the limitations on the deductibility of
investment interest.
Limitations on Interest Deductions
The deductibility of a non-corporate taxpayer's "investment
interest expense" is generally limited to the amount of such
taxpayer's "net investment income." As noted, a Unitholder's net
passive income from the Partnership will be treated as investment
income for this purpose. In addition, the Unitholder's share of
the Partnership's portfolio income will be treated as investment
income. Investment interest expense includes (i) interest on
indebtedness properly allocable to property held for investment,
(ii) a partnership's interest expense attributed to portfolio
income and (iii) the portion of interest expense incurred to
purchase or carry an interest in a passive activity to the extent
attributable to portfolio income. The computation of a
Unitholder's investment interest expense will take into account
interest on any margin account borrowing or other loan incurred
to purchase or carry a Unit to the extent attributable to
portfolio income of the Partnership. Net investment income
includes gross income from property held for investment, gain
attributable to the disposition of property held for investment
and amounts treated as portfolio income pursuant to the passive
loss rules less deductible expenses (other than interest)
directly connected with the production of investment income.
Allocation of Partnership Income, Gain, Loss and Deduction
The Partnership Agreement provides that a capital account be
maintained for each partner, that the capital accounts generally
be maintained in accordance with the applicable tax accounting
principles set forth in applicable Treasury Regulations and that
all allocations to a partner be reflected by an appropriate
increase or decrease in his capital account. Distributions upon
liquidation of the Partnership generally are to be made in
accordance with positive capital account balances.
In general, if the Partnership has a net profit, items of
income, gain, loss and deduction will be allocated among the
General Partners and the Unitholders in accordance with their
respective percentage interests in the Partnership. A class of
Unitholders that receives more cash than another class, on a per
Unit basis, with respect to a year, will be allocated additional
income equal to that excess. If the Partnership has a net loss,
items of income, gain, loss and deduction will generally be
allocated for both book and tax purposes (1) first, to the
General Partners and the Unitholders in accordance with their
respective Percentage Interests to the extent of their positive
capital accounts and (2) second, to the General Partners.
Notwithstanding the above, as required by Section 704(c) of
the Code, certain items of Partnership income, deduction, gain
and loss will be specially allocated to account for the
difference between the tax basis and fair market value of
property contributed to the Partnership ("Contributed Property").
In addition, certain items of recapture income will be allocated
to the extent possible to the partner allocated the deduction
giving rise to the treatment of such gain as recapture income in
order to minimize the recognition of ordinary income by some
Unitholders, but these allocations may not be respected. If
these allocations of recapture income are not respected, the
amount of the income or gain allocated to a Unitholder will not
change but instead a change in the character of the income
allocated to a Unitholder would result. Finally, although the
Partnership does not expect that its operations will result in
the creation of negative capital accounts, if negative capital
accounts nevertheless result, items of Partnership income and
gain will be allocated in an amount and manner sufficient to
eliminate the negative balance as quickly as possible.
Regulations provide that an allocation of items of
partnership income, gain, loss, deduction or credit, other than
an allocation required by Section 704(c) of the Code to eliminate
the disparity between a partner's "book" capital account
(credited with the fair market value of Contributed Property) and
"tax" capital account (credited with the tax basis of Contributed
Property) (the "Book-Tax Disparity"), will generally be given
effect for federal income tax purposes in determining a partner's
distributive share of an item of income, gain, loss or deduction
only if the allocation has substantial economic effect. In any
other case, a partner's distributive share of an item will be
determined on the basis of the partner's interest in the
partnership, which will be determined by taking into account all
the facts and circumstances, including the partner's relative
contributions to the partnership, the interests of the partners
in economic profits and losses, the interests of the partners in
cash flow and other non-liquidating distributions and rights of
the partners to distributions of capital upon liquidation.
Under the Code, the partners in a partnership cannot be
allocated more depreciation, gain or loss than the total amount
of any such item recognized by that partnership in a particular
taxable period. This rule, often referred to as the "ceiling
limitation," is not expected to have significant application to
allocations with respect to Contributed Property and thus, is not
expected to prevent the Unitholders from receiving allocations of
depreciation, gain or loss from such properties equal to that
which they would have received had such properties actually had a
basis equal to fair market value at the outset. However, to the
extent the ceiling limitation is or becomes applicable, the
Partnership Agreement requires that certain items of income and
deduction be allocated in a way designed to effectively "cure"
this problem and eliminate the impact of the ceiling limitations.
Such allocations will not have substantial economic effect
because they will not be reflected in the capital accounts of the
Unitholders.
The legislative history of Section 704(c) states that
Congress anticipated that Regulations would permit partners to
agree to a more rapid elimination of Book-Tax Disparities than
required provided there is no tax avoidance potential. Further,
under recently enacted final Regulations under Section 704(c),
allocations similar to the curative allocations would be allowed.
However, since the final Regulations are not applicable to the
Partnership, Counsel is unable to opine on the validity of the
curative allocations.
Counsel is of the opinion that, with the exception of
curative allocations and the allocation of recapture income
discussed above, allocations under the Partnership Agreement will
be given effect for federal income tax purposes in determining a
partner's distributive share of an item of income, gain, loss or
deduction. There are, however, uncertainties in the Regulations
relating to allocations of partnership income, and investors
should be aware that some of the allocations in the Partnership
Agreement may be successfully challenged by the IRS.
Tax Treatment of Operations
Accounting Method and Taxable Year
The Partnership will use the calendar year as its taxable
year and will adopt the accrual method of accounting for federal
income tax purposes.
Initial Tax Basis, Depreciation and Amortization
The tax basis established for the various assets of the
Partnership will be used for purposes of computing depreciation
and cost recovery deductions and, ultimately, gain or loss on the
disposition of such assets. The Partnership assets initially had
an aggregate tax basis equal to the sum of each Unitholder's tax
basis in his Units and the tax basis of the General Partners in
their respective general partner interests and Subordinated
Units.
The Partnership allocated the aggregate tax basis among the
Partnership's assets based upon their relative fair market
values. Any amount in excess of the fair market values of
specific tangible and intangible assets will constitute goodwill,
which is subject to amortization over 15 years.
The IRS may (i) challenge either the fair market values or
the useful lives assigned to such assets or (ii) seek to
characterize intangible assets as goodwill. If any such
challenge or characterization were successful, the deductions
allocated to a Unitholder in respect of such assets would be
reduced, and a Unitholder's share of taxable income from the
Partnership would be increased accordingly. Any such increase
could be material.
To the extent allowable, the General Partners may elect to
use the depreciation and cost recovery methods that will result
in the largest depreciation deductions in the early years of the
Partnership. Property subsequently acquired or constructed by
the Partnership may be depreciated using accelerated methods
permitted by the Code.
If the Partnership disposes of depreciable property by sale,
foreclosure, or otherwise, all or a portion of any gain
(determined by reference to the amount of depreciation previously
deducted and the nature of the property) may be subject to the
recapture rules and taxed as ordinary income rather than capital
gain. Similarly, a partner who has taken cost recovery or
depreciation deductions with respect to property owned by the
Partnership may be required to recapture such deductions upon a
sale of his interest in the Partnership. See "Tax
Considerations-Allocation of Partnership Income, Gain, Loss and
Deduction" and "Tax Considerations-Disposition of Common
Units-Recognition of Gain or Loss."
Costs incurred in organizing the Partnership may be
amortized over any period selected by the Partnership not shorter
than 60 months. The costs incurred in promoting the issuance of
Units must be capitalized and cannot be deducted currently,
ratably or upon termination of the Partnership. There are
uncertainties regarding the classification of costs as
organization expenses, which may be amortized, and as syndication
expenses which may not be amortized.
Section 754 Election
The Partnership previously made the election permitted by
Section 754 of the Code, which election is irrevocable without
the consent of the IRS. The election generally permits a
purchaser of Common Units to adjust his share of the basis in the
Partnership's properties ("inside basis") pursuant to Section
743(b) of the Code to fair market value (as reflected by his Unit
price). See "Tax Considerations-Allocation of Partnership
Income, Gain, Loss and Deduction." The Section 743(b) adjustment
is attributed solely to a purchaser of Common Units and is not
added to the bases of the Partnership's assets associated with
all of the Unitholders. (For purposes of this discussion, a
partner's inside basis in the Partnership's assets will be
considered to have two components: (1) his share of the
Partnership's actual basis in such assets ("Common Basis") and
(2) his Section 743(b) adjustment allocated to each such asset.)
Proposed Treasury Regulation Section 1.168-2(n) generally
requires the Section 743(b) adjustment attributable to recovery
property to be depreciated as if the total amount of such
adjustment were attributable to newly-acquired recovery property
placed in service when the transfer occurs. Similarly, the
proposed regulations under Section 197 indicates that the 743(b)
adjustment attributable to amortizable intangible assets under
Section 197 should be treated as a newly-acquired asset placed in
service in the month when the transfer occurs. Under Treasury
Regulation Section 1.167(c)-1(a)(6), a Section 743(b) adjustment
attributable to property subject to depreciation under Section
167 of the Code rather than cost recovery deductions under
Section 168 is generally required to be depreciated using either
the straight-line method or the 150% declining balance method.
The Partnership intends to utilize the 150% declining balance
method on such property. The depreciation method and useful
lives associated with the Section 743(b) adjustment, therefore,
may differ from the method and useful lives generally used to
depreciate the Common Bases in such properties. Pursuant to the
Partnership Agreement, the General Partners are authorized to
adopt a convention to preserve the uniformity of Units even if
such convention is not consistent with Treasury Regulation
Section 1.167(c)-1(a)(6), Proposed Treasury Regulation Sections
1.168-2(n) or 1.197-2(g)(3). See "Tax Considerations-Uniformity
of Units."
Although Counsel is unable to opine as to the validity of
such an approach, the Partnership intends to depreciate the
portion of a Section 743(b) adjustment attributable to unrealized
appreciation in the value of Contributed Property (to the extent
of any unamortized Book-Tax Disparity) using a rate of
depreciation or amortization derived from the depreciation or
amortization method and useful life applied to the Common Basis
of such property, despite its inconsistency with proposed
Treasury Regulation Section 1.168-2(n), Treasury Regulation
Section 1.167(c)-1(a)(6) or Proposed Treasury Regulation Section
1.197-2(g)(3). If the Partnership determines that such position cannot
reasonably be taken, the Partnership may adopt a depreciation or
amortization convention under which all purchasers acquiring
Units in the same month would receive depreciation or
amortization, whether attributable to Common Basis or Section
743(b) basis, based upon the same applicable rate as if they had
purchased a direct interest in the Partnership's property. Such
an aggregate approach may result in lower annual depreciation or
amortization deductions than would otherwise be allowable to
certain Unitholders. See "Tax Considerations-Uniformity of
Units."
The allocation of the Section 743(b) adjustment must be made
in accordance with the principles of Section 1060 of the Code.
Based on these principles, the IRS may seek to reallocate some or
all of any Section 743(b) adjustment not so allocated by the
Partnership to goodwill. Alternatively, it is possible that the
IRS may seek to treat the portion of such Section 743(b)
adjustment attributable to the Underwriter's discount as if
allocable to a non-deductible syndication cost.
A Section 754 election is advantageous if the transferee's
basis in his Units is higher than such Units' share of the
aggregate basis to the Partnership of the Partnership's assets
immediately prior to the transfer. In such case, pursuant to the
election, the transferee would take a new and higher basis in his
share of the Partnership's assets for purposes of calculating,
among other items, his depreciation deductions and his share of
any gain or loss on a sale of the Partnership's assets.
Conversely, a Section 754 election is disadvantageous if the
transferee's basis in such Units is lower than such Units' share
of the aggregate basis of the Partnership's assets immediately
prior to the transfer. Thus, the amount which a Unitholder will
be able to obtain upon the sale of his Common Units may be
affected either favorably or adversely by the election.
The calculations involved in the Section 754 election are
complex and will be made by the Partnership on the basis of
certain assumptions as to the value of Partnership assets and
other matters. There is no assurance that the determinations
made by the Partnership will not be successfully challenged by
the IRS and that the deductions attributable to them will not be
disallowed or reduced. Should the IRS require a different basis
adjustment to be made, and should, in the General Partners'
opinion, the expense of compliance exceed the benefit of the
election, the General Partners may seek permission from the IRS
to revoke the Section 754 election for the Partnership. If such
permission is granted, a purchaser of Units subsequent to such
revocation probably will incur increased tax liability.
Alternative Minimum Tax
Each Unitholder will be required to take into account his
distributive share of any items of Partnership income, gain or
loss for purposes of the alternative minimum tax. A portion of
the Partnership's depreciation deductions may be treated as an
item of tax preference for this purpose.
A Unitholder's alternative minimum taxable income derived
from the Partnership may be higher than his share of Partnership
net income because the Partnership may use more accelerated
methods of depreciation for purposes of computing federal taxable
income or loss. The minimum tax rate for individuals is 26% on
the first $175,000 of alternative minimum taxable income in
excess of the exemption amount and to 28% on any additional
alternative minimum taxable income. Prospective Unitholders
should consult with their tax advisors as to the impact of an
investment in Common Units on their liability of the alternative
minimum tax.
Valuation of Partnership Property
The federal income tax consequences of the acquisition,
ownership and disposition of Units will depend in part on
estimates by the Partnership of the relative fair market values,
and determinations of the initial tax basis, of the assets of the
Partnership. Although the Partnership may from time to time
consult with professional appraisers with respect to valuation
matters, many of the relative fair market value estimates will be
made solely by the Partnership. These estimates are subject to
challenge and will not be binding on the IRS or the courts. In
the event the determinations of fair market value are
subsequently found to be incorrect, the character and amount of
items of income, gain, loss, deductions or credits previously
reported by Unitholders might change, and Unitholders might be
required to amend their previously filed tax returns or to file
claims for refunds.
Treatment of Short Sales
Under the TRA of 1997, a Unitholder who engages in a short
sale (or a transaction having the same effect) with respect to
Units will be required to recognize the gain (but not the loss)
inherent in such Units. See "Tax Considerations-Disposition of
Common Units." In addition, it would appear that a Unitholder
whose Units are loaned to a "short seller" to cover a short sale
of Units would be considered as having transferred beneficial
ownership of those Units and would, thus, no longer be a partner
with respect to those Units during the period of the loan.
As a result, during this period, any Partnership income, gain,
deduction, loss or credit with respect to those Units would appear
not to be reportable by the Unitholder, any cash distributions
received by the Unitholder with respect to those Units would be
fully taxable and all of such distributions would appear to be
treated as ordinary income. The IRS may also contend that a loan
of Units to a "short seller" constitutes a taxable exchange. If this
contention were successfully made, the lending Unitholder may be
required to recognize gain or loss. Unitholders desiring to
assure their status as partners should modify their brokerage
account agreements, if any, to prohibit their brokers from
borrowing their Units.
Disposition of Common Units
Recognition of Gain or Loss
Gain or loss will be recognized on a sale of Units equal to
the difference between the amount realized and the Unitholder's
tax basis for the Units sold. A Unitholder's amount realized
will be measured by the sum of the cash or the fair market value
of other property received plus his share of Partnership
nonrecourse liabilities. Since the amount realized includes a
Unitholder's share of Partnership nonrecourse liabilities, the
gain recognized on the sale of Units may result in a tax
liability in excess of any cash received from such sale.
Gain or loss recognized by a Unitholder (other than a
"dealer" in Units) on the sale or exchange of a Unit held for
more than twelve months will generally be taxable as long-term
capital gain or loss. A substantial portion of this gain or
loss, however, will be separately computed and taxed as ordinary
income or loss under section 751 of the Code to the extent
attributable to assets giving rise to depreciation recapture or
other "unrealized receivables" or to inventory owned by the
Partnership. The term "unrealized receivables" includes
potential recapture items, including depreciation recapture.
Ordinary income attributable to unrealized receivables, inventory
and deprecation recapture may exceed net taxable gain realized
upon the sale of the Unit and may be recognized even if there is
a net taxable gain realized upon the sale of the Unit. Any loss
recognized on the sale of units will generally be a capital loss.
Thus, a Unitholder may recognize both ordinary income and a
capital loss upon a disposition of units. Net capital loss may
offset no more than $3,000 of ordinary income in the case of
individuals and may only be used to offset capital gain in the
case of a corporation.
The IRS has ruled that a partner acquiring interests in a
partnership in separate transactions at different prices must
maintain an aggregate adjusted tax basis in a single partnership
interest and that, upon sale or other disposition of some of the
interests, a portion of such aggregate tax basis must be
allocated to the interests sold on the basis of some equitable
apportionment method. The ruling is unclear as to how the
holding period is affected by this aggregation concept. If this
ruling is applicable to the holders of Common Units, the
aggregation of tax bases of a Common Unitholder effectively
prohibits him from choosing among Common Units with varying
amounts of unrealized gain or loss as would be possible in a
stock transaction. Thus, the ruling may result in an
acceleration of gain or deferral of loss on a sale of a portion
of a Unitholder's Common Units. It is not clear whether the
ruling applies to publicly-traded partnerships, such as the
Partnership, the interests in which are evidenced by separate
interests, and accordingly Counsel is unable to opine as to the
effect such ruling will have on the Unitholders. A Unitholder
considering the purchase of additional Common Units or a sale of
Common Units purchased at differing prices should consult his tax
advisor as to the possible consequences of such ruling.
Allocations between Transferors and Transferees
In general, the Partnership's taxable income and losses will
be determined annually and will be prorated on a monthly basis
and subsequently apportioned among the Unitholders in proportion
to the number of Units owned by them as of the close of business
on the last day of the preceding month. However, gain or loss
realized on a sale or other disposition of Partnership assets
other than in the ordinary course of business shall be allocated
among the Unitholders of record as of the opening of the New York
Stock Exchange on the first business day of the month in which
such gain or loss is recognized. As a result of this monthly
allocation, a Unitholder transferring Units in the open market
may be allocated income, gain, loss, deduction, and credit
accrued after the transfer.
The use of the monthly conventions discussed above may not
be permitted by existing Treasury Regulations and, accordingly,
Counsel is unable to opine on the validity of the method of
allocating income and deductions between the transferors and the
transferees of Common Units. If a monthly convention is not
allowed by the Treasury Regulations (or only applies to transfers
of less than all of the Unitholder's interest), taxable income or
losses of the Partnership might be reallocated among the
Unitholders. The Partnership is authorized to revise its method
of allocation between transferors and transferees (as well as
among partners whose interests otherwise vary during a taxable
period) to conform to a method permitted by future Treasury
Regulations.
A Unitholder who owns Units at any time during a quarter and
who disposes of such Units prior to the record date set for a
distribution with respect to such quarter will be allocated items
of Partnership income and gain attributable to such quarter
during which such Units were owned but will not be entitled to
receive such cash distribution.
Notification Requirements
A Unitholder who sells or exchanges Units is required to
notify the Partnership in writing of such sale or exchange within
30 days of the sale or exchange and in any event no later than
January 15 of the year following the calendar year in which the
sale or exchange occurred. The Partnership is required to notify
the IRS of such transaction and to furnish certain information to
the transferor and transferee. However, these reporting
requirements do not apply with respect to a sale by an individual
who is a citizen of the United States and who effects such sale
through a broker. Additionally, a transferor and a transferee of
a Unit will be required to furnish statements to the IRS, filed
with their income tax returns for the taxable year in which the
sale or exchange occurred, which set forth the amount of the
consideration received for such Unit that is allocated to
goodwill or going concern value of the Partnership. Failure to
satisfy such reporting obligations may lead to the imposition of
substantial penalties.
Constructive Termination
The Partnership and the Intermediate Partnership will be
considered to have been terminated if there is a sale or exchange
of 50% or more of the total interests in Partnership capital and
profits within a 12-month period. A constructive termination
results in the closing of a partnership's taxable year for all
partners. Such a termination could result in the non-uniformity
of Units for federal income tax purposes. A constructive
termination of the Partnership will cause a termination of the
Intermediate Partnership. Such a termination could also result
in penalties or loss of basis adjustments under Section 754 of
the Code if the Partnership were unable to determine that the
termination had occurred.
In the case of a Unitholder reporting on a fiscal year other
than a calendar year, the closing of a tax year of the
Partnership may result in more than 12 months' taxable income or
loss of the Partnership being includable in its taxable income
for the year of termination. In addition, each Unitholder will
realize taxable gain to the extent that any money constructively
distributed to him (including any net reduction in his share of
partnership nonrecourse liabilities) exceeds the adjusted basis
on his Units. New tax elections required to be made by the
Partnership, including a new election under Section 754 of the
Code, must be made subsequent to the constructive termination. A
constructive termination would also result in a deferral of
Partnership deductions for depreciation. In addition, a
termination might either accelerate the application of or subject
the Partnership to any tax legislation enacted with effective
dates after the closing of the offering made hereby.
Entity-Level Collections
If the Partnership is required under applicable law to pay
any federal, state or local income tax on behalf of any
Unitholder, any General Partner or any former Unitholder, the
Partnership Policy Committee is authorized to pay such taxes from
Partnership funds. Such payments, if made, will be deemed
current distributions of cash to the Unitholders and the General
Partners. The General Partners are authorized to amend the
Partnership Agreement in the manner necessary to maintain
uniformity of intrinsic tax characteristics of Units and to
adjust subsequent distributions so that after giving effect to
such deemed distributions, the priority and characterization of
distributions otherwise applicable under the Partnership
Agreement is maintained as nearly as is practicable. Payments by
the Partnership as described above could give rise to an
overpayment of tax on behalf of an individual partner in which
event, the partner could file a claim for credit or refund.
Uniformity of Units
Since the Partnership cannot match transferors and
transferees of Common Units, uniformity of the economic and tax
characteristics of the Common Units to a purchaser of such Common
Units must be maintained. In the absence of uniformity,
compliance with a number of federal income tax requirements, both
statutory and regulatory, could be substantially diminished. A
lack of uniformity can result from a literal application of
Proposed Treasury Regulation Section 1.168-2(n) and Treasury
Regulation Section 1.167(c)-1(a)(6) or Proposed Treasury Regulation
Section 1.197-2(g)(3) and from the application of the "ceiling limitation"
on the Partnership's ability to make allocations to eliminate
Book-Tax Disparities attributable to Contributed Properties and
Partnership property that has been revalued and reflected in the
partners' capital accounts ("Adjusted Properties"). Any such non-
uniformity could have a negative impact on the value of a
Unitholder's interest in the Partnership.
The Partnership intends to depreciate the portion of a
Section 743(b) adjustment attributable to unrealized appreciation
in the value of Contributed Property or Adjusted Property (to the
extent of any unamortized Book-Tax Disparity) using the rate of
depreciation derived from the depreciation method and useful life
applied to the Common Basis of such property, despite its
inconsistency with Proposed Treasury Regulation Section 1.168-
2(n) and Treasury Regulation Section 1.167(c)-1(a)(6) or Proposed
Treasury Regulation Section 1.197-2(g)(3). See "Tax Considerations-Tax
Treatment of Operations-Section 754 Election." If the
Partnership determines that such a position cannot reasonably be
taken, the Partnership may adopt depreciation and amortization
conventions under which all purchasers acquiring Common Units in
the same month would receive depreciation and amortization
deductions, whether attributable to common basis or
Section 743(b) basis, based upon the same applicable rate as if
they had purchased a direct interest in the Partnership's
property. If such an aggregate approach is adopted, it may
result in lower annual depreciation and amortization deductions
than would otherwise be allowable to certain Unitholders and risk
the loss of depreciation and amortization deductions not taken in
the year that such deductions are otherwise allowable. This
convention will not be adopted if the Partnership determines that
the loss of depreciation and amortization deductions will have a
material adverse effect on the Unitholders. If the Partnership
chooses not to utilize this aggregate method, the Partnership may
use any other reasonable depreciation and amortization convention
to preserve the uniformity of the intrinsic tax characteristics
of any Common Units that would not have a material adverse effect
on the Unitholders. The IRS may challenge any method of
depreciating or amortizing the Section 743(b) adjustment
described in this paragraph. If such a challenge were to be
sustained, the uniformity of Common Units might be affected.
Items of income and deduction will be specially allocated in
a manner that is intended to preserve the uniformity of intrinsic
tax characteristics among all Units, despite the application of
the "ceiling limitation" to Contributed Properties and Adjusted
Properties. Such special allocations will be made solely for
federal income tax purposes. See "Tax Considerations-Tax
Consequences of Unit Ownership" and "Tax
Considerations-Allocation of Partnership Income, Gain, Loss and
Deduction."
The capital accounts underlying the Common Units will likely
differ, perhaps materially, from the capital accounts underlying
the Subordinated Units. The Partnership Agreement contains a
method by which the Partnership may cause the capital accounts
underlying the Common Units to equal the capital accounts
underlying the Subordinated Units following the end of the
Subordination Period. The Partnership must be reasonably
assured, based on advice of counsel, that the Common Units and
Subordinated Units share the same intrinsic economic and federal
income tax characteristics in all material respects, before the
Subordinated Units and Common Units will be treated as a single
class of Units.
Tax-Exempt Organizations and Certain Other Investors
Ownership of Units by employee benefit plans, other tax-
exempt organizations, nonresident aliens, foreign corporations,
other foreign persons and regulated investment companies raises
issues unique to such persons and, as described below, may have
substantially adverse tax consequences.
Employee benefit plans and most other organizations exempt
from federal income tax (including individual retirement accounts
and other retirement plans) are subject to federal income tax on
unrelated business taxable income. Virtually all of the taxable
income derived by such an organization from the ownership of a
Unit will be unrelated business taxable income and thus will be
taxable to such a Unitholder.
Regulated investment companies are required to derive 90% or
more of their gross income from interest, dividends, gains from
the sale of stocks or securities or foreign currency or certain
related sources. It is not anticipated that any significant
amount of the Partnership's gross income will qualify as such
income.
Non-resident aliens and foreign corporations, trusts or
estates which acquire Units will be considered to be engaged in
business in the United States on account of ownership of Units
and as a consequence will be required to file federal tax returns
in respect of their distributive shares of Partnership income,
gain, loss deduction or credit and pay federal income tax at
regular rates on such income. Generally, a partnership is
required to pay a withholding tax on the portion of the
partnership's income which is effectively connected with the
conduct of a United States trade or business and which is
allocable to the foreign partners, regardless of whether any
actual distributions have been made to such partners. However,
under rules applicable to publicly-traded partnerships, the
Partnership will withhold at the rate of 39.6% on actual cash
distributions made quarterly to foreign Unitholders. Each
foreign Unitholder must obtain a taxpayer identification number
from the IRS and submit that number to the Transfer Agent of the
Partnership on a Form W-8 in order to obtain credit for the taxes
withheld. Subsequent adoption of Treasury Regulations or the
issuance of other administrative pronouncements may require the
Partnership to change these procedures.
Because a foreign corporation which owns Units will be
treated as engaged in a United States trade or business, such a
Unitholder may be subject to United States branch profits tax at
a rate of 30%, in addition to regular federal income tax, on its
allocable share of the Partnership's earnings and profits (as
adjusted for changes in the foreign corporation's "U.S. net
equity") which are effectively connected with the conduct of a
United States trade or business. Such a tax may be reduced or
eliminated by an income tax treaty between the United States and
the country with respect to which the foreign corporate
Unitholder is a "qualified resident."
Assuming that the Units are regularly traded on an
established securities market, a foreign Unitholder who sells or
otherwise disposes of a Unit and who has not held more than 5% in
value of the Units at any time during the five-year period ending
on the date of the disposition will not be subject to federal
income tax on gain realized on the disposition that is
attributable to real property held by the Partnership, but
(regardless of a foreign Unitholder's percentage interest in the
Partnership or whether Units are regularly traded) such
Unitholder may be subject to federal income tax on any gain
realized on the disposition that is treated as effectively
connected with a United States trade or business of the foreign
Unitholder. A foreign Unitholder will be subject to federal
income tax on gain attributable to real property held by the
Partnership if the holder held more than 5% in value of the Units
during the five-year period ending on the date of the disposition
or if the Units were not regularly traded on an established
securities market at the time of the disposition.
Administrative Matters
Partnership Information Returns and Audit Procedures
The Partnership intends to furnish to each Unitholder within
90 days after the close of each Partnership taxable year, certain
tax information, including a Schedule K-1, which sets forth each
Unitholder's allocable share of the Partnership's income, gain,
loss, deduction and credit. In preparing this information, which
will generally not be reviewed by counsel, the Partnership will
use various accounting and reporting conventions, some of which
have been mentioned in the previous discussion, to determine the
respective Unitholders' allocable share of income, gain, loss,
deduction and credits. There is no assurance that any such
conventions will yield a result which conforms to the
requirements of the Code, regulations or administrative
interpretations of the IRS. The Partnership cannot assure
prospective Unitholders that the IRS will not successfully
contend in court that such accounting and reporting conventions
are impermissible.
The federal income tax information returns filed by the
Partnership may be audited by the IRS. Adjustments resulting
from any such audit may require each Unitholder to file an
amended tax return, and possibly may result in an audit of the
Unitholder's own return. Any audit of a Unitholder's return
could result in adjustments of non-Partnership as well as
Partnership items.
Partnerships generally are treated as separate entities for
purposes of federal tax audits, judicial review of administrative
adjustments by the IRS and tax settlement proceedings. The tax
treatment of partnership items of income, gain, loss, deduction
and credit are determined at the partnership level in a unified
partnership proceeding rather than in separate proceedings with
the partners. The Code provides for one partner to be designated
as the "Tax Matters Partner" for these purposes. The Partnership
Agreement appoints Northern Plains as the Tax Matters Partner.
The Tax Matters Partner will make certain elections on
behalf of the Partnership and Unitholders and can extend the
statute of limitations for assessment of tax deficiencies against
Unitholders with respect to Partnership items. The Tax Matters
Partner may bind a Unitholder with less than a 1% profits
interest in the Partnership to a settlement with the IRS unless
such Unitholder elects, by filing a statement with the IRS, not
to give such authority to the Tax Matters Partner. The Tax
Matters Partner may seek judicial review (to which all the
Unitholders are bound) of a final Partnership administrative
adjustment and, if the Tax Matters Partner fails to seek judicial
review, such review may be sought by any Unitholder having at
least 1% interest in the profits of the Partnership and by the
Unitholders having in the aggregate at least a 5% profits
interest. However, only one action for judicial review will go
forward, and each Unitholder with an interest in the outcome may
participate.
A Unitholder must file a statement with the IRS identifying
the treatment of any item on its federal income tax return that
is not consistent with the treatment of the item on the
Partnership's return to avoid the requirement that all items be
treated consistently on both returns. Intentional or negligent
disregard of the consistency requirement may subject a Unitholder
to substantial penalties. Under the TRA of 1997, partners in
electing large partnerships would be required to treat all
partnership items in a manner consistent with the partnership
return.
Under the TRA of 1997, each partner of an electing large
partnership must take into account separately his share of the
following items, determined at the partnership level: (1)
taxable income or loss from passive loss limitation activities;
(2) taxable income or loss from other activities (such as
portfolio income or loss); (3) net capital gains to the extent
allocable to passive loss limitation activities and other
activities; (4) a net alternative minimum tax adjustment
separately computed for passive loss limitation activities and
other activities; (5) general credits; (6) low-income housing
credit; (7) rehabilitation credit; (8) tax-exempt interest;
(9) foreign income taxes; (10) credit for producing fuel from a
nonconventional source and (11) any other items the Secretary of
the Treasury deems appropriate.
The TRA of 1997 also made a number of changes to the tax
compliance and administrative rules relating to electing large
partnerships. One provision requires that each partner in an
electing large partnership take into account his share of any
adjustments to partnership items in the year such adjustments are
made. If the election is not made, adjustments relating to
partnership items for a previous taxable year are taken into
account by those persons who were partners in the previous
taxable year. Alternatively, under the TRA of 1997 a partnership
could elect to or, in some circumstances, could be required to,
directly pay the tax resulting from any such adjustments. In
either case, therefore, Unitholders could bear significant
economic burdens associated with tax adjustments relating to
periods predating their acquisition of Units.
Although the Partnership Policy Committee is weighing the
advantages and disadvantages to the Partnership and the Partners
of the Partnership's being treated as an "electing large partnership"
under the TRA of 1997, no decision has been made at this time.
Nominee Reporting
Persons who hold an interest in the Partnership as a nominee
for another person are required to furnish to the Partnership
(a) the name, address and taxpayer identification number of the
beneficial owners and the nominee; (b) whether the beneficial
owner is (i) a person that is not a United States person, (ii) a
foreign government, an international organization or any wholly-
owned agency or instrumentality of either of the foregoing or
(iii) a tax-exempt entity; (c) the amount and description of
Units held, acquired or transferred for the beneficial owners;
and (d) certain information including the dates of acquisitions
and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net
proceeds from sales. Brokers and financial institutions are
required to furnish additional information, including whether
they are United States persons and certain information on Units
they acquire, hold or transfer for their own account. A penalty
of $50 per failure (up to a maximum of $100,000 per calendar
year) is imposed by the Code for failure to report such
information to the Partnership. The nominee is required to
supply the beneficial owner of the Units with the information
furnished to the Partnership.
Registration as a Tax Shelter
The Code requires that "tax shelters" be registered with the
Secretary of the Treasury. The temporary Treasury Regulations
interpreting the tax shelter registration provisions of the Code
are extremely broad. It is arguable that the Partnership is not
subject to the registration requirement on the basis that (i) it
does not constitute a tax shelter or (ii) it constitutes a
projected income investment exempt from registration. However,
the Partnership has registered as a tax shelter with the IRS
because of the absence of assurance that the Partnership will not
be subject to tax shelter registration and in light of the
substantial penalties which might be imposed if registration is
required and not undertaken. ISSUANCE OF THE REGISTRATION NUMBER
DOES NOT INDICATE THAT AN INVESTMENT IN THE PARTNERSHIP OR THE
CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR APPROVED BY
THE IRS. The Partnership's tax shelter registration number is
93271000031. A Unitholder who sells or otherwise transfers a
Unit in a subsequent transaction must furnish the registration
number to the transferee. The penalty for failure of the
transferor of a Common Unit to furnish such registration number
to the transferee is $100 for each such failure. The Unitholders
must disclose the tax shelter registration number of the
Partnership on Form 8271 to be attached to the tax return on
which any deduction, loss, credit or other benefit generated by
the Partnership is claimed or income of the Partnership is
included. A Unitholder who fails to disclose the tax shelter
registration number on his return, without reasonable cause for
such failure, will be subject to a $50 penalty for each such
failure. Any penalties discussed herein are not deductible for
federal income tax purposes.
Accuracy-Related Penalties
An additional tax equal to 20% of the amount of any portion
of an underpayment of tax which is attributable to one or more of
certain listed causes, including substantial understatements of
income tax and substantial valuation misstatements, is imposed by
the Code. No penalty will be imposed, however, with respect to
any portion of an underpayment if it is shown that there was a
reasonable cause for such portion and that the taxpayer acted in
good faith with respect to such portion.
A substantial understatement of income tax in any taxable
year exists if the amount of the understatement exceeds the
greater of 10% of the tax required to be shown on the return for
the taxable year or $5,000 ($10,000 for most corporations). The
amount of any understatement subject to penalty generally is
reduced if any portion is attributable to a position adopted on
the return (i) with respect to which there is, or was,
"substantial authority" or (ii) as to which there is a reasonable
basis and the pertinent facts of such position are disclosed on
the return. Certain more stringent rules apply to "tax
shelters," a term that does not appear to include the
Partnership. If any Partnership item of income, gain, loss,
deduction or credit included in the distributive shares of
Unitholders might result in such an "understatement" of income
for which no "substantial authority" exists, the Partnership must
disclose the pertinent facts on its return. In addition, the
Partnership will make a reasonable effort to furnish sufficient
information for Unitholders to make adequate disclosure on their
returns to avoid liability for this penalty.
A substantial valuation misstatement exists if the value of
any property (or the adjusted basis of any property) claimed on a
tax return is 200% or more of the amount determined to be the
correct amount of such valuation or adjusted basis. No penalty
is imposed unless the portion of the underpayment attributable to
a substantial valuation misstatement exceeds $5,000 ($10,000 for
most corporations). If the valuation claimed on a return is 400%
or more than the correct valuation, the penalty imposed increases
to 40%.
Other Taxes
Prospective investors should consider state and local tax
consequences of an investment in the Partnership. The Partnership
owns property or is doing business in Arizona, Illinois, Iowa,
Minnesota, Montana, Nebraska, North Dakota, Oklahoma, South
Dakota and Texas. A Unitholder will likely be required to file
state income tax returns and/or to pay such taxes in most of such
states and may be subject to penalties for failure to comply with
such requirements. Some of the states require that a partnership
withhold a percentage of income from amounts that are to be
distributed to a partner that is not a resident of the state.
The amounts withheld, which may be greater or less than a
particular partner's income tax liability to the state, generally
do not relieve the non-resident partner from the obligation to
file a state income tax return. Amounts withheld will be treated
as if distributed to Unitholders for purposes of determining the
amounts distributed by the Partnership. Based on current law and
its estimate of future Partnership operations, the Partnership
anticipates that any amounts required to be withheld will not be
material. In addition, an obligation to file tax returns or to
pay taxes may arise in other states.
It is the responsibility of each prospective Unitholder to
investigate the legal and tax consequences, under the laws of
pertinent states or localities, of his investment in the
Partnership. Further, it is the responsibility of each
Unitholder to file all state and local, as well as federal, tax
returns that may be required of such Unitholder. Counsel has not
rendered an opinion on the state and local tax consequences of an
investment in the Partnership.
PLAN OF DISTRIBUTION
The Common Units may be offered through one or more broker-
dealers, through underwriters, or directly to investors, at a
fixed price or prices, which may be changed from time to time, at
market prices prevailing at the time of such sale, at prices
related to such market prices or at negotiated prices, and in
connection therewith distributors' or sellers' commissions may be
paid or allowed, which will not exceed those customary in the
types of transactions involved. Broker-dealers may act as agent
for the Partnership, or may purchase Common Units from the
Partnership as principal and thereafter resell such Common Units
from time to time in or through one or more transactions (which
may involve crosses and block transactions) or distributions on
the New York Stock Exchange, in the over-the-counter market, in
private transactions or in some combination of the foregoing.
Any such broker-dealer or underwriter may receive
compensation in the form of underwriting discounts or commissions
and may receive commissions from purchasers of the Common Units
for whom they may act as agents. If any such broker-dealer
purchases the Common Units as principal, it may effect resales of
the Common Units from time to time to or through other broker-
dealers, and such other broker-dealers may receive compensation
in the form of concessions or commissions from the purchasers of
Common Units for whom they may act as agents.
To the extent required, the names of the specific managing
underwriter or underwriters, if any, as well as certain other
information, will be set forth in a Prospectus Supplement. In
such event, the discounts and commissions to be allowed or paid
to the underwriters, if any, and the discounts and commissions to
be allowed or paid to dealers or agents, if any, will be set
forth in, or may be calculated from, the Prospectus Supplement.
Any underwriters, brokers, dealers and agents who
participate in any such sale may also be customers of, engage in
transactions with, or perform services for the Partnership or its
affiliates in the ordinary course of business.
VALIDITY OF COMMON UNITS
The validity of the Common Units offered hereby will be
passed upon for the Partnership by Vinson & Elkins, LLP.
EXPERTS
The consolidated financial statements included in the
Partnership's Annual Report on Form 10-K for the year ended
December 31, 1996, incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto.
The consolidated financial statements referred to above and such
report have been incorporated by reference herein in reliance
upon the authority of said firm as experts in accounting and
auditing in giving said report.
<PAGE>
TABLE OF CONTENTS
Page
Prospectus
Available Information . . . . . 2
Incorporation of Certain
Documents by Reference . . . 3
Information Regarding Forward
Looking Statements . . . . . 3
Business . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . 8 NORTHERN BORDER
Description of Units . . . . . . 8 PARTNERS, L.P.
Tax Considerations. . . . . . . 10
Plan of Distribution . . . . . 28
Validity of Common Units . . . 29
Experts . . . . . . . . . . . . 29
______________
Common Units
Representing Limited PROSPECTUS
Partner Interests ______________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth those expenses to be incurred
by the Partnership in connection with the issuance and
distribution of the securities being registered. Except for the
Securities and Exchange Commission registration fee, all amounts
shown are estimates.
<TABLE>
<S> <C>
Filing Fee for Registration Statement $ 68,182.00
Legal Fees and Expenses $ 100,000.00
Accounting Fees and Expenses $ 50,000.00
Miscellaneous $ 100,000.00
Total $ 318,182.00
</TABLE>
Item 15. Indemnification of Officers, General Partners and
Policy Committee Members.
The Amended and Restated Agreement of Limited Partnership
contains the following provisions relating to indemnification of
Officers, General Partners and Partnership Policy Committee
Members:
6.8 Indemnification.
(a) To the fullest extent permitted by law but subject to
the limitations expressly provided in this Agreement,
each General Partner, the members of the Partnership
Policy Committee, any Departing Partner, any Person who
is or was an officer or director of the Partnership, a
General Partner or any Departing Partner and all other
Indemnitees shall be indemnified and held harmless by
the Partnership from and against any and all losses,
claims, damages, liabilities, joint or several,
expenses (including, without limitation, legal fees and
expenses), judgments, fines, penalties, interest,
settlements and other amounts arising from any and all
claims, demands, actions, suits or proceedings, whether
civil, criminal, administrative or investigative, in
which any Indemnitee may be involved, or is threatened
to be involved, as a party or otherwise, by reason of
its status as (i) a General Partner, a member of the
Partnership Policy Committee, a Departing Partner or
any of their Affiliates, (ii) an officer, director,
employee, partner, agent or trustee of the Partnership,
a General Partner, any Departing Partner or any of
their Affiliates or (iii) a Person serving at the
request of the Partnership in another entity in a
similar capacity, provided, that in each case the
Indemnitee acted in good faith and in a manner which
such Indemnitee believed to be in, or not opposed to,
the best interests of the Partnership and, with respect
to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful; provided, further, no
indemnification pursuant to this Section 6.8 shall be
available to the General Partners with respect to their
obligations incurred pursuant to the Indemnity
Agreement, the Underwriting Agreement or the Conveyance
Agreement (other than obligations incurred by the
General Partners on behalf of the Partnership or the
Intermediate Partnership). The termination of any
action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a
presumption that the Indemnitee acted in a manner
contrary to that specified above. Any indemnification
pursuant to this Section 6.8 shall be made only out of
the assets of the Partnership, it being agreed that the
General Partners shall not be personally liable for
such indemnification and shall have no obligation to
contribute or loan any monies or property to the
Partnership to enable it to effectuate such
indemnification.
(b) To the fullest extent permitted by law, expenses
(including, without limitation, legal fees and
expenses) incurred by an Indemnitee who is indemnified
pursuant to Section 6.8(a) in defending any claim,
demand, action, suit or proceeding shall, from time to
time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or
proceeding upon receipt by the Partnership of an
undertaking by or on behalf of the Indemnitee to repay
such amount if it shall be determined that the
Indemnitee is not entitled to be indemnified as
authorized in this Section 6.8.
(c) The indemnification provided by this Section 6.8 shall
be in addition to any other rights to which an
Indemnitee may be entitled under any agreement,
pursuant to any vote of the holders of Outstanding
Units, as a matter of law or otherwise, both as to
actions in the Indemnitee's capacity as (i) a General
Partner, a member of the Partnership Policy Committee,
a Departing Partner or an Affiliate thereof, (ii) an
officer, director, employee, partner, agent or trustee
of the Partnership, a General Partner, any Departing
Partner or an Affiliate thereof or (iii) a Person
serving at the request of the Partnership in another
entity in a similar capacity, and as to actions in any
other capacity (including, without limitation, any
capacity under the underwriting Agreement), and shall
continue as to an Indemnitee who has ceased to serve in
such capacity and shall inure to the benefit of the
heirs, successors, assigns and administrators of the
Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse
the General Partners or their Affiliates for the cost
of) insurance, on behalf of the General Partners, the
members of the Partnership Policy Committee and such
other Persons as the Partnership Policy Committee shall
determine, against any liability that may be asserted
against or expense that may be incurred by such Person
in connection with the Partnership's activities,
regardless of whether the Partnership would have the
power to indemnify such Person against such liability
under the provisions of this Agreement.
(e) For purposes of this Section 6.8, the Partnership shall
be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the
performance by it of its duties to the Partnership also
imposes duties on, or otherwise involves services by,
it to the plan or participants or beneficiaries of the
plan; excise taxes assessed on an Indemnitee with
respect to an employee benefit plan pursuant to
applicable law shall constitute "fines" within the
meaning of Section 6.8(a); and action taken or omitted
by it with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably
believed by it to be in the interest of the
participants and beneficiaries of the plan shall be
deemed to be for a purpose which is in, or not opposed
to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited
Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 6.8 because the
Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 6.8 are for the benefit
of the Indemnitees, their heirs, successors, assigns
and administrators and shall not be deemed to create
any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section
6.8 or any provision hereof shall in any manner
terminate, reduce or impair the right of any past,
present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to
indemnity any such Indemnitee under and in accordance
with the provisions of this Section 6.8 as in effect
immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
Item 16. Exhibits.
*3 - Form of Amended and Restated Agreement
of Limited Partnership of Northern Border
Partners, L.P. (Exhibit 3.1 to the Partnership's
Form S-1 Registration Statement, Registration No.
33-66158 ("Form S-1")).
+5 - Opinion of Vinson & Elkins, LLP, as to the
validity of the Common Units.
**8 - Tax Opinion of Vinson & Elkins, LLP.
*10(a) - Form of Amended and Restated Agreement of
Limited Partnership of Northern Border
Intermediate Limited Partnership (Exhibit 10.1 to
Form S-1).
*10(b) - 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 (Exhibit 10.2
to Form S-1).
**10(c) - Form of Credit Agreement among Northern Border
Pipeline Company, 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.
**10(d) - Form of Credit Agreement among Northern Border
Partners, L.P., Canadian Imperial Bank of Commerce,
as Agent and Lenders (as defined therin) dated as
of November 6, 1997.
+23(a) - Consent of Arthur Andersen LLP.
23(b) - The consents of Vinson & Elkins, LLP,
are contained in its opinions filed as Exhibits 5
and 8 hereto.
_______________
* Incorporated by reference as indicated.
** Filed with this amendment.
+ Previously filed.
Item 17. 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 in 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;
(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;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the Partnership pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference 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; and
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Partnership's
annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement 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.
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
provisions described under Item 15 above, 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement or amendment
to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 2nd day of December, 1997.
NORTHERN BORDER PARTNERS, L.P.
(A Delaware Limited Partnership)
By: LARRY L. DEROIN
Larry L. DeRoin
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement or amendment has been signed by the
following persons in the capacities indicated and on the 2nd day
of December, 1997.
Signature Title
LARRY L. DEROIN Chief Executive Officer and
Larry L. DeRoin Chairman of the Partnership Policy
Committee
(Principal Executive Officer)
GEORGE L. MAZANEC Member of Partnership Policy Committee
George L. Mazanec
BRIAN E. O'NEILL Member of Partnership Policy Committee
Brian E. O'Neill
JERRY L. PETERS Chief Financial and Accounting Officer
Jerry L. Peters
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
*3 - Form of Amended and Restated Agreement
of Limited Partnership of Northern Border
Partners, L.P. (Exhibit 3.1 to the Partnership's
Form S-1 Registration Statement, Registration No.
33-66158 ("Form S-1")).
+5 - Opinion of Vinson & Elkins, LLP, as to the
validity of the Common Units.
**8 - Tax Opinion of Vinson & Elkins, LLP.
*10(a) - Form of Amended and Restated Agreement of
Limited Partnership of Northern Border
Intermediate Limited Partnership (Exhibit 10.1 to
Form S-1).
*10(b) - 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 (Exhibit 10.2
to Form S-1).
**10(c) - Form of Credit Agreement among Northern Border
Pipeline Company, 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.
**10(d) - Form of Credit Agreement among Northern Border
Partners, L.P., Canadian Imperial Bank of Commerce,
as Agent and Lenders (as defined therin) dated as
of November 6, 1997.
+23(a) - Consent of Arthur Andersen LLP.
23(b) - The consent of Vinson & Elkins, LLP, is
contained in its form of opinion filed as Exhibits
5 and 8 hereto.
* Incorporated by reference.
** Filed with this amendment.
+ Previously filed.
<PAGE>
EXHIBIT 8
December 2, 1997
Northern Border Partners, L.P.
1400 Smith Street
Houston, Texas 77002
Gentlemen:
We have acted as counsel to Northern Border Partners, L.P.,
a Delaware limited partnership (the "Partnership"), in connection
with the offer and sale of units representing limited partner
interests in the Partnership (the "Common Units") pursuant to a
Registration Statement on Form S-3 (the "Registration Statement")
filed with the Securities and Exchange Commission under the
Securities Act of 1933 (File No. 333-40601). Capitalized terms
not defined herein shall have the meanings ascribed to them in
the Partnership Agreement, the form of which has been filed as an
exhibit to the Registration Statement.
The Partnership owns a 70% general partner interest in
Northern Border Pipeline Company ("Northern Border Pipeline"), a
Texas general partnership engaged in pipeline transportation of
natural gas. The Partnership's interest in Northern Border
Pipeline is held through the Northern Border Intermediate Limited
Partnership, a Delaware limited partnership (the "Intermediate
Partnership"). Unless the context otherwise requires, references
to Partnership are references to both the Partnership and the
Intermediate Partnership.
You have requested our opinion that (i) each of the
Partnership and Northern Border Pipeline will be classified as a
partnership for federal income tax purposes and (ii) each Limited
Partner and each beneficial owner of Common Units will be treated
as a partner of the Partnership for federal income tax purposes.
In addition, you have asked us to review the description of the
principal federal income tax consequences that should arise from
the purchase, ownership and disposition of Common Units found in
the "Tax Considerations" section of the Registration Statement.
In connection with the foregoing request, the Partnership
and the General Partners have made the following representations
with respect to the Partnership and Northern Border Pipeline:
(a) Neither the Partnership nor Northern Border
Pipeline will elect to be treated as an association taxable
as a corporation;
(b) The Partnership has been and will continue to be
operated in accordance with (i) all applicable partnership
statutes, (ii) the Partnership Agreement, and (iii) the
description thereof in the Registration Statement;
(c) Except as otherwise required by section 704 of the
Code and regulations promulgated thereunder, the General
Partners will have, in the aggregate, an interest in each
material item of income, gain, loss, deduction or credit of
the Partnership equal to at least 1% at all times during the
existence of the Partnership;
(d) The General Partners will maintain, in the
aggregate, a minimum capital account balance in the
Partnership equal to 1% of the total positive capital
account balances of the Partnership;
(e) For each taxable year, less than 10% of the gross
income of the Partnership will be derived from sources other
than (i) the exploration, development, production,
processing, refining, transportation or marketing of any
mineral or natural resource including oil, gas or products
thereof, and naturally occurring carbon dioxide or (ii)
other items of "qualifying income" within the meaning of
section 7704(d) of the Code.
(f) Northern Border Pipeline has been and will
continue to be operated in accordance with the Texas Uniform
Partnership Act and the Northern Border Pipeline partnership
agreement.
Based upon the foregoing representations and covenants, the
General Partners' continued participation (or the participation
of another party satisfying the foregoing representations and
covenants) as general partners of the Partnership and the Code,
existing regulations thereunder, published rulings and judicial
decisions currently outstanding, it is our opinion that (i) each
of the Partnership and Northern Border Pipeline will be
classified as a partnership for federal income tax purposes, and
(ii) each Limited Partner and each beneficial owner of Common
Units will be treated as a partner of the Partnership for federal
income tax purposes. As used in this opinion, the term
"beneficial owner of Common Units" refers to (a) the assignees of
Common Units who have executed and delivered Transfer
Applications and are awaiting admission as Limited Partners, and
(b) Unitholders whose Common Units are held in street name or by
another nominee and who have the right to direct the nominee in
the exercise of all substantive rights attendant to the ownership
of their Common Units.
In addition, we have reviewed the description of the
principal federal income tax consequences of the purchase,
ownership and disposition of Common Units contained in the "Tax
Considerations" section of the Registration Statement and, except
as otherwise noted therein, all statements contained in such
description relating to matters of law and legal conclusions
reflect our opinion.
Finally, based on our review of the Registration Statement,
we have concluded that the "Tax Considerations" section of the
Registration Statement addresses all material tax consequences to
Unitholders who are individual citizens or residents of the
United States.
We are rendering this opinion as of the time the
Registration Statement becomes effective. We hereby consent to
the use of our name in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute an admission that we
are "experts" within the meaning of such term as used in the
Securities Act of 1933.
Very truly yours,
VINSON & ELKINS L.L.P.
<PAGE>
EXHIBIT 10(c)
CREDIT AGREEMENT
among
NORTHERN BORDER PIPELINE COMPANY,
a Texas general partnership,
as Borrower
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
and
FIRST CHICAGO CAPITAL MARKETS, INC.,
ROYAL BANK OF CANADA, and
BANCAMERICA SECURITIES, INC.
as Joint Arrangers
Dated as of June 16, 1997
CREDIT AGREEMENT
This Credit Agreement, dated as of June 16, 1997, is among
Northern Border Pipeline Company, a Texas general partnership, as
Borrower (the "Borrower"), the Lenders (hereinafter defined), The
First National Bank of Chicago, as Administrative Agent (in such
capacity, the "Administrative Agent") , The First National Bank
of Chicago, Royal Bank of Canada and Bank of America, as
Syndication Agents (in such capacity "Syndication Agents") and
collectively, with the Administrative Agent, (the "Agents") and
First Chicago Capital Markets, Inc., Royal Bank of Canada and
BancAmerica Securities, Inc., as Joint Arrangers (in such
capacity, collectively the "Joint Arrangers"). The parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION I.1. Defined Terms.
As used in this Agreement:
"ABR" means a fluctuating rate of interest equal to the
higher of (a) CBR and (b) the Federal Funds Effective Rate most
recently determined by the Administrative Agent plus 1/2% per
annum.
"ABR Advance" means an Advance which bears interest at the
ABR.
"Absolute Rate" means, with respect to a Loan made by a
particular Lender for the relevant Absolute Rate Interest Period,
the rate of interest per annum (rounded to the nearest 1/100 of
1%) offered by such Lender and accepted by the Borrower pursuant
to Section 2.3.6(b).
"Absolute Rate Advance" means a borrowing hereunder
consisting of the aggregate amount of the several Absolute Rate
Loans made by some or all of the Lenders to the Borrower at the
same time and for the same Absolute Rate Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive
Bid Quotes setting forth Absolute Rates pursuant to Section 2.3.
"Absolute Rate Interest Period" means, with respect to an
Absolute Rate Advance or an Absolute Rate Loan, a period from
seven up to 360 days commencing on a Business Day selected by the
Borrower pursuant to this Agreement. If such Absolute Rate
Interest Period would end on a day which is not a Business Day,
such Absolute Rate Interest Period shall end on the next
succeeding Business Day.
"Absolute Rate Loan" means a Loan which bears interest at an
Absolute Rate.
"Accepting Lender" is defined in Section 2.23.
"Acquisition" means any transaction, or any series of
related transactions, consummated after the date of this
Agreement, by which the Borrower or any of the Subsidiaries (i)
acquires any going business or all or substantially all of the
assets of any firm, corporation or division thereof, whether
through purchase of assets or otherwise or (ii) directly or
indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority of
the ownership of a Person.
"Administrative Agent" means The First National Bank of
Chicago in its capacity as Administrative Agent or any successor
thereto in such capacity.
"Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Loans made by the Lenders to the
Borrower on the same Borrowing Date, at the same Rate Option and
for the same Interest Period, or a Swing Loan, as the case may
be.
"Affiliate" means a Person which, directly or indirectly,
controls or is controlled by or under common control with any
other Person. For purposes of this definition, the concept of
"control", when used with respect to any specified Person, shall
signify the possession of the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities or by contract or otherwise.
"Agents" means collectively, the Administrative Agent and
Syndication Agents in their capacity as Administrative Agent and
Syndication Agents and not in their individual capacities as a
Lender, and any successor Agents appointed pursuant to Article X.
"Aggregate Commitment" means the aggregate of the
Commitments of all the Lenders as reduced from time to time
pursuant to the terms hereof.
"Agreement" means this credit agreement, as it may be
amended, modified or supplemented from time to time.
"Applicable Margin" means the number of basis points per
annum, which shall be subject to adjustment (upwards or
downwards, as appropriate) based on the Leverage Ratio, in
accordance with the table set forth below; provided, that
notwithstanding the foregoing, so long as the Borrower's senior
unsecured long term debt has a rating of at least A- by Standard
& Poors Ratings Group or A3 by Moody's Investors Services, the
Applicable Margin is 17.5 bps for purposes of determining the
Eurodollar Rate and 30 bps for purposes of determining the Fixed
CD Rate. The Leverage Ratio shall be determined from the then
most recent annual or quarterly financial statements delivered by
the Borrower pursuant to Sections 6.1.1(a) or 6.1.1(b) and any
changes in the Applicable Margin shall become effective five days
following the delivery of such financial statements. Until
financial statements for the first fiscal quarter ending after
the date hereof have been delivered, the Applicable Margin for
purposes of determining the Eurodollar Rate shall be 21 basis
points and for purposes of determining the Fixed CD Rate shall be
33.5 basis points based upon a Leverage Ratio of 43%. In the
event that the Borrower shall at any time fail to furnish to the
Lenders the financial statements required to be delivered
pursuant to Section 6.1.1(a) or 6.1.1(b) by the time required
pursuant to such Section, the maximum Applicable Margin as set
forth in the table below shall apply until such time as such
financial statements are so delivered.
Leverage Leverage
Ratio Ratio
<55% >55%
Eurodollar 21 22.5
Rate +
CD Base Rate 33.5 35
+
"Article" means an article of this Agreement unless another
document is specifically referenced.
"Assessment Rate" means, for any CD Interest Period, the net
assessment rate per annum (rounded upwards, if necessary, to the
next higher 1/100 of 1%) payable to the Federal Deposit Insurance
Corporation (or any successor) for the insurance of domestic
deposits of First Chicago during the calendar year in which the
first day of such CD Interest Period falls, as estimated by First
Chicago on the first day of the CD Interest Period.
"Authorized Officer" means any of the President; Vice
President, Finance, or any vice president of the Operator, acting
singly.
"Authorized Representative" means any Authorized Officer,
the Operator's Director, Finance or the Operator's Manager, Debt
& Investment.
"Borrowing Date" means a date on which an Advance is made or
to be made hereunder.
"Borrowing Notice" is defined in Section 2.9.
"Business Day" means (i) with respect to borrowing, payment
or rate selection of Eurodollar Advances, a day other than
Saturday or Sunday on which commercial banks are open for
business in Chicago and New York and on which dealings in U.S.
dollars are carried on in the London interbank market and (ii)
for all other purposes, a day other than Saturday or Sunday on
which commercial banks are open for business in Chicago and New
York.
"Capitalized Lease" of a Person means any lease of property
by such Person as lessee which would be capitalized on a balance
sheet of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with GAAP.
"CBR" means the corporate base rate of interest announced by
the Administrative Agent from time to time, changing when and as
said corporate base rate changes.
"CD Interest Period" means, with respect to a Fixed CD Rate
Advance, a period of 30, 60, 90 or 180 days commencing on a
Business Day selected by the Borrower pursuant to this Agreement.
If such CD Interest Period would end on a day which is not a
Business Day, such CD Interest Period shall end on the next
succeeding Business Day.
"CD Base Rate" means, relative to any Interest Period for CD
Rate Loans, the rate of interest determined by the Administrative
Agent to be the arithmetic average (rounded upwards, if
necessary, to the nearest 1/100th of 1%) of the prevailing rates
per annum bid at 10:00 a.m., Chicago time (or as soon thereafter
as practicable), on the first day of such Interest Period by two
or more certificate of deposit dealers of recognized standing for
the purchase at face value from each Reference Lender of its
certificates of deposit in an amount approximately equal to the
CD Rate Loan being made or maintained by each such Reference
Lender to which such Interest Period applies and having a
maturity approximately equal to such Interest Period.
"Change" is defined in Section 3.2.
"Closing Date" means the date the conditions of Section 4.1
are satisfied.
"Commitment" means, for each Lender, the obligation of such
Lender to make Facility A Loans and Facility B Loans not
exceeding the amount set forth opposite its signature below or as
set forth in any Notice of Assignment relating to any assignment
that has become effective pursuant to Section 12.3.2, as such
amount may be modified from time to time pursuant to the terms
hereof.
"Competitive Bid Advance" means a borrowing hereunder
consisting of the aggregate amount of the several Competitive Bid
Loans made by some or all of the Lenders to the Borrower at the
same time, at the same interest basis, for the same Interest
Period and under the same Facility.
"Competitive Bid Borrowing Notice" is defined in Section
2.3.6.
"Competitive Bid Loan" means a Eurodollar Bid Rate Loan or
an Absolute Rate Loan, as the case may be made pursuant to
Section 2.3.
"Competitive Bid Margin" means the margin above or below the
applicable Eurodollar Rate offered for a Eurodollar Loan,
expressed as a percentage (rounded to the nearest 1/100 of 1%) to
be added or subtracted from such Eurodollar Rate.
"Competitive Bid Note" means a promissory note in
substantially the form of Exhibit "A-2" hereto, with appropriate
insertions, duly executed and delivered to the Administrative
Agent by the Borrower for the account of a Lender and payable to
the order of such Lender, including any amendment, modification,
renewal or replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote
substantially in the form of Exhibit "C" hereto completed and
delivered by a Lender to the Administrative Agent in accordance
with Section 2.3.4.
"Competitive Bid Quote Request" means a Competitive Bid
Quote Request substantially in the form of Exhibit "E" hereto
completed and delivered by the Borrower to the Administrative
Agent in accordance with Section 2.3.2.
"Compliance Certificate" is defined in Section 6.1.1(c).
"Consolidated Net Worth" means at any date the Partners'
Capital of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as of such date.
"Conversion Date" means the date on which the applicable
conditions precedent to conversion of the outstanding Facility B
Advances as set forth in Section 4.3 are satisfied.
"Declining Lender" is defined in Section 2.23.
"Default" means an event or circumstance which with notice,
or lapse of time, or both, will constitute an Event of Default.
"Dollars" and "$" each mean lawful money of the United
States.
"Environmental Laws" means any and all present Federal,
state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, consent decrees, permits, concessions,
grants, franchises, licenses, agreements or other governmental
restrictions relating to the regulation or protection of human
health, safety or the environment or to emissions, discharges,
releases or threatened releases of hazardous materials into the
environment, including, without limitation, ambient air, soil,
surface water, groundwater, wetlands, land or subsurface strata,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of hazardous materials. Without limiting the foregoing,
Environmental Laws shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended, the Solid Waste
Disposal Act, 42 U.S.C. Section 6901 et seq., as amended, the Federal
Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., as amended,
the Clean Air Act, 42 U.S.C. Section 7401 et seq., as amended, the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Emergency
Planning and Community Right-to-Know-Act, 42 U.S.C. Section 11001 et
seq., the Natural Gas Pipeline Safety Act, 49 App. U.S.C. Section 1671
et seq., the Liquid Pipeline Safety Act, 40 U.S.C. Sections 1811, 2001
et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651
et seq., the Hazardous Materials Transportation Act, 49 U.S.
Section 1801 et seq., any analogous, foreign, state, and local laws,
and any rules or regulations promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any rule or regulation
issued thereunder.
"ERISA Affiliate" means each Person (as defined in Section
3(a) of ERISA) which together with the Borrower would be deemed
to be a member of the same "controlled group" within the meaning
of Section 414(b) and (c) of the Internal Revenue Code.
"Eurodollar Advance" means an Advance which bears interest
at the Eurodollar Rate.
"Eurodollar Auction" means a solicitation of Competitive Bid
Quotes priced at a margin above or below the Eurodollar Rate
pursuant to Section 2.3.2.
"Eurodollar Base Rate" means, with respect to any Eurodollar
Interest Period for any Eurodollar Loan, the rate per annum equal
to the average of the offered quotations appearing on Telerate
Page 3750 (or if such Telerate Page shall not be available, any
successor or similar service as may be selected by the
Administrative Agent and the Borrower) as of 11:00 a.m., London
time, (or as soon thereafter as practicable) on the day two
Business Days prior to the first day of such Eurodollar Interest
Period for dollar deposits having a term comparable to such
Eurodollar Interest Period. If none of such Telerate Page 3750
nor any successor or similar service is available, then the
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar
Interest Period for any applicable Eurodollar Loan, the rate per
annum determined by the Administrative Agent to be the average of
the rates quoted by the Reference Lenders at approximately 11:00
a.m., London time, (or as soon thereafter as practicable) on the
day two Business Days prior to the first day of such Eurodollar
Interest Period for the offering by such Reference Lenders to
leading banks in the interbank market of U.S. dollar deposits
having a term comparable to such Eurodollar Interest Period and
in an amount comparable to the principal amount of the Eurodollar
Loan of such respective Reference Lender to which such Eurodollar
Interest Period relates. If any Reference Lender does not
furnish a timely quotation, the Agent shall determine the
relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Lender or
Lenders. Each determination of the Eurodollar Base Rate shall be
conclusive and binding, absent manifest error.
"Eurodollar Bid Rate" means, with respect to a Competitive
Bid Loan made by a given Lender for the relevant Eurodollar
Interest Period, the sum of (i) the Eurodollar Base Rate and (ii)
the Competitive Bid Margin offered by such Lender and accepted by
the Borrower pursuant to Section 2.3.6.
"Eurodollar Bid Rate Advance" means a Competitive Bid
Advance which bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan
which bears interest at a Eurodollar Bid Rate.
"Eurodollar Interest Period" means, with respect to a
Eurodollar Advance, a period of one, two, three, six or if
available from all Lenders twelve months commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on the day in the succeeding
calendar month which corresponds numerically to the beginning day
of such Eurodollar Interest Period, provided, however, that if
there is no such numerically corresponding day in such succeeding
month, such Eurodollar Interest Period shall end on the last
Business Day of such succeeding month. If a Eurodollar Interest
Period would otherwise end on a day which is not a Business Day,
such Eurodollar Interest Period shall end on the next succeeding
Business Day, provided, however, that if said next succeeding
Business Day falls in a new month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day.
"Eurodollar Loan" means a Loan which bears interest at the
Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar
Advance or a Eurodollar Loan for the relevant Eurodollar Interest
Period the sum of (i) the Eurodollar Base Rate applicable to such
Eurodollar Interest Period plus (ii) the Applicable Margin. The
Eurodollar Rate shall be rounded, if necessary, to the next
higher 1/100th of 1%.
"Event of Default" means an event described in Article VII.
"Expansion and Extension" means the expansion and extension
of the Borrower's pipeline and related facilities (as described
in the Borrower's FERC filings relating thereto).
"Facility" means Facility A or Facility B, as the case may be.
"Facility A" means the revolving credit facility made
available to the Borrower pursuant to Section 2.1.
"Facility A Advance" means an Advance consisting of Facility
A Loans pursuant to Section 2.1.1 or a Swing Loan pursuant to
Section 2.1.3.
"Facility A Aggregate Commitment" means $200,000,000 as
reduced from time to time pursuant to the terms hereof.
"Facility A Commitment" means, for each Lender, the
obligation of such Lender to make Facility A Loans ratably in
proportion to the ratio that its Commitment bears to the
Aggregate Commitment or as set forth in any Notice of Assignment
relating to any assignment that has become effective pursuant to
Section 12.3.2, as such amount may be modified from time to time
pursuant to the terms hereof.
"Facility A Competitive Bid Advance" means a Competitive Bid
Advance under Facility A.
"Facility A Loan" means a Loan under Facility A.
"Facility A Termination Date" means the date five years from
the Closing Date, however the Borrower shall have the option to
extend such date pursuant to Section 2.23.
"Facility B" means the facility made available to the
Borrower pursuant to Section 2.2.
"Facility B Advance" means an Advance pursuant to Section
2.2.1.
"Facility B Aggregate Commitment" means $550,000,000 as
reduced from time to time pursuant to the terms hereof.
"Facility B Commitment" means, for each Lender, the
obligation of such Lender to make Facility B Loans ratably in
proportion to the ratio that its Commitment bears to the
Aggregate Commitment or as set forth in any Notice of Assignment
relating to any assignment that has become effective pursuant to
Section 12.3.2, as such amount may be modified from time to time
pursuant to the terms hereof.
"Facility B Competitive Bid Advance" means a Competitive Bid
Advance under Facility B.
"Facility B Loan" means a Loan under Facility B.
"Facility B Termination Date" means the date five years from
the Closing Date if the Conversion Date occurs on or before the
date three years from the Closing Date, otherwise it means the
date which is three years from the Closing Date.
"Facility Fee" means the number of basis points per annum,
which shall be subject to adjustment (upwards or downwards, as
appropriate) based on the Leverage Ratio, in accordance with the
table set forth below, provided, that notwithstanding the
foregoing, so long as the Borrower's senior unsecured long term
debt has a rating of at least A- by Standard & Poors Ratings
Group or at least A3 by Moody's Investors Services,
respectively, the Facility Fee shall be 7.5 bps. The Leverage
Ratio shall be determined from the then most recent annual or
quarterly financial statements delivered by the Borrower,
pursuant to Section 6.1.1(a) or 6.1.1(b) and any changes in the
Facility Fee shall become effective five days following the
delivery of such financial statements. Until financial
statements for the first fiscal quarter ending after the date
hereof have been delivered, the Facility Fee shall be 9 basis
points based upon a Leverage Ratio of 43%. In the event that the
Borrower shall at any time fail to furnish to the Lenders the
financial statements required to be delivered pursuant to Section
6.1.1(a) or 6.1.1(b), the maximum Facility Fee as set forth in
the table below shall apply until such time as such financial
statements are so delivered.
LEVERAGE LEVERAGE RATIO
RATIO GREATER THAN
LESS THAN OR EQUAL TO
55% 55%
Facility Fee 9 15
"Facility Note" means a promissory note in substantially the
form of Exhibit "A-1" hereto, duly executed and delivered to the
Administrative Agent by the Borrower and payable to the order of
a Lender in the amount of its Commitment, including any
amendment, modification, renewal or replacement of such
promissory note.
"Federal Funds Effective Rate" means, for any period a
fluctuating rate of interest equal for each day during such
period to (a) the weighted average of the rates on overnight
Federal Funds transaction with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such
day by the Federal Reserve Bank of New York or (b) if such rate
is not so published for any day the average of the quotations for
such day on such transactions received by the Administrative
Agent from three Federal Funds brokers of recognized standing
selected by it.
"FERC" means the Federal Energy Regulatory Commission and
any successor agency or commission.
"First Chicago" means The First National Bank of Chicago in
its individual capacity, and its successors.
"Fixed CD Rate" means with respect to a Fixed CD Rate
Advance or a Fixed CD Loan for the relevant CD Interest Period,
the sum of (i) the CD Base Rate applicable to such CD Interest
Period plus (ii) the Applicable Margin. The Fixed CD Rate shall
be rounded, if necessary, to the next higher 1/100 of 1%.
"Fixed CD Rate Advance" means an Advance which bears
interest at the Fixed CD Rate.
"Fixed CD Rate Loan" means a Loan which bears interest at
the Fixed CD Rate.
"Fixed Rate" means the Fixed CD Rate, the Eurodollar Rate,
the Absolute Rate or the Eurodollar Competitive Bid Rate. "Fixed
Rate Advance" and "Fixed Rate Loan" mean an Advance or a Loan, as
the case may be, which bears interest at a Fixed Rate.
"GAAP" means generally accepted accounting principles as in
effect from time to time, applied on a basis consistent with the
most recent financial statements of the Borrower and its
Subsidiaries delivered to the Lenders pursuant hereto.
"Guaranty" means, with respect to any Person, (a) all
indebtedness and other obligations, contingent or otherwise, of
such Person under or in respect of any letter of credit issued
for its own account, and (b) all indebtedness and other
obligations of such Person under any agreement, undertaking or
other arrangement by which such Person (i) assumes, guarantees,
endorses (other than the endorsement of instruments for
collection in the ordinary course of business), commits or agrees
(whether or not such commitment or agreement is contingent or
subject to the occurrence of a specified event or events) to
purchase or otherwise acquire or provide funds for the payment of
any obligation or liability of any other Person or (ii) agrees to
maintain the net worth, working capital or any other financial
condition of any other Person.
"Hazardous Material" means (a) any "hazardous substance," as
defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and (b) any "hazardous
waste," as defined by the Resource Conservation and Recovery Act,
as amended and (c) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material waste or substance within
the meaning of any applicable Environmental Law, all as amended
or hereafter amended.
"Indebtedness" of a Person means (i) obligations of such
Person for borrowed money, (ii) obligations of such Person
representing the deferred purchase price of property other than
accounts payable arising in the ordinary course of such Person's
business payable on terms customary in the trade, (iii)
obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from property now or hereafter
owned or acquired by such Person, (iv) obligations of such Person
which are evidenced by notes, acceptances, or other instruments,
(v) Capitalized Lease Obligations of such Person, (vi)
obligations of such Person as lessee of any real or personal
property (or any interest therein) which have not been or should
not be, in accordance with GAAP, recorded as Capitalized Lease
Obligations other than leases of property and equipment for
annual rentals not in excess of $10,000,000 in the aggregate in
any year, (vii) obligations for which such Person is obligated
pursuant to a Guaranty and (viii) all Indebtedness of others
secured by a lien on any asset of such person whether or not such
Indebtedness is assumed by such person (except Indebtedness of
others secured by Liens, neither assumed nor guaranteed by the
Borrower nor on which it customarily pays interest, existing upon
real estate or rights in or relating to real estate acquired by
the Borrower for substation, metering station, gathering line,
transmission line, transportation line, distribution line or
right of way purposes, and any Liens reserved in leases for rent
and for compliance with the terms of the leases in the case of
leasehold estates, to the extent that any such Lien referred to
in this clause (viii) does not materially impair the use of the
property covered by such Lien for the purposes for which such
property is held by the Borrower).
"Interest Period" means a CD Interest Period or a Eurodollar
Interest Period or an Absolute Rate Interest Period.
"Investment" of a Person means any loan, advance (other than
commission, relocation, travel and similar loans and/or advances
to officers and employees made in the ordinary course of
business), extension of credit (other than Guaranties, accounts
receivable arising in the ordinary course of business on terms
customary in the trade and prepayments made and production
payments acquired in the ordinary course of business), or
contribution of capital by such Person to any other Person or any
investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of
any other Person made by such Person.
"Invitation for Competitive Bid Quotes" means an Invitation
for Competitive Bid Quotes substantially in the form of Exhibit
"F" hereto, completed and delivered by the Administrative Agent
to the Lenders in accordance with Section 2.3.3.
"Lenders" means the Lenders listed on the signature pages of
this Agreement and their respective successors and assigns,
including any Lenders that became parties hereto pursuant to
Section 12.3.
"Lending Installation" means any office, branch, subsidiary
or affiliate of a Lender.
"Leverage Ratio" means the ratio, expressed as a percentage,
of the Borrower's Indebtedness to the sum of the Borrower's
Indebtedness plus Consolidated Net Worth.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, preference, priority, lien, claim,
charge, encumbrance, title or other security agreement or any
interest in Property to secure payment of a debt or performance
of an obligation (including, without limitation, the interest of
a vendor or lessor under any conditional sale, Capitalized Lease
or other title retention agreement).
"Loan" means, with respect to a Lender, such Lender's
portion of any Advance.
"Loan Documents" means this Agreement and the Notes and the
other relevant documents delivered by the Borrower pursuant to
Section 4.1 or 4.2 hereof.
"Majority Lenders" means Lenders in the aggregate having at
least 51% of the Aggregate Commitment, or if the Aggregate
Commitment has been terminated, Lenders in the aggregate holding
at least 51% of the aggregate unpaid principal amount of the
outstanding Advances.
"Material Adverse Effect" means a material adverse effect on
(i) the business, Property, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole, or (ii) the
ability of the Borrower to perform its obligations under any of
the Loan Documents.
"Negative Pledge" means, with respect to any Person, any
agreement which prohibits or limits the creation by such Person
of any Lien in, of or on any of the Property, assets or revenue
of such Person.
"Note" means a Facility Note, a Swing Line Note, or a
Competitive Bid Note.
"Note Purchase Agreements" means the Note Purchase
Agreements dated as of July 15, 1992, each as amended by the
Supplemental Agreement dated as of June 1, 1995 and the Letter
Amendment dated October 14, 1996 with Borrower as obligor.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Notes, all accrued and unpaid Facility
Fees and all other obligations of the Borrower to the Lenders or
to any Lender or any Agent arising under any of the Loan
Documents.
"Operating Agreement" means that certain Operating
Agreement, dated February 28, 1980, between the Borrower and the
Operator, as heretofore amended, modified or supplemented and as
such agreement may be further amended, modified or supplemented
from time to time.
"Operator" means the Person provided for in Section 8 of the
Partnership Agreement, which, at the date of this Agreement, is
Northern Plains Natural Gas Company, a Delaware corporation.
"Participants" is defined in Section 12.2.1.
"Partner" means any one of Northern Border Intermediate
Limited Partnership, TransCanada Border PipeLine Ltd., and
TransCan Northern Ltd., or any Person substituted for any thereof
as a partner pursuant to Section 10 of the Partnership Agreement
or which becomes a partner pursuant to Section 11 of the
Partnership Agreement.
"Partners' Capital" means, at any time, the amount reflected
as "Partners' Capital" on a consolidated balance sheet of the
Borrower and its Subsidiaries as at such time, prepared in
accordance with GAAP.
"Partnership Agreement" means that certain General
Partnership Agreement relating to the formation of the Borrower
effective as of March 9, 1978, as heretofore amended, modified
and supplemented and as such agreement may be further amended,
modified or supplemented from time to time hereafter to the
extent, and in the manner, permitted by the terms of this
Agreement.
"Payment Date" means the last Business Day of each calendar
quarter.
"Permitted Liens" means (i) Liens in connection with
workmen's compensation, unemployment insurance or other social
security or old age pension obligations (excluding, in the case
of the Borrower, obligations covered by ERISA), (ii) Liens
securing the performance of bids, tender, contracts (other than
for the repayment of borrowed money or for the deferred purchase
price of Property or services), leases (other than leases which
constitute Indebtedness), statutory obligations, surety and
appeal bonds, Liens to secure progress or partial payments made
to the Borrower and other Liens of like nature, in each case made
in the ordinary course of business, (iii) legal or equitable
encumbrances deemed to exist by reason of negative pledge
covenants such as that made in Section 6.2.7 and other covenants
or undertakings of like nature, (iv) Liens for taxes, assessments
or governmental charges which are not yet due or which are being
contested in good faith and by appropriate proceedings for which
adequate reserves have been established, (v) legal or equitable
encumbrances deemed to exist by reason of the existence of any
litigation or other legal proceeding (excluding, in the case of
the Borrower and the Partners, any attachment prior to judgment,
judgment lien or attachment in aid of execution on a judgment),
(vi) mechanic's, workmen's, materialmen's construction or other
like Liens arising in the ordinary course of business or incident
to the construction or improvement of any Property in respect of
obligations (A) which are not yet due or (B) which are being
contested in good faith by appropriate proceedings, (vii) rights
reserved to or vested in any municipality or governmental,
statutory or public authority by the terms of any right, power,
franchise, grant, license or permit, or by any provision of law,
to terminate such right, power, franchise, grant, license or
permit or to purchase, condemn, expropriate or recapture or to
designate a purchaser of any of the Property of the Borrower,
(viii) rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or
regulate any Property of the Borrower, or to use such Property in
a manner which does not materially impair the use of such
Property for the purposes for which it is held by the Borrower,
(ix) any obligations or duties affecting the Property of the
Borrower to any municipality or governmental, statutory or public
authority with respect to any franchise, grant, license or
permit, (x) rights of a common owner of any interest in Property
held by the Borrower as such common owner and tenants in common
or through other common ownership and (xi) zoning, planning and
environmental laws and ordinances and municipality regulations.
"Person" means any corporation, natural person, limited
liability company, firm, joint venture, partnership, trust,
unincorporated organization, enterprise, government or any
department or agency of any government.
"Pipeline" means the Borrower's pipeline system and related
facilities extending from a point near Port of Morgan, Montana,
to a point near Harper, Iowa as it may be expanded and extended
pursuant to the Expansion and Extension.
"Plan" means any multiemployer or single-employer plan as
defined in Section 4001 of ERISA which is maintained or
contributed to, or at any time during the five calendar years
preceding the date of this Agreement was maintained or
contributed to, for employees of the Borrower or an ERISA
Affiliate.
"Property" of a Person means any and all property, whether
real, personal, tangible, intangible, or mixed, of such Person,
or other assets owned, leased or operated by such Person, and
includes, without limitation, stock, partnership and limited
liability company interests owned or held in any other Person by
such Person.
"Rate Option" means a Eurodollar Rate, a Fixed CD Rate or an
ABR.
"Reference Lenders" means each of the Agents.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System from time to time in effect and any
successor or other regulation or official interpretation of said
Board of Governors relating to reserve requirements applicable to
member Lenders of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System from time to time in effect and any
successor or other regulation or official interpretation of said
Board of Governors relating to the extension of credit by Lenders
for the purpose of purchasing or carrying margin stocks
applicable to member Lenders of the Federal Reserve System.
"Replacement Lender" is defined in Section 2.23.
"Required Accounting Principles" means, as applied to any
Person, the accounting rules and regulations, if any, at the time
prescribed by the regulatory body or bodies under the
jurisdiction of which such Person is at the time operating and,
to the extent of matters not covered by such rules or
regulations, generally accepted principles of accounting at the
time prevailing for Persons engaged in businesses similar to that
of such Person in the country in which such Person has its
principal place of business.
"Risk-Based Capital Guidelines" is defined in Section 3.2.
"S&P" means Standard and Poor's Ratings Group and any
successor thereto that is a nationally-recognized rating agency.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Senior Notes" means the Borrower's $250,000,000 Senior
Notes issued pursuant to the Note Purchase Agreements.
"Service Agreement" means an agreement in substantially the
form of the U.S. Shippers Service Agreement, and any other form
of firm transportation agreement, included in the Tariff, entered
into between the Borrower and a Shipper, as such agreements may
be amended, modified or supplemented from time to time.
"Shipper" means any Person who is, at the time of such
characterization, a party to a Service Agreement with the
Borrower for the transportation of gas through the Pipeline and
shall include on the date hereof those Persons identified on
Schedule "1-a" hereto.
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of
which shall at the time be owned directly or indirectly, by such
Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture, limited liability company or similar
business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so
owned. Unless otherwise expressly provided, all references
herein to a "Subsidiary" shall mean a direct or indirect
Subsidiary of the Borrower.
"Support Agreements" means the Support Agreements listed in
Schedule 5 together with any other agreements entered into from
time to time by or on behalf of any of the Shippers in support of
its obligations under its Service Agreement.
"Swing Loan" is defined in Section 2.1.3.
"Swing Loan Sublimit" means an aggregate amount not to
exceed on any date the amount of $15,000,000 (in minimum
increments of $1,000,000) as such amount may be reduced from time
to time pursuant to Section 2.1.3.
"Swing Loan Note" means a promissory note in substantially
the form of Exhibit "A-3" hereto, duly executed and delivered to
the Administrative Agent by the Borrower and payable to the order
of the Administrative Agent in the amount of the Swing Loan
Sublimit, including any amendment, modification, renewal or
replacement of such promissory note.
"T-1R Shipper" means any Person who has, at the time of such
characterization, obtained firm pipeline capacity on a release
basis pursuant to Section 27.1 of the General Terms and
Conditions of the Tariff and who has executed a T-1R Service
Agreement with the Borrower for the transportation of gas through
the Pipeline.
"T-1R Service Agreement" means that form of Service
Agreement included in the Tariff entered into between the
Borrower and a T-1R Shipper for certain firm gas transportation
rights pursuant to the T-1R Rate Schedule, as such agreement may
be amended, modified or supplemented from time to time.
"Tariff" means the FERC gas tariff of the Borrower stating
the terms and conditions applicable to the transportation of gas
through the Pipeline, such terms and conditions consisting of the
compilation on file with the FERC of the Borrower's Rate
Schedules, General Terms and Conditions and related forms of
Service Agreement (as each of such terms is defined in said
Tariff), as amended and in effect from time to time.
"Taxes" are defined in Section 2.21.
"Transferee" is defined in Section 12.4.
The foregoing definitions shall be equally applicable to
both the singular and plural forms of the defined terms.
ARTICLE II
THE FACILITIES
SECTION II.1. Facility A.
SECTION II.1.1 Description of Facility A. Each Lender
severally agrees, on the terms and conditions set forth in this
Agreement, to make Facility A Loans to the Borrower from time to
time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Facility A Commitment. Each Lender
may, in its sole discretion, make bids to make Competitive Bid
Loans to the Borrower under Facility A in accordance with Section
2.3; provided that in no event may the sum of the aggregate
principal amount of all outstanding Facility A Advances plus all
Facility A Competitive Bid Advances exceed the Facility A
Aggregate Commitment.
SECTION II.1.2 Availability of Facility A. Subject to the
terms of this Agreement, Facility A is available to the Borrower
from the date of this Agreement to the Facility A Termination
Date, and subject to the other terms hereof the Borrower may
borrow, repay and reborrow, under the Facility A at any time
prior to the Facility A Termination Date.
SECTION II.1.3 Swing Loan. Subject to the terms and
conditions of this Agreement, the Borrower may request one or
more loans from the Administrative Agent (each such loan, a
"Swing Loan') from time to time for periods of up to 29 days on
any Business Day during the period from the date hereof to the
Facility A Termination Date, in an aggregate amount not to exceed
the Swing Loan Sublimit; provided however, that, after giving
effect to any borrowing of Swing Loans, the aggregate amount of
all outstanding Facility A Advances plus the outstanding Facility
A Competitive Bid Advances shall not at any time exceed the
Facility A Aggregate Commitment. The Administrative Agent may,
but shall have no obligation whatsoever to, make any Swing Loan.
At the maturity of each applicable Swing Loan, each Lender will,
at the Administrative Agent's request, reimburse the
Administrative Agent for its pro rata share of such Swing Loans
(such reimbursements to bear interest at ABR until paid or
converted by the Borrower).
SECTION II.1.4 Facility A Advances. Each Facility A Advance
hereunder (other than any Swing Loans or any Facility A
Competitive Bid Advances) shall consist of borrowings made from
the several Lenders in accordance with their respective Facility
A Commitments. The Facility A Advances (other than any Swing
Loans and other than any Facility A Competitive Bid Advances)
shall be evidenced by the Facility Notes. The Swing Loans shall
be evidenced by the Swing Loan Note.
SECTION II.2. Facility B.
SECTION II.2.1 Description of Facility B. Each Lender
severally agrees, on the terms and conditions set forth in this
Agreement, to make Loans to the Borrower from time to time in
amounts not to exceed in the aggregate at any one time
outstanding the amount of its Facility B Commitment. Each Lender
may, in its sole discretion, make bids to make Competitive Bid
Loans to the Borrower under Facility B in accordance with Section
2.3; provided, that in no event may the sum of the aggregate
principal amount of all outstanding Facility B Advances plus all
Facility B Competitive Bid Advances exceed the Facility B
Aggregate Commitment.
SECTION II.2.2 Availability of Facility B. Subject to the
terms of this Agreement, Facility B is available to the Borrower
from the date of this Agreement to the Facility B Termination
Date or the Conversion Date, whichever occurs first, and subject
to the other terms hereof prior to such time the Borrower may
borrow, repay and reborrow, under Facility B.
SECTION II.2.3 Facility B Advances. Each Facility B Advance
hereunder (other than Facility B Competitive Bid Advances) shall
consist of borrowings made from the several Lenders in accordance
with their respective Facility B Commitments. The Facility B
Advances (other than any Facility B Competitive Bid Advances)
shall be evidenced by the Facility Notes.
SECTION II.3. Competitive Bid Advances.
SECTION II.3.1 Competitive Bid Option. Subject to the terms
and conditions of this Agreement (including, without limitations,
the limitations set forth in the last sentence of Section 2.1.1
and 2.2.1 as to the maximum aggregate principal amount of all
outstanding Advances hereunder), the Borrower may as set forth in
this Section 2.3, request the Lenders, prior to the Facility A
Termination Date, the Facility B Termination Date or the
Conversion Date, as applicable, to make offers to make
Competitive Bid Advances to the Borrower under Facility A or
Facility B, or both. Each Lender may, but shall have no
obligation to, make such offers and the Borrower may, but shall
have no obligation to, accept any such offers in the manner set
forth in this Section 2.3. Competitive Bid Advances shall be
evidenced by the Competitive Bid Notes.
SECTION II.3.2 Competitive Bid Quote Request. When the
Borrower wishes to request offers to make Competitive Bid Loans
under Section 2.3, it shall transmit to the Administrative Agent,
by facsimile, a Competitive Bid Quote Request so as to be
received no later than (i) 11:00 a.m. (Chicago time) at least
four Business Days prior to the Borrowing Date proposed therein,
in the case of a Eurodollar Auction or (ii) 11:00 a.m. (Chicago
time) at least one Business Day prior to the Borrowing Date
proposed therein, in the case of an Absolute Rate Auction
specifying:
(a) the proposed Borrowing Date, which shall be a
Business Day, for the proposed Competitive Bid Advance;
(b) the aggregate principal amount of such Competitive
Bid Advance;
(c) whether the Competitive Bid Quotes requested are
to set forth a Competitive Bid Margin or an Absolute Rate,
or both;
(d) the Interest Period applicable thereto;
(e) whether the Competitive Bid Advance is to be
prepayable; and
(f) whether the Competitive Bid Advance is being
requested under Facility A or Facility B.
The Borrower may request offers to make Competitive Bid Loans
for more than one Interest Period, for a Eurodollar Auction and an
Absolute Rate Auction and under Facility A or Facility B in a
single Competitive Bid Quote Request. No Competitive Bid Quote
Request shall be given within 3 Business Days (or upon reasonable
prior notice to the Lenders, such other number of days as the
Borrower and the Administrative Agent may agree) of any other
Competitive Bid Quote Request. Each Competitive Bid Quote
Request shall be in a minimum amount of $5,000,000 (and in
integral multiples of $1,000,000 in excess thereof). A
Competitive Bid Quote Request that does not conform substantially
to the format of Exhibit "E" hereto shall be rejected, and the
Administrative Agent shall promptly notify the Borrower of such
rejection by facsimile.
SECTION II.3.3 Invitation for Competitive Bid Quotes.
Promptly and in any event before noon (Chicago time) on the same
Business Day of receipt of a Competitive Bid Quote Request that
is not rejected pursuant to Section 2.3.2, the Administrative
Agent shall send to each of the Lenders by facsimile an
Invitation for Competitive Bid Quotes which shall constitute an
invitation by the Borrower to each Lender to submit Competitive
Bid Quotes offering to make the Competitive Bid Loans to which
such Competitive Bid Quote Request relates in accordance with
Section 2.3.4.
SECTION II.3.4 Submission and Contents of Competitive Bid
Quotes. (i) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make
Competitive Bid Loans in response to any Invitation for
Competitive Bid Quotes. Each Competitive Bid Quote must comply
with the requirements of this Section 2.3.4 and must be submitted
to the Administrative Agent by facsimile at its offices specified
in or pursuant to Article XIII not later than (a) (I) 9:30 a.m.
(Chicago time) in the case of First Chicago and (II) 9:45 a.m.
(Chicago time) in the case of each other Lender, at least three
Business Days prior to the proposed Borrowing Date, in the case
of a Eurodollar Auction or (b) (I) 8:45 a.m. (Chicago time) in
the case of First Chicago and (II) 9:00 a.m. (Chicago time) in
the case of each other Lender on the proposed Borrowing Date, in
the case of an Absolute Rate Auction (or, in either case upon
reasonable prior notice to the Lenders, such other time and date
as the Borrower and the Administrative Agent may agree, provided
that First Chicago shall always be required to submit its
Competitive Bid Quotes not less than fifteen minutes prior to the
other Lenders). Subject to Article IV, any Competitive Bid Quote
so made shall be irrevocable except with the written consent of
the Administrative Agent given on the instructions of the
Borrower.
(ii) Each Competitive Bid Quote shall in any case specify:
(a) the proposed Borrowing Date and whether such
Competitive Bid Quote is under Facility A or Facility B,
which shall be the same as that set forth in the applicable
Invitation for Competitive Bid Quotes;
(b) the principal amount of the Competitive Bid Loan
for which each such offer is being made, which principal
amount (1) may be greater than, less than or equal to the
Commitment of the quoting Lender, (2) must be at least
$5,000,000 and an integral multiple of $1,000,000, and (3)
may not exceed the principal amount of Competitive Bid
Advances for which offers were requested;
(c) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each such Competitive Bid
Loan;
(d) the minimum or maximum amount, if any, of any
Competitive Bid Loan which may be accepted by the Borrower
and/or the limit, if any, as to the aggregate principal
amount of Competitive Bid Loans from such Lender which may
be accepted by the Borrower;
(e) in the case of an Absolute Rate Auction, the
Absolute Rate offered for each such Competitive Bid Loan;
(f) the applicable Interest Period; and
(g) the identity of the quoting Lender.
(iii) The Administrative Agent shall reject any
Competitive Bid Quote that:
(a) is not substantially in the form of Exhibit "G"
hereto or does not specify all of the information required
by Section 2.3.4(ii);
(b) contains qualifying, conditional or similar
language, other than any such language contained in Exhibit
"G" hereto;
(c) proposes terms other than or in addition to those
set forth in the applicable Invitation for Competitive Bid
Quotes; or
(d) arrives after the time set forth in Section
2.3.4(i).
If any Competitive Bid Quote shall be rejected pursuant to
this Section 2.3.4(iii), then the Administrative Agent shall notify
the relevant Lender of such rejection as soon as practical.
SECTION II.3.5 Notice to the Borrower. The Administrative
Agent shall promptly notify the Borrower of the terms (i) of any
Competitive Bid Quote submitted by a Lender that is in accordance
with Section 2.3.4 and (ii) of any Competitive Bid Quote that is
in accordance with Section 2.3.4 and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote
submitted by such Lender with respect to the same Competitive Bid
Quote Request. Any such subsequent Competitive Bid Quote shall
be disregarded by the Administrative Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted
solely to correct a manifest error in such former Competitive Bid
Quote. The Administrative Agent's notice to the Borrower shall
specify the aggregate principal amount of Competitive Bid Loans
for which offers have been received for each Interest Period
specified in the related Competitive Bid Quote Request and the
respective principal amounts and Competitive Bid Margins or
Absolute Rates, as the case may be, so offered.
SECTION II.3.6 Acceptance and Notice by the Borrower.
Subject to the receipt of the notice from the Administrative
Agent referred to in Section 2.3.5, not later than (i) 10:45 a.m.
(Chicago time) at least three Business Days prior to the proposed
Borrowing Date, in the case of a Eurodollar Auction or (ii) 10:00
a.m. (Chicago time) on the proposed Borrowing Date, in the case
of an Absolute Rate Auction, the Borrower shall notify the
Administrative Agent of its acceptance or rejection of the offers
so notified to it pursuant to Section 2.3.5; provided, however,
that the failure by the Borrower to give such notice to the
Administrative Agent shall be deemed to be a rejection of all
such offers. In the case of acceptance, such notice (a
"Competitive Bid Borrowing Notice") shall specify the aggregate
principal amount of offers for each Interest Period that are
accepted. The Borrower may accept or reject any Competitive Bid
Quote in whole or in part (subject to the terms of Section
2.3.4(ii)(d)); provided that:
(a) the aggregate principal amount of each Competitive
Bid Advance may not exceed the applicable amount set forth
in the related Competitive Bid Quote Request;
(b) acceptance of offers for any Competitive Bid
Advance with otherwise identical terms may only be made on
the basis of ascending Competitive Bid Margins or Absolute
Rates, as the case may be;
(c) the Borrower may not accept any offer of the type
described in Section 2.3.4(iii) or that otherwise fails to
comply with the requirements of this Agreement for the
purpose of obtaining a Competitive Bid Loan under this
Agreement; and
(d) after giving effect to such Competitive Bid
Advance, the aggregate principal amount of all outstanding
Advances shall not exceed the Aggregate Commitment and the
requirements of the provisos of the last sentences of
Sections 2.1.1 and 2.2.1 shall be satisfied.
SECTION II.3.7 Allocation by the Administrative Agent. If
offers are made by two or more Lenders with the same Competitive
Bid Margins or Absolute Rates, as the case may be, for a greater
aggregate principal amount than the amount in respect of which
offers are permitted to be accepted for the related Interest
Period under Facility A or Facility B, the principal amount of
Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Administrative Agent among
such Lenders as nearly as possible (in such multiples, not
greater than $500,000, as the Administrative Agent may deem
appropriate) in proportion to the aggregate principal amount of
such offers; provided, however, that no Lender shall be allocated
a portion of any Competitive Bid Advance which is less than the
minimum amount which such Lender has indicated that it is willing
to accept. Allocations by the Administrative Agent of the
amounts of Competitive Bid Loans shall be conclusive in the
absence of manifest error. The Administrative Agent shall
promptly, but in any event on the same Business Day in the case
of Eurodollar Bid Rate Advances, and by 11:00 a.m. (Chicago time)
in the case of Absolute Rate Advances, notify each Lender of its
receipt of a Competitive Bid Borrowing Notice and the aggregate
principal amount of such Competitive Bid Advance allocated to
each participating Lender.
SECTION II.3.8 Administration Fees. The Borrower hereby
agrees to pay to the Administrative Agent for its sole account
administration fees for Competitive Bid Quote Requests in such
amounts as heretofore agreed upon by the Borrower in writing.
SECTION II.4. Types of Advances. The Facility A Advances
and the Facility B Advances may be ABR Advances or Eurodollar
Advances, or a combination thereof, selected by the Borrower in
accordance with the terms hereof.
SECTION II.5. Facility Fees. The Borrower will pay the
Facility Fee on the average daily amount of the Aggregate
Commitment, regardless of usage, payable quarterly in arrears on
each Payment Date and on the date on which both the Facility A
Aggregate Commitment and the Facility B Aggregate Commitment have
terminated to the Administrative Agent for the ratable benefit of
the Lenders (including the Administrative Agent) from the date of
execution of this Agreement until termination of both the
Facility A Aggregate Commitment and the Facility B Aggregate
Commitment.
SECTION II.6. Reduction or Cancellation. The Borrower may
at any time after the date hereof cancel either the Facility A
Aggregate Commitment or (prior to the Conversion Date) the
Facility B Aggregate Commitment, in whole, or reduce either of
them with a corresponding reduction in the Aggregate Commitment,
in a minimum amount of $10,000,000 (and in integral multiples of
$5,000,000) ratably among the Lenders upon at least five (5)
Business Days' prior written notice to the Administrative Agent,
which notice shall specify the amount of such reduction and
whether and to what extent such reduction shall apply to the
Facility A Aggregate Commitment or the Facility B Aggregate
Commitment, or either of them; provided, however, no such notice
of cancellation shall be effective to the extent that it would
(i) reduce the Facility A Aggregate Commitment to an amount which
would be less than the sum of the outstanding principal amount of
the Facility A Advances plus the Facility A Competitive Bid
Advances or (ii) reduce the Facility B Aggregate Commitment to an
amount which would be less than the sum of the outstanding
principal amount of the Facility B Advances plus the Facility B
Competitive Bid Advances. Any notice of cancellation given
pursuant to this Section 2.6 shall be irrevocable and permanent
and shall specify the date upon which such cancellation is to
take effect. The Administrative Agent shall promptly notify each
Lender of its receipt of notice from the Borrower electing to
cancel all or reduce a portion of the Aggregate Commitment. Each
reduction of the Facility A Aggregate Commitment or the Facility
B Aggregate Commitment shall cancel each Lender's Commitment
ratably in proportion to the ratio that such Lender's Commitment
bears to the Aggregate Commitment.
SECTION II.7. Method of Borrowing. Not later than 1:00
p.m. Chicago time on each Borrowing Date, each Lender shall make
available its Loan or Loans in funds immediately available in
Chicago, to the Administrative Agent at its address specified
pursuant to Article XIII. The Administrative Agent will make the
funds so received from the Lenders available to the Borrower at
the Borrower's account number 3901-8523 at Citibank, N.A., New
York, NY, ABA number 021-0000-89. Notwithstanding the foregoing
provisions of this Section 2.7, to the extent that a Loan made by
a Lender matures on the Borrowing Date of a requested Loan, such
Lender shall apply the proceeds of the Loan it is then making to
the repayment of the maturing Loan.
SECTION II.8. Method of Borrowing Swing Loan. The Borrower
shall deliver a written request to the Administrative Agent,
which must be received by the Administrative Agent at or prior to
12:00 Noon (Chicago time) on the requested Borrowing Date,
specifying: (1) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $1,000,000 or any multiple of
$1,000,000; (2) the requested Borrowing Date, which shall be a
Business Day and (3) the Borrower's Rate Option, which can be
either (i) ABR or (ii) a mutually agreed upon money market rate.
The Administrative Agent shall notify the Borrower by 2:00 p.m.
(Chicago time) whether it will make such Swing Loan. If the
Administrative Agent does not so notify the Borrower, the
Administrative Agent shall be deemed to have declined to make
such Swing Loan.
SECTION II.9. Method of Selecting Rate Options and Interest
Periods. The Borrower shall select the Rate Option and Interest
Period applicable to each Advance from time to time. The
Borrower shall give the Administrative Agent irrevocable notice
(a "Borrowing Notice") not later than 11:00 a.m. Chicago time on
the Borrowing Date of each ABR Advance, one Business Day before
the Borrowing Date of each Fixed CD Rate Advance and three
Business Days before the Borrowing Date for each Eurodollar
Advance, specifying: (a) the Borrowing Date, which shall be a
Business Day, of such Advance, (b) the aggregate amount of such
Advance, (c) the Rate Option selected for such Advance, and
(d) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto. Each Fixed Rate Advance shall bear interest
from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to
such Fixed Rate Advance.
SECTION II.10. Minimum Amount of Each Advance. Each Fixed
Rate Advance shall be in the minimum amount of $5,000,000 (and in
multiples of $1,000,000 if in excess thereof), and each ABR
Advance shall be in the minimum amount of $5,000,000 (and in
multiples of $1,000,000), provided, however, that any ABR Advance
may be in the amount of the unused Facility A Aggregate
Commitment or Facility B Aggregate Commitment.
SECTION II.11. Rate after Maturity. Any applicable Advance
not paid at maturity thereof, whether by acceleration or
otherwise, shall bear interest until paid in full at a rate per
annum equal to the ABR, plus 2% per annum.
SECTION II.12. Method of Payment. All payments of
principal, interest, and fees hereunder shall be made in
immediately available funds by noon (Chicago time) on the date
when due and shall be made ratably (except for Swing Loans and
Competitive Bid Loans) among the Lenders, to the Administrative
Agent at the Administrative Agent's address specified pursuant to
Article XIII or at any other Lending Installation in the U.S. of
the Administrative Agent specified in writing by the
Administrative Agent to the Borrower. Each payment delivered to
the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in
the same type of funds which the Administrative Agent received at
its address specified pursuant to Article XIII or at any Lending
Installation specified in a notice received by the Administrative
Agent from such Lender.
SECTION II.13. Notes; Telephonic Notices. Each Lender is
hereby authorized to record the principal amount of each of its
Loans and each repayment on the schedule attached to its Note;
provided, however, that the failure to so record shall not affect
the Borrower's obligations under such Note. The Borrower hereby
authorizes the Lenders and the Administrative Agent to extend
Advances and effect Rate Option selections based on telephonic
notices made by any person or persons, the Administrative Agent
or any Lender in good faith believes to be acting on behalf of
the Borrower. The Borrower agrees to deliver promptly to the
Administrative Agent a written confirmation of each telephonic
notice signed by an Authorized Representative. If the written
confirmation differs in any material respect from the action
taken by the Administrative Agent and the Lenders, the records of
the Administrative Agent and the Lenders shall govern absent
manifest error.
SECTION II.14. Interest Payment Dates; Interest Basis.
Interest accrued on each Fixed Rate Advance shall be payable on
the last day of its applicable Interest Period and on any date on
which the Advance is prepaid, whether due to acceleration or
otherwise. Interest accrued on each Fixed Rate Advance having an
Interest Period longer than three months shall also be payable on
the last day of each three-month interval during such Interest
Period. Interest accrued on each ABR Advance shall be payable on
each Payment Date, on the date such ABR Advance is paid or
converted into a Fixed Rate Advance and on the Commitment
Termination Date. Interest on all Eurodollar Rate Loans and
Fixed CD Rate Loans and fees shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest on ABR Loans
shall be calculated for actual days elapsed on the basis of a
365, or when appropriate 366, day year. Interest shall be
payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon
(Chicago time) at the place of payment. If any payment of
principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the
next succeeding Business Day and, in the case of a principal
payment, such extension of time shall be included in computing
interest in connection with such payment.
SECTION II.15. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions. Promptly after receipt
thereof, the Administrative Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice, Borrowing
Notice and prepayment notice received by it hereunder. The
Administrative Agent will notify each Lender and the Borrower of
the interest rate applicable to each Fixed Rate Advance promptly
upon determination of such interest rate and will give each
Lender and the Borrower prompt notice of each change. Each
Reference Lender agrees to furnish timely information for the
purpose of determining the Eurodollar Rate or the Fixed CD Rate,
as applicable.
SECTION II.16. Lending Installations. Each Lender may book
its Loans at any Lending Installation selected by such Lender and
may change its Lending Installation from time to time; provided,
that no Lender shall select a Lending Installation that shall
impose any additional material cost on the Borrower. All terms
of this Agreement shall apply to any such Lending Installation
and the Notes shall be deemed held by each Lender for the benefit
of such Lending Installation. Each Lender may, by written or
facsimile notice to the Administrative Agent and the Borrower,
designate a Lending Installation through which Loans will be made
by it and for whose account Loan payments are to be made.
SECTION II.17. Non-Receipt of Funds by the Administrative
Agent. Unless the Borrower or a Lender, as the case may be,
notifies the Administrative Agent prior to the date on which it
is scheduled to make payment to the Administrative Agent of (i)
in the case of a Lender, the proceeds of a Loan or (ii) in the
case of the Borrower, a payment of principal, interest or fees to
the Administrative Agent for the account of the Lenders, that it
does not intend to make such payment, the Administrative Agent
may assume that such payment has been made. The Administrative
Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such
assumption. If such Lender or the Borrower, as the case may be,
has not in fact made such payment to the Administrative Agent,
the recipient of such payment shall, on demand by the
Administrative Agent, repay to the Administrative Agent the
amount so made available together with interest thereon in
respect of each day during the period commencing on the date such
amount was so made available by the Administrative Agent until
the date the Administrative Agent recovers such amount at a rate
per annum equal to (i) in the case of payment by a Lender, the
federal funds rate for such day (as determined by the
Administrative Agent) or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Advance.
If any Lender fails to make its scheduled payment, the
Administrative Agent agrees to provide the Borrower with
reasonable assistance in locating a Lender (reasonably acceptable
to the Administrative Agent) which will agree to assume the
Commitment of the defaulting Lender under this Agreement.
SECTION II.18. Voluntary Prepayments. Advances bearing
interest based at the ABR Rate may be prepaid at any time without
penalty on one Business Day's prior written notice in a minimum
amount of $5,000,000. Advances bearing interest based on the
Eurodollar Rate or Fixed CD Rate may be paid prior to the last
day of the applicable Interest Period upon three Business Days'
prior written notice, subject to customary breakage
indemnifications, in a minimum amount of $5,000,000. Competitive
Bid Loans may not be prepaid without the consent of the
applicable Lender. The Borrower shall compensate the Lenders for
any funding losses and loss of profits incurred as a result of
any prepayment of an Advance bearing interest based on the
Eurodollar Rate, Fixed CD Rate, Eurodollar Bid Rate or Absolute
Rate, unless Borrower and Lender previously agreed that Loan
would be prepayable without such compensation, prior to the last
day of the applicable Interest Period as provided in Section 3.4.
SECTION II.19. Conversion and Continuation of Outstanding
Advances. ABR Advances shall continue as ABR Advances unless and
until paid or converted into Fixed Rate Advances. Each Fixed
Rate Advance shall continue as a Fixed Rate Advance of the same
type until the end of the then applicable Interest Period
therefor, at which time such Fixed Rate Advance shall be
automatically converted into an ABR Advance unless the Borrower
shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Fixed
Rate Advance either continue as a Fixed Rate Advance of a type
specified for the same or another Interest Period or be
converted into an ABR Advance. Subject to the terms of Section
2.10, the Borrower may elect from time to time to convert all or
any part of an Advance of any type into another type of Advance;
provided that any conversion of any Fixed Rate Advance shall be
made on, and only on, the last day of the Interest Period
applicable thereto. The Borrower shall give the Administrative
Agent irrevocable notice (a "Conversion/Continuation Notice") of
each conversion of an Advance or continuation of a Fixed Rate
Advance not later than 11:00 a.m. (Chicago time) the Business
Day, in the case of a conversion into an ABR Advance, at least
one Business Day, in the case of a conversion into a Fixed CD
Rate Advance or three Business Days, in the case of a conversion
into or continuation of a Eurodollar Advance, prior to the date
of the requested conversion or continuation, specifying: (i) the
requested date which shall be a Business Day, of such conversion
or continuation; (ii) the aggregate amount and type of the
Advance which is to be converted or continued; and (iii) the
amount and type(s) of Advance(s) into which such Advance is to be
converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Advance or Fixed CD Rate Advance,
the duration of the Interest Period applicable thereto.
SECTION II.20. Rates. The Borrower may elect that Facility
A Advances and Facility B Advances accrue interest at a rate per
annum: (i) on that portion maintained from time to time as an ABR
Advance, equal to the ABR from time to time in effect; (ii) on
that portion maintained as a CD Rate Advance, during each
Interest Period applicable thereto, equal to the Fixed CD Rate
for such Interest Period; and (iii) on that portion maintained as
a Eurodollar Advance, during each Interest Period applicable
thereto, equal to the Eurodollar Rate for such Interest Period.
SECTION II.21. Withholding Tax Exemption. Subject to the
other provisions of this Section 2.21, all payments by the
Borrower in respect of principal, interest, fees and other
amounts due hereunder or under the Notes shall be made, free and
clear of and without deduction for any and all present and future
taxes, levies, imposts, deductions, charges, withholdings, and
all liabilities with respect thereto, excluding income and
franchise and ad valorem taxes of, in the case of each Lender and
the Agents, of the jurisdiction under the laws of which such
Lender or the Agents (as the case may be) is organized and, in
the case of each Lender, of the jurisdiction of such Lender's
Lending Installation and any political subdivision or taxing
authority of either thereof or therein (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). At least
five Business Days prior to the first date on which interest or
fees are payable hereunder for the account of any Lender, each
Lender (or Lending Installation) that is not incorporated under
the laws of the United States of America, or a state thereof,
agrees that it will deliver to each of the Borrower and the
Administrative Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender (or Lending Installation) is entitled to
receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income
taxes. Each Lender (or Lending Installation) which so delivers a
Form 1001 or 4224 further undertakes to deliver to each of the
Borrower and the Administrative Agent two additional copies of
such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form
1001 and one calendar year for Form 4224) or becomes obsolete or
after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by
the Borrower or the Administrative Agent, in each case certifying
that such Lender (or Lending Installation) is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Lender (or Lending
Installation) from duly completing and delivering any such form
with respect to it and such Lender (or Lending Installation)
advises the Borrower and the Administrative Agent that it is not
capable of receiving payments without any deduction or
withholding of United States federal income tax, in which case
such Lender shall deliver to the Borrower and Administrative
Agent the required number of any form or certificate it is
eligible to provide to reduce the amount of such withholding or
deduction. Each Lender that is not a United States person (as
such term is defined in Section 7701(a)(30) of the Internal
Revenue Code) represents and warrants to the Borrower and to the
Administrative Agent that on the date hereof such Lender (i) is
engaged in the active conduct of a trade or business in the
United States and that it will make its Loans through a branch or
office located in the United States (or otherwise is entitled to
deliver accurate and complete signed copies of Internal Revenue
Service Form 4224), or (ii) is exempt from U.S. withholding taxes
with respect to payments to be made to such Lender hereunder in
accordance with current U.S. Federal income tax law and the
current provisions of a tax treaty to which the United States is
a party. If such representation and warranty shall prove to be
untrue as to any Lender or withholding taxes otherwise become
applicable otherwise than as a result of a change in a treaty,
law or regulation, the Borrower shall not be obligated to
reimburse such Lender under this Section 2.21 with respect to
such withholding tax on interest, and, to the extent, if any,
that such Lender shall have received such reimbursement, it shall
repay the amount thereof to the Borrower or the Administrative
Agent, as applicable. If any Lender receives a refund of or a
credit for Taxes for which the Borrower has paid or reimbursed
such Lender pursuant to this Section 2.21, such Lender shall pay
to the Borrower the amount of such refund or credit.
Any and all present or future Taxes and related liabilities
(including penalties, interest, additions to tax and expenses)
which are not paid by the Borrower pursuant to and as required by
this Section 2.21 shall be paid by the Lender which received the
principal, interest or fees in respect of which such Taxes or
related liabilities are payable. Any and all present or future
Taxes which are required by law to be deducted or withheld from
or in respect of any sum payable hereunder to any Lender and
which are not paid by the Borrower pursuant to and as required by
this Section 2.21 will be deducted or withheld by the
Administrative Agent without any increase in the sum payable.
Each Lender agrees to indemnify each Agent and hold each Agent
harmless for the full amount of any and all present or future
taxes and related liabilities (including penalties, interest,
additions to tax and expenses, and any Taxes imposed by any
jurisdiction on amounts payable to such Agent under this
Section 2.21) which are imposed on or with respect to principal,
interest, or fees payable to such Lender hereunder and which are
not paid by the Borrower pursuant to this Section 2.21, whether
or not such taxes or related liabilities were correctly or
legally asserted. This indemnification shall be made within
thirty (30) days from the date such Agent makes written demand
therefor.
If any Taxes specified in this Section 2.21 are asserted to
be due from any Lender or Agent, such Lender or Agent will notify
the Borrower (with a copy to the Administrative Agent) of such
claim. Such Lender or Agent, as the case may be, may pay such
asserted taxes, and the Borrower will indemnify such Lender or
Agent for such payments, together with any interest, penalties
and expenses in connection therewith, with interest thereon at
the rate specified in Section 2.11 (calculated as if such
payments constituted overdue amounts as of the date of making
such payments), unless within 10 days after its receipt of such
notification, the Borrower pays such asserted Taxes (and supplies
such Lender or Administrative Agent with evidence of such
payment) or (i) the Borrower notifies such Lender or
Administrative Agent that the Borrower intends to contest in good
faith and by appropriate proceedings the claim for such taxes
asserted against such Lender or Agent, (ii) counsel for such
Lender or Agent advises such Lender or Agent that it may withhold
such payment without incurring thereby any additional legal
liability (other than an obligation to pay interest thereon) and
(iii) the Borrower indemnifies such Lender or Agent for any
additional interest, payment, expenses or liabilities incurred by
reason of its failure to make such payment when originally
asserted.
Without prejudice to the survival or termination of any
other agreement of the Borrower hereunder, the agreements of the
Borrower contained in this Section 2.21 shall survive the payment
in full of the Notes.
SECTION II.22. Agent's Fees. In order to compensate First
Chicago for the cost and expense of acting as Administrative
Agent under this Agreement, the Borrower hereby agrees to pay to
First Chicago the fees agreed to between the Borrower and First
Chicago with respect to its activities in administering this
Agreement.
SECTION II.23. Extension of Facility A Termination Date.
Subject to the other provisions of this Agreement, the Facility A
Aggregate Commitment shall be effective for an initial period
from the Closing Date to the Facility A Termination Date;
provided that so long as no Default or Event of Default shall
have occurred and be continuing the Facility A Termination Date,
and concomitantly the Facility A Aggregate Commitment, may,
subject to the other provisions of this Agreement, be extended
for successive one year periods expiring on the date which is one
(1) year from the then scheduled Facility A Termination Date. In
order to request such extension, the Borrower will deliver
written notice delivered to the Administrative Agent not more
than one hundred fifty (150) days nor less than one hundred five
(105) days prior to the anniversary date immediately preceding
the then Facility A Termination Date that the Facility A
Termination Date be extended for one year from the then scheduled
Facility A Termination Date. The Administrative Agent shall then
promptly notify each Lender of such request, and each Lender
shall notify the Administrative Agent in writing no later than
forty-five (45) days after receipt by the Lenders of the relevant
request for an extension from the Borrower, pursuant to this
Section 2.23 whether such Lender, in the exercise of its sole
discretion, will extend the Facility A Termination Date for such
one year period. Any Lender which shall not timely notify the
Administrative Agent whether it will extend the Facility A
Termination Date shall be deemed to not have agreed to extend the
Facility A Termination Date. No Lender shall have any obligation
whatsoever to agree to extend the Facility A Termination Date.
Any agreement to extend the Facility A Termination Date by any
Lender shall be irrevocable, except as provided in
Section 2.23(b)(iii).
(a) If all the Lenders notify the Administrative Agent
pursuant to the foregoing provisions of this Section 2.23 of
their agreement to extend the Facility A Termination Date
(such Lenders agreeing to extend the Facility A Termination
Date herein called the "Accepting Lenders"), then the
Administrative Agent shall so notify each Lender and the
Borrower, and such extension shall be effective without
other or further action by any party hereto for such
additional one year period.
(b) If Lenders constituting at least the Majority
Lenders approve the extension of the then scheduled Facility
A Termination Date and if one or more of the Lenders shall
notify, or be deemed to notify, the Administrative Agent
pursuant to the foregoing provisions of this Section 2.23
that they will not extend the then scheduled Facility A
Termination Date (such Lenders herein called the "Declining
Lenders"), then (A) the Administrative Agent shall promptly
so notify the Borrower and the Accepting Lenders, (B) the
Accepting Lenders shall, upon the Borrower's election to
extend the then scheduled Facility A Termination Date in
accordance with clause (i) or (ii) below, extend the then
scheduled Facility A Termination Date and (C) the Borrower
shall pursuant to a notice delivered to the Administrative
Agent, the Accepting Lenders and the Declining Lenders, no
later than the tenth day following the date by which each
Lender is required, pursuant to Section 2.23(b)(i), to
approve or disapprove the requested extension of the
Facility A Aggregate Commitment, either:
(i) elect to extend the Facility A Termination Date with
respect to the Accepting Lenders and direct the
Declining Lenders to terminate their Facility A
Commitments, which termination shall become effective
on the date which would have been the Facility A
Termination Date except for the operation of this
Section 2.23. On such date, (x) the Borrower shall
deliver a notice of the effectiveness of such
termination to the Declining Lenders with a copy to the
Administrative Agent and (y) the Borrower shall pay in
full in immediately available funds all Obligations of
the Borrower owing to the Declining Lenders and (z)
upon the occurrence of the events set forth in clauses
(x) and (y), the Declining Lenders shall each cease to
be a Lender hereunder for all purposes, and shall no
longer have any obligations hereunder; however, such
Person shall be obligated to make or entitled to
receive payments pursuant to Article III, Section 2.21
and Section 9.7 and to the Agents pursuant to Section
10.3 (but only to the extent the event giving rise to
such payment occurred prior to the time at which the
events set forth in clauses (x) and (y) shall have
occurred) as if it were a Lender and the Administrative
Agent shall promptly notify the Accepting Lenders and
the Borrower of the new Facility A Aggregate
Commitment; or
(ii) elect to extend the Facility A Termination Date with
respect to the Accepting Lenders and, prior to or no
later than the then scheduled Facility A Termination
Date, (A) to replace one or more of the Declining
Lender or Declining Lenders with another lender or
lenders reasonably acceptable to the Administrative
Agent (such lenders herein called the "Replacement
Lenders") and (B) the Borrower shall pay in full in
immediately available funds all Obligations of the
Borrower owing to the Declining Lenders which are not
being replaced, as provided in clause (i) above;
provided that (x) the Replacement Lender or Replacement
Lenders shall purchase, and the Declining Lender or
Declining Lenders shall sell, the Notes of the
Declining Lender or Declining Lenders being replaced
and the Declining Lender's or Declining Lenders' rights
hereunder without recourse or expense to, or warranty
(except warranty of ownership which is free and clear
of any adverse claims) by, such Declining Lender or
Declining Lenders being replaced for a purchase price
equal to the aggregate outstanding principal amount of
the Note or Notes payable to such Declining Lender or
Declining Lenders plus any accrued but unpaid interest
on such Note or Notes and accrued but unpaid fees in
respect of such Declining Lender's or Declining
Lenders' Loans and Facility A Commitments hereunder,
and (y) all obligations of the Borrower owing under or
in connection with this Agreement with respect to
Facility A to the Declining Lender or Declining Lenders
being replaced (including, without limitation, such
increased costs, breakage fees payable under
Article III and all other costs and expenses payable to
each such Declining Lender) shall be paid in full in
immediately available funds to such Declining Lender or
Declining Lenders concurrently with such replacement,
and (z) upon the payment of such amounts referred to in
clauses (x) and (y), the Replacement Lender or
Replacement Lenders shall each constitute a Lender
hereunder and the Declining Lender or Declining Lenders
being so replaced shall no longer constitute a Lender
and shall no longer have any obligations hereunder;
however, such Person shall be obligated to make or
entitled to receive payments pursuant to Article III,
Section 2.21 and Section 9.7, and to the Agents
pursuant to Section 10.3 (but only to the extent the
event giving rise to such payment occurred prior to the
time at which the events set forth in clauses (x) and
(y) shall have occurred) as if it were a Lender or
(iii) elect to revoke and cancel the extension request
in such prior written notice by giving notice of such
revocation and cancellation to the Administrative Agent
(which shall promptly notify the Lenders thereof) no
later than the tenth day following the date by which
each Lender is required, pursuant to Section 2.23(a),
to approve or disapprove the requested extension of the
Facility A Termination Date, and concomitantly the
Facility A Aggregate Commitment. If the Borrower fails
to timely provide the election notice referred to in
this clause (iii), the Borrower shall be deemed to have
revoked and canceled the extension request in the prior
written notice and to have elected not to extend the
Facility A Termination Date, and the concomitant
Facility A Aggregate Commitment, and, on the then
scheduled Facility A Termination Date, the Borrower
shall repay in full all Obligations under the Loan
Documents.
ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION III.1. Yield Protection. If any change in, or
introduction of, any law or any governmental or quasi-
governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any interpretation
thereof, or compliance of any Lender therewith, (a) subjects any
Lender or any applicable Lending Installation to any tax, duty,
charge or withholding on or from payments due from the Borrower
(excluding taxation of the overall net income of any Lender or
applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Fixed Rate
Loans or other amounts due it hereunder, or (b) imposes or
increases or deems applicable any reserve, assessment, insurance
charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any
Lender or any applicable Lending Installation, or (c) imposes any
other condition the result of which is to increase the cost to
any Lender or any applicable Lending Installation of making,
funding or maintaining Fixed Rate Loans or reduces any amount
receivable by any Lender or any applicable Lending Installation
in connection with Fixed Rate Loans, or requires any Lender or
any applicable Lending Installation to make any payment
calculated by reference to the amount of Fixed Rate Loans held or
interest received by it, by an amount deemed material by such
Lender, then, within 15 days of demand by such Lender specifying,
in reasonable detail, the nature of the change or introduction,
the Borrower shall pay such Lender that portion of such increased
expense incurred or reduction in an amount received which such
Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment. The Borrower shall not
be obligated to compensate any Lender pursuant to this Section
3.1 for any amounts attributable to a period more than 120 days
prior to the giving of notice by such Lender to the Borrower of
its intention to seek compensation under this Section 3.1 or its
request therefor.
SECTION III.2. Changes in Capital Adequacy Regulations. If
a Lender determines that the amount of capital required or
expected to be maintained by such Lender, any Lending
Installation of such Lender, or any corporation controlling such
Lender is increased as a result of a Change, then, within 15 days
of demand by such Lender, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender
reasonably determines is attributable to this Agreement, its
Loans, or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy being
applied with respect to customers similarly situated to Borrower
with whom such Lender has a contractual right to so charge such
amounts). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any
adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of
law) after the date of this Agreement which affects the amount of
capital required or expected to be maintained by any Lender or
any Lending Installation or any corporation controlling any
Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988
report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to
the date of this Agreement. The Borrower shall not be obligated
to compensate any Lender pursuant to this Section 3.2 for any
amounts attributable to a period more than 120 days prior to the
giving of notice by such Lender to the Borrower of its intention
to seek compensation under this Section 3.2 or its request
therefor.
SECTION III.3. Availability of Types of Advances. If any
Lender determines that maintenance of any of its Eurodollar Loans
or any of its Eurodollar Bid Rate Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation
or directive, whether or not having the force of law, the
Administrative Agent shall suspend the availability of the
affected type of Advance and require any Eurodollar Advances or
Eurodollar Bid Rate Advances of the affected type to be converted
into ABR Advances. If the Majority Lenders determine that (i)
deposits of a type or maturity appropriate to match fund
Eurodollar Advances or Eurodollar Bid Rate Advances are not
available, the Administrative Agent shall suspend the
availability of such type of Advance with respect to any
Eurodollar Advances or Eurodollar Bid Rate Advances made after
the date of any such determination until such time as deposits of
a type or maturity appropriate to match fund Eurodollar Advances
or Eurodollar Bid Rate Advances are made available, or (ii) after
giving effect to amounts payable under Sections 3.1 and 3.2 an
interest rate applicable to a type of Advance does not accurately
reflect the cost of making a Eurodollar Advance or Eurodollar Bid
Rate Advance of such type, then, if for any reason whatsoever the
provisions of Section 3.1 are inapplicable, the Administrative
Agent shall suspend the availability of the affected type of
Advance with respect to any Eurodollar Advances or Eurodollar Bid
Rate Advances made after the date of any such determination.
SECTION III.4. Funding Indemnification. If any payment of a
Fixed Rate Advance occurs on a date which is not the last day of
the applicable Interest Period, whether because of acceleration,
prepayment or otherwise, or a Fixed Rate Advance is not made or
converted on the date specified by the Borrower for any reason
other than default by the relevant Lenders, the Borrower will
indemnify each Lender for any loss or cost incurred by it
resulting therefrom, including, without limitation, any loss or
cost in liquidating or employing deposits acquired to fund or
maintain the Fixed Rate Advance. The Borrower shall not be
obligated to compensate any Lender pursuant to this Section 3.4
for any amounts attributable to a period more than 120 days prior
to the giving of notice by such Lender to the Borrower of its
intention to seek compensation under this Section 3.4 or its
request therefor.
SECTION III.5. Lender Statements; Survival of Indemnity. To
the extent reasonably possible, each Lender shall designate an
alternate Lending Installation with respect to its Fixed Rate
Loans to reduce any liability of the Borrower to such Lender
under Section 3.1 or to avoid the unavailability of a Rate Option
under Section 3.3, so long as such designation is not
disadvantageous to such Lender as determined by such Lender in
good faith. A written statement of a Lender as to the amount due
under Section 3.1, 3.2 or 3.4 shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in
connection with a Fixed Rate Loan shall be calculated as though
each Lender funded its Fixed Rate Loan through the purchase of a
deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Fixed Rate applicable to
such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the
Borrower of the written statement. The obligations of the
Borrower under Sections 3.1, 3.2 and 3.4 shall survive payment of
the Obligations and termination of this Agreement.
SECTION III.6. Replacement of Lenders. If any Lender is
unable to make a Fixed Rate Loan pursuant to Section 3.3, is
subject to increased costs pursuant to Section 3.1, 3.2 or 3.4,
fails to designate an alternate Lending Installation pursuant to
Section 3.1 or 3.5, or is owed or reasonably anticipates being
owed additional amounts pursuant to Section 3.1 or 3.2 and fails
to take action to the extent required under Section 3.1, 3.2 or
3.5 to avoid or reduce any such additional amounts, the Borrower
shall have the right, if no Event of Default then exists, to
replace such Lender with another financial institution reasonably
acceptable to the Administrative Agent provided that (i) such
financial institution shall unconditionally offer in writing
(with a copy to the Administrative Agent) to purchase, in
accordance with Section 12.3.2, all of such Lender's rights and
obligations under this Agreement and the Notes, without recourse
or expense to, or warranty (except warranty of ownership which is
free and clear of any adverse claims) by, such Lender being
replaced for a purchase price equal to the aggregate outstanding
principal amount of the Notes payable to such Lender plus accrued
but unpaid fees and interest in respect of such Lender's
commitment hereunder to the date of such purchase on a date
therein specified, (ii) the obligations of the Borrower owing
pursuant to Section 3.1, 3.2 and 3.4 to the Lender being
replaced, shall be paid in full to the Lender being replaced
concurrently with such replacement, (iii) the replacement
financial institution shall execute a Notice of Assignment
pursuant to which it shall become a party hereto as provided in
Section 12.3.2 and shall pay the processing fee required pursuant
to such section, and (iv) upon compliance with the provisions for
assignment provided in Section 12.3 and the payment of amounts
referred to in clause (i), the replacement financial institution
shall constitute a "Lender" hereunder and the Lender being so
replaced shall no longer constitute a "Lender" hereunder;
provided that (x) if such Lender accepts such an offer and such
financial institution fails to purchase on such specified date in
accordance with the terms of such offer, the Borrower shall
continue to be obligated to pay the increased cost, amounts,
expenses and taxes under Sections 3.1, 3.2 and 3.4 above to such
Lender and (y) if such Lender fails to accept such purchase
offer, the Borrower shall not be obligated to pay such Lender
such increased cost pursuant to such sections from and after the
date of such purchase offer.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION IV.1. Initial Advance. The Lenders shall not be
required to make the initial Advance hereunder unless all
obligations of the Borrower under its Credit Agreement dated as
of July 15, 1992, as amended, are concurrently paid in full and
the Borrower has furnished the following (each dated the date of
such initial Advance) to the Administrative Agent with sufficient
copies for the Lenders:
(a) Copies of the Partnership Agreement of the
Borrower and the Operating Agreement, together with all
amendments thereto, and copies of the articles of
incorporation or partnership agreement of each Partner, each
certified by an Authorized Officer or a Partner, as
applicable, as being true, correct and complete.
(b) Copies, certified by an Authorized Officer, of
resolutions authorizing the execution by the Borrower of the
Loan Documents.
(c) An incumbency certificate, executed by an
Authorized Officer, which shall identify by name and title
and bear the signature of the Authorized Representatives to
sign the Loan Documents and to make borrowings hereunder,
upon which certificate the Agents and the Lenders shall be
entitled to rely until informed of any change in writing by
the Borrower.
(d) A certificate, signed by the Vice President,
Finance of the Operator, stating that on the initial
Borrowing Date no Default or Event of Default has occurred
and is continuing.
(e) Written opinions of the General Counsel of the
Operator and Chapman and Cutler, addressed to the Agents and
the Lenders in substantially the forms of Exhibits "B-1" and
"B-2" hereto.
(f) Notes payable to the order of each of the Lenders.
(g) A certificate setting forth the Borrower's
insurance coverage and insurers as of the Closing Date.
(h) Such other documents as any Agent or its counsel
or the Majority Lenders may have reasonably requested.
(i) Solely with respect to the initial Advance under
Facility B, a FERC Certificate of Public Convenience and
Necessity granting Borrower the requisite authority to
construct and operate the Extension and Expansion in form
reasonably acceptable to the Borrower and the Agents.
(j) A certificate dated on the Closing Date of an
Authorized Officer certifying that the representations and
warranties contained in Article V are true and correct as of
the Closing Date.
SECTION IV.2. Each Loan and Conversion Date. (i) No Lender
shall be required to make any Loan on the applicable Borrowing
Date, and (ii) the Conversion Date of Facility B shall not occur,
unless on such date:
(a) There exists no Default or Event of Default.
(b) The representations and warranties contained in
Article V (other than in Sections 5.5, 5.7 and 5.19), are
true and correct as of such Borrowing Date or Conversion
Date except for changes in the Schedules hereto reflecting
transactions permitted by, and transactions not prohibited
by, this Agreement.
(c) All legal matters incident to the making of such
Loan shall be satisfactory to the relevant Lenders and their
counsel.
Each Borrowing Notice and Competitive Bid Borrowing Notice
with respect to each such Loan shall constitute a representation
and warranty by the Borrower that the conditions contained in
Section 4.2(a) and (b) have been satisfied.
SECTION IV.3. Conversion Date. The Conversion Date of
Facility B shall occur on the date as of which:
(a) the Expansion and Extension shall be completed
such that the Borrower has received written authorization
from the FERC or its representative, to commence service on
the Expansion and Extension and the Borrower shall have
complied in all material respects with the terms of the FERC
Certificate of Public Convenience and Necessity and the
Administrative Agent shall have received a certificate from
an appropriate officer of the Operator certifying that the
Borrower has received such written authorization;
(b) the new shipper contracts entered into by the
Borrower for substantially all of the Expansion and
Extension capacity shall be in full force and effect and the
Shippers' payment obligations thereunder have commenced by
Borrower notifying Shippers by at least one day's notice
that Borrower is capable of receiving and delivering gas
under such Shippers' contracts;
(c) the Borrower shall have received equity
contributions from its Partners equal to not less than 35%
of the total cost of the Expansion and Extension; and
(d) the matters in Section 4.2 have been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agents and the
Lenders that:
SECTION V.1. General Partnership Existence and Standing.
The Borrower is a general partnership duly formed, validly
existing and in good standing under the laws of the State of
Texas and has all requisite authority to own its assets and to
conduct its business in each jurisdiction in which its business
is conducted except where failure to have such authority would
not have a Material Adverse Effect. The Operator is a corporation
duly formed, validly existing and in good standing under the laws
of the State of Delaware and has all requisite authority to own
its assets and to conduct its business in each jurisdiction in
which its business is conducted except where failure to have such
authority would not have a Material Adverse Effect.
SECTION V.2. Authorization and Validity. The Borrower has
the partnership power and authority and legal right to execute
and deliver the Loan Documents and to perform its obligations
thereunder. The execution and delivery by the Borrower of the
Loan Documents and the performance of its obligations thereunder
have been duly authorized by proper partnership proceedings, and
the Loan Documents constitute legal, valid and binding
obligations of the Borrower enforceable against the Borrower in
accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and except that the
enforceability of obligations under agreements is subject to
general principles of equity (regardless of whether such
enforceability is considered at law or in equity).
SECTION V.3. No Conflict; Government Consent. Neither the
execution and delivery by the Borrower of the Loan Documents, nor
the consummation of the transactions therein contemplated, nor
compliance with the provisions thereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or
award binding on the Borrower or the provisions of any indenture,
instrument or agreement to which the Borrower is a party or is
subject, or by which it, or its Property, is bound, or conflict
with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the Property of
the Borrower pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or
registration with, or exemption by, any governmental or public
body or authority, or any subdivision thereof, which could have a
Material Adverse Effect or result in liability to the Lenders if
not obtained, is required to authorize, or is required in
connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, any
of the Loan Documents.
SECTION V.4. Financial Statements. The December 31, 1996
consolidated financial statements of the Borrower heretofore
delivered to the Lenders were prepared in accordance with GAAP in
effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of
the Borrower at such date and the results of its operations for
the period then ended.
SECTION V.5. Material Adverse Change. No material adverse
change in the business, properties, financial condition, or
operations of the Borrower has occurred since the date of the
financial statements referred to in Section 5.4.
SECTION V.6. Taxes. The Borrower has filed all tax
returns which are required to be filed and has paid all taxes and
assessments due pursuant to said returns or pursuant to any
assessment received by the Borrower, except such taxes, if any,
as are being contested in good faith and as to which adequate
reserves have been provided or which if not timely paid could not
reasonably be expected to have a Material Adverse Effect or
result in liability to the Lenders. No tax liens have been filed
and no claims are being asserted with respect to any such taxes.
The charges, accruals and reserves on the books of the Borrower
in respect of any taxes or other governmental charges are
adequate in all material respects.
SECTION V.7. Litigation and Contingent Obligations.
Except as set forth on Schedule "2" hereto, there is no
litigation, arbitration, governmental investigation, proceeding
or inquiry pending or, to the knowledge of any of the Authorized
Officers, threatened against or affecting the Borrower or any of
its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect. Other than any liability incident to
such litigation, arbitration or proceedings, the Borrower has no
material contingent obligations not provided for or disclosed in
the financial statements referred to in Section 5.4.
SECTION V.8. Subsidiaries. At the Closing Date, the
Borrower has no Subsidiaries.
SECTION V.9. ERISA. The Borrower has no ERISA Plans.
SECTION V.10. Accuracy of Information. All factual
information (taken as a whole) heretofore or contemporaneously
furnished by the Borrower in writing to any Lender for purposes
of or in connection with this Agreement or any transaction
contemplated herein was true and accurate in all material
respects on the date as of which such information was dated or
certified and is not incomplete by omitting to state any fact
necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which
such information was provided.
SECTION V.11. Representation with Respect to Regulations G,
T, U and X. No part of the proceeds of the Borrowings will be
used to purchase or carry margin stock (as defined in
Regulations G, T, U and X) in violation of Regulation G, T, U or
X, nor will the execution, performance or delivery by the
Borrower of the Notes or the Loan Documents, nor the application
of the proceeds of the Borrowings in accordance herewith, violate
Regulation G, T, U or X. The Borrower is not engaged
principally, nor is one of its important activities in the
business of extending credit for the purpose of buying or
carrying margin stock, and both before and after giving effect to
all of the transactions contemplated herein, less than 25% of the
assets of the Borrower consists of margin stock.
SECTION V.12. Compliance With Laws, Approvals, etc. The
Borrower is in compliance with its Tariff, and with all
applicable statutes, rules, regulations, orders and restrictions
(including Environmental Laws), and has obtained all necessary
permits, authorizations and approvals, of any domestic or foreign
government or any instrumentality or agency thereof, having
jurisdiction over the conduct of its businesses or the ownership
of its respective Property other than those for which application
has been made or will be made and which are reasonably expected
to be received in the ordinary course of business, except where
the failure to so comply or to have so obtained would not singly
or in the aggregate have a Material Adverse Effect.
SECTION V.13. Environmental Matters. The Borrower is not
subject to any liability or obligation for remedial action under
any Environmental Laws which could reasonably be expected to have
a Material Adverse Effect. There is no pending or, to the best
of the Borrower's knowledge, threatened investigation or inquiry
of the Borrower or any of its Properties (i) pertaining to any
violation of any Environmental Law relating to Hazardous
Materials, or (ii) which could reasonably be expected to result
in any requirement that the Borrower conduct any clean-up or
remediation activities with respect to any Hazardous Materials
which could reasonably be expected to have a Material Adverse
Effect. There are no Hazardous Materials located on or under any
of the properties of the Borrower (other than petroleum products
which are located thereon in the ordinary course of business and
in a manner which does not constitute a violation of applicable
Environmental Law) which could reasonably be expected to have a
Material Adverse Effect. The Borrower has not caused or
permitted any Hazardous Material to be disposed of on or under or
released from any of its Properties which disposal or release
could reasonably be expected to have a Material Adverse Effect.
The Borrower has no knowledge of any violation of any
Environmental Law by any previous owner of any of its Properties
that could reasonably be expected to have a Material Adverse
Effect.
SECTION V.14. Ownership of Properties; Liens. Except as
shown in Schedule 5.14, the Borrower has good and marketable
title to all Properties purported to be owned by it (other than
easements, with respect to which the Borrower has sufficient
title to permit the Borrower to operate the Pipeline), as
reflected in the most recent balance sheet of the Borrower
delivered pursuant hereto, or purported to have been acquired by
the Borrower after said date (except as sold or otherwise
disposed of in the ordinary course of business), in all cases
free and clear of Liens not permitted by Section 6.2.7 hereof.
The Borrower enjoys peaceful and undisturbed possession under all
leases of real property upon which facilities operated by it are
situated, and all such leases are valid and subsisting and in
full force and effect and neither the Borrower nor, to the
knowledge of the Borrower, any of the respective other parties
thereto is in default in any material respect under any such
lease.
SECTION V.15. Investment Company Act. Neither the Borrower
nor any Subsidiary thereof is an "investment company" or a
company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
SECTION V.16. Public Utility Holding Company Act. The
Borrower is not subject to or is exempt from regulation as, a
"holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended
("PUHCA").
SECTION V.17. Insurance. As of the Closing Date, the
certificate provided pursuant to Section 4.1(g) and signed by an
Authorized Representative of the Borrower, that attests to the
existence and adequacy of, and summarizes, the property and
casualty insurance program carried by the Borrower and that has
been furnished by the Borrower to the Administrative Agent and
the Lenders, is complete and accurate in all material respects.
SECTION V.18. Default. No Default or Event of Default has
occurred and is continuing.
SECTION V.19. Service Agreements and Support Agreements.
The Service Agreements (other than T-1R Service Agreements) and
precedent agreements identified on Schedule "1-a" and Schedule "1-
b" and the Support Agreements identified on Schedule "5" hereto
comprise all of the Service Agreements and precedent agreements
and Support Agreements in effect as of the date of this
Agreement, and, subject to the express terms thereof, each of
said Service Agreements, is valid for the term and the total
maximum receipt quantity set forth on such Schedule; and each of
such Service Agreements, assuming due authorization, execution
and delivery by the respective Shipper party thereto, is the
legal, valid and binding obligation of such Shipper party
thereto, enforceable against such Shipper in accordance with its
respective terms, except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws relating to or
affecting the enforcement of creditors' rights generally and
except that the enforceability of obligations thereunder is
subject to general principles of equity (regardless whether such
enforceability is considered in a proceeding in equity or at
law).
SECTION V.20. Partnership Agreement. The Partnership
Agreement and the Operating Agreement are in full force and
effect.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Majority
Lenders shall otherwise consent in writing:
SECTION VI.1. Affirmative Covenants.
SECTION VI.1.1 Financial Reporting. The Borrower will
furnish to the Lenders:
(a) As soon as available, and in any event within
sixty (60) days after the end of each of the first three
quarterly periods of each of its fiscal years, a balance
sheet of the Borrower as of the end of such quarter, and
statements of income, cash flows and changes in partners'
capital of the Borrower for a period commencing at the end
of the previous fiscal year and ending with the end of such
quarter.
(b) As soon as available and in any event within 120
days after the close of each of its fiscal years, an audit
report certified by independent certified public
accountants, acceptable to the Administrative Agent,
together with a balance sheet of the Borrower as of the end
of such fiscal year, and statements of income, cash flows
and changes in partners' capital of the Borrower for each
fiscal year prepared in accordance with GAAP on a
consolidated basis for the Borrower.
(c) Together with the financial statements required
hereunder, a compliance certificate in substantially the
form of Exhibit "C" hereto signed by an Authorized Officer
(a "Compliance Certificate") certifying that the financial
statements fairly present the Borrower's financial condition
and results of operations and showing the calculations
necessary to determine compliance with this Agreement and
stating that no Default or Event of Default exists, or if
any Default or Event of Default exists, stating the nature
and status thereof.
(d) Promptly after becoming aware thereof, written
notice of any litigation which could reasonably be expected
to result in a judgment against the Borrower in excess of
$25,000,000, net of insurance coverage which is reasonably
expected to be paid by the insurer, or other event or
condition which could reasonably be expected to have a
Material Adverse Effect.
(e) Within 10 days after the distribution or filing
thereof, copies (excluding exhibits, which will be provided
on request) of all financial information the Borrower makes
generally available to its security holders (other than to
the Partners in their capacity as such) and copies of all
annual and quarterly reports of the Borrower which the
Borrower files with the Securities and Exchange Commission
and all annual financial reports which the Borrower files
with FERC or the Department of Energy.
(f) Within 10 Business Days after an executive officer
of the Borrower or the Operator becomes aware of the
occurrence of any Event of Default or Default, a written
statement of an executive officer of the Borrower or the
Operator which sets forth, so far as is known to such
officer, the relevant details of such Event of Default or
Default and the action which the Borrower has taken or
proposes to take with respect thereto.
(g) Within 10 Business Days after the commencement
thereof or after an executive officer of the Borrower or the
Operator becomes aware that the Borrower has been made a
party thereto, whichever occurs later, notice of all
actions, suits or proceedings before any court or
governmental authority or regulatory body or arbitrator to
which the Borrower is a party and which, in the good-faith
opinion of the Operator, presents a reasonable possibility
of having a Material Adverse Effect.
(h) Within 10 Business Days after an executive officer
of the Borrower or the Operator becomes aware of the
occurrence of any material default under any Service
Agreement (other than a T-1R Service Agreement) with a
Shipper or any action or inaction by itself or any Shipper
which but for the lapse of time or the giving of notice or
both would become a material default under its Service
Agreement which could reasonably be expected to have a
Material Adverse Effect, a written statement of an executive
officer of the Borrower or the Operator which sets forth, so
far as is known to such officer, the relevant details of
such default, action or inaction and any action the Borrower
or the Shipper has taken or proposes to take with respect
thereto.
(i) Such other information respecting the condition or
operations, financial or otherwise, of the Borrower as any
Lender or Agent through the Administrative Agent may from
time to time reasonably request.
SECTION VI.1.2 Use of Proceeds. The Borrower will use the
proceeds of the Facility A Advances to provide (i) funds to
refinance certain existing indebtedness of the Borrower and (ii)
funds for general business purposes; provided that the Borrower
will not use any proceeds to fund an Acquisition not approved by
the board of directors or other governing body of the target or
selling company. The Borrower will use the proceeds of the
Facility B Advances to provide funds to finance the construction
of the Expansion and Extension and expenses incurred in
connection therewith.
SECTION VI.1.3 [INTENTIONALLY OMITTED]
SECTION VI.1.4 Taxes and Other Charges. The Borrower will
pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or Property, as well as all
lawful claims for labor, materials, and supplies, which, if
unpaid could become a Lien or charge on such Property, or any
part thereof, except, with regard to any of the foregoing, which
are being contested in good faith by appropriate proceedings
diligently pursued and with respect to which adequate reserves
have been set aside or which, if not paid, could not reasonably
be expected to have a Material Adverse Effect.
SECTION VI.1.5 Insurance. The Borrower will maintain with
financially sound and reputable insurance companies insurance on
its Property in such amounts and covering such risks as is
consistent with prudent industry practice, and the Borrower will
furnish to any Lender upon reasonable request full information as
to the insurance carried, including, without limitation,
certificates of insurers, brokers and agents, as to such
insurance.
SECTION VI.1.6 Compliance with Laws. The Borrower will
comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be
subject, including, without limitation, all Environmental Laws,
and obtain, keep, and comply with, all necessary permits,
approvals, certificates and licenses in effect and remain in
compliance therewith, except in any such case where the failure
to do so could not reasonably be expected to have a Material
Adverse Effect.
SECTION VI.1.7 Maintenance of Properties. The Borrower will
maintain, preserve, protect and keep its Pipeline in good repair,
working order and condition in accordance with prudent industry
practices, and make all necessary and proper repairs, renewals
and replacements so that its business is carried on in accordance
with prudent industry practices, ordinary wear and tear excepted,
subject to acts of God, strikes, lockouts, or other industrial
disturbances, acts of public enemy, wars, blockades,
insurrections, riots, epidemics, lightning, earthquakes, fires,
storms, floods, washouts, arrests and restraints of governments
and people, civil disturbances, explosions, blowouts, cratering,
breakage or accident to machinery or lines of pipe, shortages
and/or governmentally imposed allocations of pipe or other
facilities, materials and equipment and any other causes, whether
of the kind herein enumerated or otherwise, not reasonably within
the control of the Borrower or which by the exercise of due
diligence, the Borrower is unable to overcome. The Borrower
shall not be required to settle strikes, lockouts, embargoes or
boycotts, or disputes with governmental authorities, by acceding
to the demands of the opposing party, or any such authority, when
such course is inadvisable in the discretion of the Borrower.
SECTION VI.1.8 Inspection. The Borrower will permit the
Agents and the Lenders, by their respective representatives and
agents, to visit and inspect any of the Property, partnership
books and financial records of the Borrower, to audit and examine
and make copies of the books of accounts and other financial
records (and after the occurrence and during the continuance of a
Default, other records) of the Borrower, and to discuss the
affairs, finances and accounts of the Borrower with, and to be
advised as to the same by, their respective officers upon
reasonable advance notice, and at such reasonable times (during
normal business hours) and intervals as the Agents and the
Lenders may designate; provided, however, that during such time
as no Default or Event of Default has occurred and is continuing,
visits, inspections and audits by the Agents and the Lenders
shall be conducted at their own risk, cost and expense and on the
same date and not more often than once during any calendar
quarter, unless otherwise agreed by the Borrower.
SECTION VI.1.9 Maintenance of Books and Records. The
Borrower will maintain proper books of record and account in
which the Borrower will make full, true, and correct entries, in
accordance with Required Accounting Principles, of all dealings
and transactions pursuant to any law or Required Accounting
Principles with respect to which the Borrower is required to
maintain written records in relation to its business and
activities.
SECTION VI.1.10 Pari Passu Status. The Borrower will
ensure that the claims and rights of the Lenders against it under
this Agreement will not be subordinate to, and will rank at all
times at least pari passu with, all other Indebtedness including
the Borrower's Senior Notes. The Borrower will not amend, modify
or supplement any Note Purchase Agreements or the Senior Notes in
any manner which would make them materially more onerous to the
Borrower than the provisions of this Agreement and the Notes as
in effect from time to time.
SECTION VI.1.11 Tariff. The Borrower will use its best
efforts to cause the Borrower's Tariff to remain effective at all
times.
SECTION VI.1.12 Preservation of Rights, Etc. Subject to
the provisions of Section 14 of the Partnership Agreement, the
Borrower will use its best efforts to maintain such
authorizations as may be required to enable it to do business as
a general partnership wherever the nature of its Property or of
its activities requires such authorizations and to preserve and
maintain its rights, franchises, leases, licenses and privileges
in all jurisdictions where necessary in light of its business or
Properties (except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect).
SECTION VI.1.13 Service Agreements and Support
Agreements. The Borrower will use its best efforts to maintain
each Service Agreement and Support Agreement (other than the T-1R
Service Agreements and any Support Agreements related thereto) in
full force and effect during the stated term thereof, other than
pursuant to a termination through the exercise of a remedy
permitted therein, and other than Support Agreements modified or
terminated consistent with Section 6.1.14, provided, however,
that this Section 6.1.13 shall not prohibit the Borrower from
terminating a Service Agreement in whole or in part pursuant to
Section 27.1, and subject to Section 25, of the General Terms and
Conditions of Borrower's Tariff as a result of the Borrower's
entering into a new Service Agreement in accordance with Section
6.1.14 or amending an existing Service Agreement with a Shipper
or Shippers satisfying the requirements for (i) the amount of
volumes so terminated and (ii) the remaining term of such
terminated Service Agreement(s) or portion thereof.
SECTION VI.1.14 Shipper Credit Quality. The Borrower
will require all Shippers to meet the credit worthiness standards
of the Borrower's Tariff and the Borrower's historical credit
practices (except to the extent changes to such credit practices
are required as a result of any FERC proceeding) and, if
necessary, to provide credit enhancement consistent with
Borrower's Tariff and such credit practices.
SECTION VI.2. Negative Covenants.
SECTION VI.2.1 Limitation on Negative Pledges. The Borrower
will not agree to, create, assume, or permit to exist, any
Negative Pledge binding on it which covers any of its Property,
assets or revenues except pursuant to the Note Purchase
Agreements or agreements evidencing Indebtedness permitted
pursuant to Section 6.3.
SECTION VI.2.2 Limitation on Other Business. Neither the
Borrower nor any of its Subsidiaries will engage in any business
other than the operation of the Pipeline; the construction and
operation of additions, extensions and expansions related to the
Pipeline, including the Expansion and Extension; the ownership
and operation of any other pipelines; gas storage facilities and
related equipment and Property; and services related to the
transportation and marketing of natural gas.
SECTION VI.2.3 Merger; etc. The Borrower will not merge or
consolidate with or into any other Person, or sell, assign, lease
or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its business
and assets (whether now owned or hereafter acquired) to, any
Person, except pursuant to Section 14 or Section 15 of the
Partnership Agreement, provided in each case that the surviving
Person shall unconditionally assume, in writing, each and every
obligation of the Borrower under the Loan Documents to which the
Borrower is or becomes a party.
SECTION VI.2.4 Sale of Assets. The Borrower will not lease,
sell or otherwise dispose of its Property, to any other Person
except: (a) sales of inventory and other assets in the ordinary
course of business, (b) leases, sales or other dispositions of
its Property that, together with all other Property of the
Borrower previously leased, sold or disposed of (other than
Property otherwise permitted to be sold, leased, or otherwise
disposed of pursuant to this Section 6.2.4) during the
twelve-month period ending with the month in which any such
lease, sale or other disposition occurs, do not constitute a
substantial portion of the Property of the Borrower, (c) sales of
assets which are concurrently leased back, and (d) dispositions
of assets which are obsolete or no longer used or useful in the
business of the Borrower.
SECTION VI.2.5 Investments and Acquisitions. The Borrower
will not make any loan or advance to any Person, except for
advances in the ordinary course of business in the operations of
the Pipeline or in connection with the construction of the
Expansion and Extension, the construction of additional gas
compressor facilities on the Pipeline or the retrofitting of gas
compressor facilities existing on the Pipeline, or purchase or
otherwise acquire the capital stock, assets or obligations of or
any interest in any Person other than
(a) Short-term obligations of, or fully guaranteed by,
the United States of America;
(b) Commercial paper rated A-l or better by S&P or P-l
or better by Moody's Investors Service, Inc.;
(c) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of Five Hundred Million
Dollars ($500,000,000) or any Lender;
(d) Other Investments (not otherwise permitted
pursuant to this Section 6.2.5) in existence on the date
hereof and included in the financial statements provided
pursuant to Section 5.4 or in Schedule "4" hereto;
(e) Bonds, debentures, notes or other evidences of
indebtedness issued by any of the following agencies or such
other like governmental or governmental-sponsored agencies
which may be hereafter created: Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Financing Banks,
Federal Home Loan Bank System, Export-Import Bank of the
United States, Farmers Home Administration, Small Business
Administration, InterAmerican Development Bank,
International Bank for Reconstruction and Development,
Federal Land Banks, the Federal National Mortgage
Association, and the Government National Mortgage
Association, in each case if purchased by the Borrower from
a financial institution referred to in clause (c) above;
provided that such financial institution agrees to
repurchase such securities within 180 days from the purchase
by the Borrower;
(f) Repurchase agreements with any Agent or any
Lender, or any banks that are insured by the Federal Deposit
Insurance Corporation and having a capital and an unimpaired
surplus of at least Five Hundred Million Dollars
($500,000,000), and with members of the Association of
Primary Dealers in United States Government Securities, the
underlying securities of which are of the type described in
(a) or (e) above, and each of which is secured at all times
by obligations of the same type that have fair market value,
including accrued interest, at least equal to the amount of
such repurchase agreement, including accrued interest;
(g) Obligations of any state within the United States
of America, any nonprofit corporation or any instrumentality
of the foregoing, provided that at the time of their
purchase, such obligations are rated in one of the two
highest letter rating categories (e.g. in the case of S&P,
either its AAA or AA category) by a nationally recognized
securities credit rating agency;
(h) Obligations issued by political subdivisions or
municipalities of any state within the United States of
America, any nonprofit corporation or any instrumentality of
the foregoing, that are rated in one of the two highest
letter rating categories (e.g. in the case of S&P, either
its AAA or AA category) by a nationally recognized
securities credit rating agency;
(i) Eurodollar deposits with the overseas branch of
any Lender or any domestic bank having a capital and surplus
of at least Five Hundred Million Dollars ($500,000,000);
(j) Participations having a term of no more than 90
days with (i) any Lender or (ii) any financial institution,
the unsecured debt of which is rated in one of the two
highest letter rating categories (e.g. in the case of S&P,
either its AAA or AA category) by a nationally recognized
securities credit rating agency, in loans made or owned by
such Lender or other financial institution to Persons which
have open market commercial paper rated in either of the two
highest short-term rating categories by a nationally
recognized securities credit rating agency;
(k) Purchases or other acquisitions of the capital
stock, assets or obligations of, or any interest in, any
other Person not in excess in the aggregate for all such
purchases and acquisitions of 5% of Partners' Capital; or
(l) Acquisitions, provided that after giving effect to
such Acquisition, no Event of Default shall have occurred
and be continuing or will result therefrom, and upon the
effectiveness of the Acquisition the Borrower will remain in
compliance with this Agreement.
SECTION VI.2.6 Guaranty. The Borrower will not make or
suffer to exist any Guaranty, except endorsement of instruments
for deposit or collection in the ordinary course of business.
SECTION VI.2.7 Liens. The Borrower will not create, incur,
or suffer to exist any Lien in, of or on the Property of the
Borrower, except: (a) utility easements, building restrictions
and such other encumbrances or charges against real property as
are of a nature generally existing with respect to properties of
a similar character and which do not materially affect the
marketability of the same or interfere with the use thereof in
the business of the Borrower; (b) Liens existing on the date
hereof (not otherwise permitted pursuant to this Section 6.2.7)
and described in Schedule "3" hereto; (c) Permitted Liens; (d)
Liens created by (i) Capitalized Leases permitted by the terms
hereof provided that the Liens created by any such Capitalized
Lease attach only to the Property leased to the Borrower pursuant
thereto, and (ii) purchase money Liens securing Indebtedness
(including such Liens securing Indebtedness incurred within 12
months of the date on which such Property was acquired) provided
that all such Liens attach only to the Property purchased with
the proceeds of the Indebtedness secured thereby; (e) Liens on
Property of a Person which exist at the time such Person becomes
a Subsidiary of the Borrower which Liens were not granted in
contemplation of such Person becoming a Subsidiary of the
Borrower; (f) any Liens securing Indebtedness, neither assumed
nor guaranteed by the Borrower nor on which it customarily pays
interest, existing upon real estate or rights in or relating to
real estate acquired by the Borrower for substation, metering
station, gathering line, transmission line, transportation line,
distribution line or right of way purposes, and any Liens
reserved in leases for rent and for compliance with the terms of
the leases in the case of leasehold estates, to the extent that
any such Lien referred to in this clause (f) does not materially
impair the use of the property covered by such Lien for the
purposes for which such property is held by the Borrower; and (g)
extensions, renewals or replacements of any Lien referred to in
Sections 6.2.7(a) through (f), provided that the principal amount
of the Indebtedness or obligation secured thereby is not
increased and that any such extension, renewal or replacement
Lien is limited to the Property originally encumbered thereby.
SECTION VI.2.8 Affiliates. The Borrower will not enter into
any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or
transfer to, any Affiliate (other than the Borrower and other
than distributions to partners of the Borrower) except upon terms
not materially less favorable to the Borrower than the Borrower
would obtain in a comparable arms-length transaction.
SECTION VI.2.9 Judgments. The Borrower will not allow any
final judgment for the payment of money in excess of Twenty-Five
Million Dollars ($25,000,000) with respect to the Borrower
rendered against the Borrower to remain undischarged or unbonded
for a period of thirty (30) days during which such execution
shall not be effectively stayed or deferred.
SECTION VI.2.10 ERISA. Neither the Borrower nor any
ERISA Affiliate shall maintain or contribute to any Plan without
obtaining the prior written consent of the Majority Banks, which
consent shall not be unreasonably withheld.
SECTION VI.3. Ratio of Debt. The Borrower will not permit
its ratio of Indebtedness to the sum of Partners' Capital
(determined in accordance with GAAP) plus Indebtedness to exceed
.65:1.0 on a consolidated basis.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events
shall constitute an Event of Default:
SECTION VII.1. False Representation or Warranty. Any
representation or warranty made or deemed made by or on behalf of
the Borrower to the Lenders or any Agent under or in connection
with this Agreement or any Loan, or any other Loan Document
(excluding any certificate or information) shall be false as of
the date on which made, or any certificate or information
delivered in connection with this Agreement shall be false in any
material respect as of the date on which made.
SECTION VII.2. Nonpayment of Principal. Nonpayment of
interest upon any Note or of any Facility Fee or other
obligations under any of the Loan Documents within five days
after the same becomes due or nonpayment of principal of any Note
when due.
SECTION VII.3. Breach of Other Terms. The breach by the
Borrower (other than a breach which constitutes a Default under
Section 7.1 or 7.2) of any of the terms or provisions of this
Agreement or any other Loan Document which is not remedied within
thirty days after an executive officer of the Borrower or the
Operator becomes aware thereof.
SECTION VII.4. Indebtedness. Failure of the Borrower to pay
any Indebtedness in excess in the aggregate of $10,000,000 when
due; or the default by the Borrower in the performance of any
term, provision or condition contained in any agreement under
which any Indebtedness in excess in the aggregate of $10,000,000
was created or is governed, the effect of which is to cause, or
to permit the holder or holders of such Indebtedness to cause,
such Indebtedness to become due prior to its stated maturity; or
any Indebtedness in excess in the aggregate of $10,000,000 shall
be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated
maturity thereof; provided that upon payment in full of the
Senior Notes, the foregoing $10,000,000 amounts shall
automatically without further action increase to the lesser of
(i) $25,000,000 in aggregate or (ii) the lowest cross-default or
cross-acceleration threshold in any agreement under which
Indebtedness of the Borrower is created or governed.
SECTION VII.5. Bankruptcy. The Borrower or any Subsidiary
shall (a) have an order for relief entered with respect to it
under the Federal bankruptcy laws as now or hereafter in effect,
(b) not pay, or admit in writing its inability to pay, its debts
generally as they become due, (c) make an assignment for the
benefit of creditors, (d) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any
substantial part of its property, (e) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws or
seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed
against it, (f) take any partnership or corporate action to
authorize or effect any of the foregoing actions set forth in
this Section 7.5 or (g) fail to contest in good faith any
appointment or proceeding described in Section 7.6.
SECTION VII.6. Appointment of Receiver. Without the
application, approval or consent of the Borrower, a receiver,
trustee, examiner, liquidator or similar official shall be
appointed for the Borrower or any Subsidiary or any substantial
part of its property, or a proceeding described in Section 7.5(e)
shall be instituted against the Borrower or any Subsidiary and
such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive
days.
SECTION VII.7. Condemnation. Any court, government or
governmental agency shall condemn, seize or otherwise
appropriate, or take custody or control of all or any of the
Property of the Borrower if such action could reasonably be
expected to have a Material Adverse Effect.
SECTION VII.8. Judgment. Any judgment or order for the
payment of money in an aggregate amount greater than the sum of
(i) the amount of any insurance receivable by the Borrower in
respect of such judgments for which the applicable insurer has
not denied liability and (ii) either (A) the amount set forth in
the judgment default provisions of the Senior Notes (as of the
date of this Agreement $10,000,000) as they may be amended or in
effect from time to time, but in no event in excess of the lesser
of (i) $25,000,000 in aggregate or (ii) the lowest judgment
threshold in any agreement under which Indebtedness of the
Borrower is created or governed, or (B), if the Senior Notes have
been paid in full, the lesser of (i) $25,000,000 in aggregate or
(ii) the lowest judgment threshold in any agreement under which
Indebtedness of the Borrower is created or governed, shall be
rendered against the Borrower or any Subsidiary by a court of
competent jurisdiction and such judgment or order shall not be
satisfied in accordance with its terms and shall continue
unstayed and in effect for 30 days.
SECTION VII.9. Action to Change Tariff. The Borrower or any
Partner or any parent company thereof shall seek, or shall
directly or indirectly cause any Person to seek, in any
proceeding before the FERC or any other administrative or legal
authority in the United States or Canada to rescind or terminate
or to have repealed or declared invalid the Tariff, or to
suspend, amend or modify the Tariff in any respect which may
reasonably be expected to have a material adverse effect on the
Borrower's ability to perform its obligations under the Loan
Documents; provided, however, that no Event of Default shall
occur under this Section 7.9 solely by reason of the taking of
any action required to be taken by any such Person to satisfy the
requirements of any order of any court or regulatory authority
having jurisdiction.
SECTION VII.10. Regulatory Action to Change Tariff. Any
of the following events shall occur and could reasonably be
expected to have a material adverse effect on the Borrower's
ability to perform its obligations under the Loan Documents: (a)
the Tariff shall be effectively rescinded, terminated, disavowed,
repealed, declared invalid, suspended, amended or modified, or
the FERC shall order any such rescission, termination,
suspension, amendment or modification (and such order shall be
unstayed and in effect); or (b) any government approval at any
time required to be obtained or effected to enable the Borrower
or any Shipper to perform a material monetary obligation under
any Service Agreement shall be effectively withheld, rescinded,
terminated, repealed, declared invalid, suspended, amended or
modified (and such decision shall be unstayed and in effect).
SECTION VII.11. Voting Interest. The aggregate voting
interest of the Borrower's management committee held by
subsidiaries of Enron Corp., PanEnergy Corp., TransCanada
PipeLines Limited and The Williams Companies (or their successors
by merger) falls below 60% prior to completion of the Expansion
and Extension without obtaining the prior consent of the Majority
Lenders.
SECTION VII.12. Partnership Agreement. Except for an
automatic termination thereof in accordance with its terms, the
Borrower's Partnership Agreement ceases to be in full force and
effect.
SECTION VII.13. Abandonment of the Project. The
Borrower abandons all or any material portion of the Expansion
and Extension at any time that any Advances are outstanding under
Facility B.
SECTION VII.14. Change in Operator. There is a change
in Operator of the Borrower without the prior consent of the
Majority Lenders.
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
SECTION VIII.1. Acceleration. If any Event of Default
described in Section 7.5 or 7.6 occurs, the obligations of the
Lenders to make Advances hereunder shall automatically terminate
and the Obligations shall immediately become due and payable
without any election or action on the part of any Agent or any
Lender. If any other Event of Default occurs, the Majority
Lenders may terminate or suspend the obligations of the Lenders
to make Loans hereunder, or declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which the Borrower hereby expressly
waives.
SECTION VIII.2. Amendments. Subject to the provisions
of this Article VIII, the Majority Lenders (or the Administrative
Agent with the consent in writing of the Majority Lenders) and
the Borrower may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or
the Borrower hereunder or waiving any Default or Event of Default
hereunder; provided, however, that no such supplemental agreement
shall, without the consent of all of the Lenders:
(a) Extend the maturity of any Note or reduce the
principal amount thereof, or reduce the rate or extend the
time of payment of interest thereon;
(b) Reduce the percentage specified in the definition
of Majority Lenders;
(c) Extend the Facility A Termination Date (except as
provided in Section 2.23) or the Facility B Termination
Date, or reduce the amount or extend the payment date for,
any payments required hereunder, or increase the amount of
the Commitment of any Lender hereunder, or change any term
or provision of this Agreement relating to the Conversion
Date or permit the Borrower to assign its rights under this
Agreement except as provided in Section 3.6; or
(d) Amend this Section 8.2.
No amendment of any provision of this Agreement relating to the
Administrative Agent shall be effective without the written
consent of the Administrative Agent.
SECTION VIII.3. Preservation of Rights. No delay or
omission of the Lenders or the Agents to exercise any right under
the Loan Documents shall impair such right or be construed to be
a waiver of any Default or Event of Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence
of a Default or Event of Default or the inability of the Borrower
to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no
waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section
8.2, and then only to the extent in such writing specifically set
forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative and all shall be available to the
Agents and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
SECTION IX.1. Survival of Representations. All
representations and warranties of the Borrower contained in this
Agreement and the other Loan Documents shall survive delivery of
the Notes and the making of the Loans herein contemplated.
SECTION IX.2. Governmental Regulation. Anything contained
in this Agreement to the contrary notwithstanding, no Lender
shall be obligated to extend credit to the Borrower in violation
of any limitation or prohibition provided by any applicable
statute or regulation.
SECTION IX.3. Taxes. Any taxes (excluding income taxes)
payable or ruled payable by Federal or state authority in respect
of the Loan Documents shall be paid by the Borrower, together
with interest and penalties, if any.
SECTION IX.4. Headings. Section headings in the Loan
Documents are for convenience of reference only, and shall not
govern the interpretation of any of the provisions of the Loan
Documents.
SECTION IX.5. Entire Agreement. The Loan Documents embody
the entire agreement and understanding among the Borrower, the
Agents and the Lenders and supersede all prior agreements and
understandings among the Borrower, the Agents and the Lenders
relating to the subject matter thereof.
SECTION IX.6. Several Obligations. The respective
obligations of the Lenders hereunder are several and not joint
and no Lender shall be the partner or agent of any other (except
to the extent to which the Administrative Agent is authorized to
act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any
of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person
other than the parties to this Agreement and their respective
successors and assigns.
SECTION IX.7. Expenses; Indemnification. The costs and
expenses of the syndication groups of the Administrative Agent
and the Joint Arrangers incurred in syndication will be for the
account of the Borrower whether or not the transactions herein
contemplated are consummated. The Administration Agent's costs
and expenses of preparation, negotiation, documentation,
administration, amendment and modification of this Agreement and
the other Loan Documents and the other documents referred to
herein and therein and any amendment, consent or waiver relating
thereto or hereto, will be for the account of the Borrower,
including reasonable expenses of and fees for attorneys for the
Administrative Agent and First Chicago Capital Markets, Inc. and
other advisors and professionals engaged by the Administrative
Agent as more fully described in the fee letter among the
Borrower, the Administrative Agent and First Chicago Capital
Markets, Inc. In addition, the Borrower shall pay the costs and
expenses of preserving any rights of the Agents, Arrangers or the
Lenders under, or enforcement of this Agreement and the other
Loan Documents and the other documents delivered hereunder and
thereunder, including, without limitation, costs and expenses
sustained by each Lender as a result of any failure by the
Borrower to perform or observe its obligations contained in any
of the Loan Documents, provided that the Borrower shall only be
liable hereunder for the counsel fees and expenses in this regard
of legal counsel selected by the Agents (and limited to one law
firm in the United States, one law firm in Canada, and one or
more correspondent law firms (including local and regulatory
counsel) as deemed appropriate by such United States law firm;
unless in the reasonable opinion of the Majority Lenders, a
conflict of interest exists between one or more of the Agents and
the Lenders and the other Agents, in which case Borrower shall be
liable for the counsel fees and expenses of one additional law
firm selected by the Majority Lenders). The Borrower agrees, to
the extent permitted by applicable law, to indemnify, exonerate
and hold the Administrative Agent, the Syndication Agents, the
Joint Arrangers and the Lenders and each of their officers,
directors, employees and agents (collectively the "Indemnitees"
and individually an "Indemnitee") free and harmless from and
against any and all actions, causes of action, suits, losses,
liabilities and damages, and expenses in connection therewith,
including without limitation reasonable counsel fees and
disbursements (collectively the "Indemnified Liabilities")
incurred by the Indemnitees or any of them as a result of, or
arising out of, or relating to any transaction financed or to be
financed in whole or in part directly or indirectly with proceeds
from the Advances or Loans, or the execution, delivery,
performance or enforcement of this Agreement or any Loan Document
by any of the Indemnitees, except for any such Indemnified
Liabilities arising on account of any Indemnitee's gross
negligence or willful misconduct and; provided that the Borrower
shall not be liable for any such obligations arising out of any
claim made by an Agent, a Joint Arranger or Lender against
another Agent, Joint Arranger or Lender. If and to the extent
the foregoing undertaking may be unenforceable for any reason,
the Borrower agrees to make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. The obligations of
the Borrower under this Section 9.7 shall survive payment of the
Notes.
SECTION IX.8. Numbers of Documents. All statements,
notices, closing documents, and requests hereunder shall be
furnished to the Administrative Agent with sufficient
counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
SECTION IX.9. Accounting. Except as provided to the
contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be
made in accordance with Required Accounting Principles.
SECTION IX.10. Severability of Provisions. Any provision in
any Loan Document that is held to be inoperative, unenforceable,
or invalid in any jurisdiction shall, as to that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
SECTION IX.11. Nonliability of Lender. The relationship
between the Borrower and the Lenders and the Agents shall be
solely that of borrower and lender. Neither the Administrative
Agent nor any other Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Administrative
Agent nor any other Agent nor any Lender undertakes any
responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's
business or operations.
SECTION IX.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER
THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION)
SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT
THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
SECTION IX.13. CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK
IN ANY ACTION OR PROCEEDINGS ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE BORROWER AGAINST ANY AGENT OR ANY
LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT
ONLY IN A COURT IN NEW YORK, NEW YORK.
SECTION IX.14. [INTENTIONALLY OMITTED.]
SECTION IX.15. Confidentiality. Each Lender agrees to hold
any confidential information which it may receive from the
Borrower pursuant to this Agreement in confidence, except for
disclosure to (i) other Lenders, (ii) legal counsel, accountants,
and other professional advisors to that Lender, (iii) regulatory
officials, (iv) as required by law, regulation, or legal process,
(v) in connection with any legal proceeding to which that Lender
is a party, and (v) in connection with an actual or proposed
sale, assignment, or other disposition or proposed disposition of
that Lender's interests hereunder.
SECTION IX.16. Limitation on Agent and Lender Liability.
The Borrower agrees that (i) neither any Agent nor any Lender
shall have any liability to the Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by the Borrower
in connection with, arising out of, or in any way related to, the
transactions contemplated and the relationship established by the
Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined by a judgment of a
court that is binding on such Agent, or such Lender, final and
not subject to review on appeal, that such losses were the result
of acts or omissions on the part of such Agent or such Lender, as
the case may be, constituting gross negligence, willful
misconduct or knowing violations of law and (ii) such Borrower
waives, releases and agrees not to sue upon any claim against any
Agent or any Lender (whether sounding in tort, contract or
otherwise) except a claim based upon gross negligence, willful
misconduct or knowing violations of law. Whether or not such
damages are related to a claim that is subject to the waiver
effected above and whether or not such waiver is effective,
neither any Agent nor any Lender shall have any liability with
respect to, and the Borrower hereby waives, releases and agrees
not to sue upon any claim for, any special, indirect or
consequential damages suffered by the Borrower in connection
with, arising out of, or in any way related to the transactions
contemplated or the relationship established by the Loan
Documents, or any act, omission or event occurring in connection
therewith, unless it is determined by a judgment of a court that
is binding on such Agent or such Lender, as the case may be,
final and not subject to review on appeal, that such damages were
the result of acts or omissions on the part of such Agent or such
Lender, as the case may be, constituting willful misconduct or
knowing violations of law.
SECTION IX.17. No Partners' Liability. The Lenders agree
for themselves and their respective successors and assigns,
including any subsequent holder of any Note, that any claim
against the Borrower which may arise under any Loan Document
shall be made only against and shall be limited to the assets of
the Borrower and that no judgment, order or execution entered in
any suit, action or proceeding, whether legal or equitable, on
this Agreement, such Note or any of the other Loan Documents
shall be obtained or enforced against any Partner or its assets
for the purpose of obtaining satisfaction and payment of such
Note, the Indebtedness evidenced thereby or any claims arising
thereunder or under this Agreement or any other Loan Document,
any right to proceed against the Partners individually or their
respective assets being hereby expressly waived, renounced and
remitted by the Lenders for themselves and their respective
successor and assigns. Nothing in this Section 9.17, however,
shall be construed so as to prevent the Agents, any Lender or any
other holder of any Note from commencing any action, suit or
proceeding with respect to or causing legal papers to be served
upon any Partner for the purpose of obtaining jurisdiction over
the Borrower.
ARTICLE X
THE ADMINISTRATIVE AGENT
SECTION X.1. Appointment and Authority of Administrative
Agent. In order to expedite the various transactions
contemplated by this Agreement, each Lender hereby designates and
appoints First Chicago to act as its agent hereunder, and
authorizes First Chicago to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the
Administrative Agent, as the case may be, by the terms of this
Agreement or any other Loan Document, together with such other
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement or any
other Loan Document, the Administrative Agent shall not have any
duties or responsibilities, except those expressly set forth
herein or therein, or any fiduciary relationship with any Lender
or Borrower, and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be
read into this Agreement or any other Loan Document or otherwise
exist against the Administrative Agent. At any time that no
Person or Persons are acting as agent hereunder, the Borrower is
authorized to deal directly with each Lender for all purposes
hereunder including, without limitation, the remittances of
amounts then required to be paid hereunder and, in respect to any
request or the like purportedly delivered by the Majority Lenders
to the Borrower. The Administrative Agent is hereby expressly
authorized as agent on behalf of the Lenders, without hereby
limiting any implied authority:
(a) To receive on behalf of each Lender any payment of
principal or interest on the Advances paid to the
Administrative Agent, and to promptly distribute to each
Lender its pro rata share of all payments so received;
(b) To receive all documents and items to be furnished
hereunder;
(c) To act as nominee for and on behalf of all of the
Lenders in and under this Agreement and the other Loan
Documents;
(d) To arrange for the means whereby the funds of the
Lenders are to be made available to the Borrower;
SECTION X.2. Capacity of the Agents. With respect to
their commitment to lend hereunder and the Loans made by them,
the Agents in their respective capacities as a Lender and not as
the Agents as the case may be, shall have the same rights and
powers hereunder as the other Lenders and may exercise the same
rights and power as though they were not Agents.
SECTION X.3. No Liability of the Administrative Agent and
Indemnity. Neither the Administrative Agent nor any other Agent
nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for
any action taken or omitted to be taken by it or them hereunder
or otherwise in connection with the Loan Documents (except for
its or such Person's own willful misconduct or gross negligence
in not performing a specific administrative duty hereunder), or
(ii) responsible in any manner to any Lender or any other Agent
for any recitals, statements, representations, or warranties made
by Borrower or any officer thereof contained in any Loan Document
or in any certificate, report, statement, or other document
referred to or provided for in, or received by the Administrative
Agent under or in connection with, any Loan Document or for the
value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Loan Document or for any failure of Borrower
to perform its obligations under any Loan Document. The
Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or
performance of any of the agreements or conditions contained in
any Loan Document, or to inspect the properties, books, or
records of Borrower. To the extent that such Agent is not
reimbursed or indemnified by the Borrower, each of the Lenders
will indemnify the Agents to the fullest extent permitted by
applicable Law pro rata based upon their respective Commitments
from and against any and all demands, liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind whatsoever which may at
any time be imposed on, incurred by, or asserted against any
Agent in any way relating to or arising out of this or any other
Loan Document, or any documents contemplated by or referred to
herein, or therein, or the transactions contemplated hereby, or
thereby, or any action taken or omitted by any Agent under or in
connection with any of the foregoing, including resulting from
such Agent's own negligence (and including, without limitation,
any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements
resulting from any violations or alleged violation of applicable
federal or state securities laws, committed by any Person other
than such Agent) but not gross negligence or willful misconduct.
The agreements in this Section 10.3. shall survive the
termination of this Agreement.
SECTION X.4. Employees of Administrative Agent. The
Administrative Agent may execute any and all duties hereunder by
or through agents or employees and shall be entitled to advice of
counsel pertaining to all matters hereunder. The Borrower has
agreed to reimburse the Administrative Agent for actual out-of-
pocket expenses incurred by the Administrative Agent and its
agents in acting under this Agreement and each other Loan
Document and to pay any reasonable legal and out-of-pocket
expenses incurred by the Administrative Agent in connection with
the development, preparation, negotiation, and execution of the
Loan Documents. Each Lender agrees to reimburse the
Administrative Agent when applicable, in the amount of its pro
rata share based upon its Commitment of any out-of-pocket
expenses incurred for the benefit of the Lenders and not
reimbursed by the Borrower.
SECTION X.5. Reliance. The Administrative Agent shall be
entitled to rely on any conversation, notice, consent,
certificate, schedule, affidavit, letter, telegram, teletype
message, statement, order, or other document believed to be
genuine and correct and to have been signed or sent by the proper
Person or Persons and, in respect of legal matters, upon an
opinion of counsel selected by the Administrative Agent.
SECTION X.6. Several Commitments. Except as expressly
provided in this Section 10.6, the obligations of the Lenders
under this Agreement are several. The default by any Lender in
making a Loan in accordance with its commitment hereunder shall
not relieve the other Lenders of their obligations hereunder. In
the event of any default by any Lender in advancing its pro rata
share of any Advance, a non-defaulting Lender shall be obligated
to advance its pro-rata share of such Advance but shall not be
obligated to advance the amount which the defaulting Lender was
required to advance hereunder. Nothing in this Section 10.6
shall be construed as releasing, modifying, or waiving the
obligation of each Lender to forward or deposit its pro rata
share of any Advance pursuant to the terms of this Section 10.6
and this Agreement.
SECTION X.7. Notice of Default. No Agent shall be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default unless such Agent has received notice from a
Lender or Borrower referring to this Agreement or other relevant
Loan Document, describing such Default or Event of Default and
stating that such notice is a "notice of default."
Notwithstanding the provisions of the immediately preceding
sentence, in the event that any Agent or any Lender knows of any
Default or Event of Default such Person shall, as soon as
practicable, give notice of same to each other Lender. In the
event that the Administrative Agent receives such a notice, the
Administrative Agent shall give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that, unless and until the
Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action (unless
directions from the Majority Lenders are required therefore under
Article VIII), with respect to such Default or Event of Default
as it shall deem advisable in the best interests of the Lenders.
SECTION X.8. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
any Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other
Loan Documents. Each Lender also acknowledges that it will,
independently and without reliance upon any Agent or any other
Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and
the other Loan Documents.
SECTION X.9. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation
to be effective upon the appointment of a successor
Administrative Agent or, if no successor Administrative Agent has
been appointed, forty-five days after the retiring Administrative
Agent gives notice of its intention to resign. Upon any such
resignation, the Majority Lenders shall have the right to appoint
with the consent of the Borrower which such consent shall not be
unreasonably withheld or delayed, on behalf of the Lenders, a
successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Majority Lenders within
thirty days after the resigning Administrative Agent's giving
notice of its intention to resign, then the resigning
Administrative Agent may appoint with the consent of the Borrower
which such consent shall not be unreasonably withheld or delayed,
on behalf of the Borrower and the Lenders, a successor
Administrative Agent. If the Administrative Agent has resigned
and no successor Administrative Agent has been appointed, the
Lenders may perform all the duties of the Administrative Agent
hereunder and the Borrower shall make all payments in respect of
the Obligations to the applicable Lender and for all other
purposes shall deal directly with the Lenders. No successor
Administrative Agent shall be deemed to be appointed hereunder
until such successor Administrative Agent has accepted the
appointment. Any such successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least
$500,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Administrative Agent.
Upon the effectiveness of the resignation of the Administrative
Agent, the resigning Administrative Agent shall be discharged
from its duties and obligations hereunder and under the Loan
Documents. After the effectiveness of the resignation of an
Administrative Agent, the provisions of this Article X shall
continue in effect for the benefit of such Administrative Agent
in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent hereunder and
under the other Loan Documents.
SECTION X.10. Syndication Agents; Joint Arrangers. None of
the Syndication Agents shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than
those applicable to Lenders as Lenders. The Joint Arrangers
shall not have any obligations, liabilities, responsibilities or
duties under this Agreement or the other Loan Documents. Without
limiting the foregoing, none of the Syndication Agents, nor the
Joint Arrangers, shall have or be deemed to have any fiduciary
relationship with any Lender or any other Agent or Joint
Arranger.
ARTCILE XI
SETOFF; RATABLE PAYMENTS
SECTION XI.1. Setoff. In addition to, and without
limitation of, any rights of the Lenders under applicable law, if
the Borrower becomes insolvent, however evidenced, or (i) any
Event of Default described in Section 7.5 or 7.6 occurs or
(ii) any other Event of Default occurs and the Majority Lenders
agree to terminate the obligations of the Lenders to make Loans
hereunder or declare the Obligations to be due and payable, or
both, then any indebtedness from any Lender to the Borrower
(including all account balances, whether provisional or final and
whether or not collected or available) may be offset and applied
toward the payment of the Obligations owing to such Lender,
without presentment, demand, protest or notice of any kind, all
of which the Borrower hereby expressly waives whether or not the
Obligations, or any part thereof, shall then be due.
SECTION XI.2. Ratable Payments. If any Lender, whether by
setoff or otherwise, has payment made to it upon its Loans in a
greater proportion than that received by any other Lender (other
than in respect of Competitive Bid Advances or any Swing Loan),
such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loans.
If any Lender, whether in connection with setoff or amounts which
might be subject to setoff or otherwise, receives collateral or
other protection for its Obligations or such amounts which may be
subject to set off, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans.
In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION XII.1. Successors and Assigns. The terms and
provisions of the Loan Documents shall be binding upon and inure
to the benefit of the Borrower and the Lenders and their
respective successors and assigns, except that the Borrower shall
not have the right to assign its rights under the Loan Documents
and any assignment by any Lender must be made in compliance with
Section 12.3. The Administrative Agent may treat the payee of
any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof
shall have been filed with the Administrative Agent, and any
assignee or transferee of a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the Loan Documents.
Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the
holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any
Note or Notes issued in exchange therefor.
SECTION XII.2. Participations.
SECTION XII.2.1 Permitted Participants; Effect. Any
Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell
to one or more Lenders or other entities ("Participants")
participating interests in any Loan owing to such Lender, any
Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender under the Loan Documents, provided
that Participants shall have no voting rights except with respect
to amendments which (i) forgive principal of, or interest on, any
loan, (ii) postpone any date fixed for the payment of principal
of, or interest on, any loan, or (iii) decrease the rates at
which interest or fees are payable (in each case, other than as
expressly provided in the Loan Documents). In the event of any
such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such
Note for all purposes under the Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under the Loan Documents.
SECTION XII.2.2 Voting Rights. Each Lender shall retain
the sole right to approve, without the consent of any
Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan in which such
Participant has an interest which (i) forgives principal of, or
interest on, any loan, or (ii) postpones any date fixed for the
payment of principal of, or interest on, any loan, or
(iii) decreases the rates at which interest or fees are payable
in each case, other than as expressly provided in the Loan
Documents.
SECTION XII.2.3 Benefit of Setoff and Indemnities.
The Borrower agrees that each Participant shall be deemed to have
the right of setoff provided in Section 11.1 in respect of its
participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff
provided in Section 11.1 with respect to the amount of
participating interests sold to each Participant, except to the
extent such Participant has exercised its right of setoff. The
Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in
Section 11.1, each agrees to share with the Lenders, any amount
received pursuant to the exercise of its right of setoff, in
accordance with Section 11.2 as if each Participant was a Lender.
The Borrower also agrees that each Participant shall be entitled
to the benefits of Sections 3.1 and 3.3 with respect to its
participation in the Facility A Aggregate Commitments and the
Facility B Aggregate Commitments outstanding from time to time;
provided, that no Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor
Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
SECTION XII.3. Assignments.
SECTION XII.3.1 Permitted Assignments. Any Lender
may, in the ordinary course of its commercial banking business,
in accordance with applicable law at any time assign to one or
more Lenders or other entities ("Purchasers") all or any part of
its rights and obligations under the Loan Documents and the
Borrower shall release the assignor Lender for the amount so
assigned, provided that each such assignment shall be in an
amount not less than the lesser of (a) all of the assigning
Lender's interest and (b) $10,000,000. Notwithstanding the
foregoing, no such assignments or participations are permitted
unless a pro rata portion of both the Facility A Commitment and
Facility B Commitment are so assigned or participated. Each
Lender may disclose information to prospective participants and
assignees, provided such prospective participants and assignees
agree to maintain the confidentiality of such information.
Unless a Default has occurred and is continuing, the consent of
the Borrower and the Administrative Agent shall be required prior
to an assignment becoming effective with respect to a Purchaser
which is not a Lender or an affiliate thereof. Such consent
shall be substantially in the form attached as Exhibit "1" to
Exhibit "D" hereto and shall not be unreasonably withheld.
SECTION XII.3.2 Effect; Effective Date. Upon (i)
delivery to the Administrative Agent of a notice of assignment,
substantially in the form of Exhibit "D" hereto (a "Notice of
Assignment"), together with any consents required by Section
12.3.1, and (ii) payment of a $2,500 fee to the Administrative
Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice
of Assignment. Such assignment shall be substantially in the
form of Exhibit "I" hereto or in such other form as may be agreed
to by the parties thereto and the Administrative Agent. On and
after the effective date of such assignment, such Purchaser shall
for all purposes be a Lender party to this Agreement and any
other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents,
to the same extent as if it were an original party hereto, and no
further consent or action by the Borrower, the Lenders or the
Administrative Agent shall be required to release the transferor
Lender with respect to the percentage of the Aggregate Commitment
and Loans assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3.2,
the transferor Lender, the Administrative Agent and the Borrower
shall make appropriate arrangements so that replacement Notes are
issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their Commitment, as
adjusted pursuant to such assignment.
SECTION XII.4. Dissemination of Information. The Borrower
authorizes each Lender to disclose to any Participant or
Purchaser (each a "Transferee") and any prospective Transferee
which agrees to be bound by the confidentiality provisions of
Section 9.15 as if it were a Lender any and all financial
information in such Lender's possession concerning the Borrower
which has been delivered to such Lender by the Borrower pursuant
to this Agreement or which has been delivered to such Lender by
the Borrower in connection with such Lender's credit evaluation
of the Borrower prior to entering into this Agreement.
SECTION XII.5. Tax Treatment. If, pursuant to this Article
XII, any interest in any Loan Document is transferred to any
Transferee which is organized under the laws of any jurisdiction
other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the
Administrative Agent and the Borrower) that under applicable law
and treaties no taxes will be required to be withheld by the
Administrative Agent, the Borrower or the transferor Lender with
respect to any payments to be made to such Transferee in respect
of the Loans, (ii) to furnish to the transferor Lender, the
Administrative Agent and the Borrower either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such Transferee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of the
transferor Lender, the Administrative Agent and the Borrower) to
provide the transferor Lender, the Administrative Agent and the
Borrower a new Form 4224 or Form 1001 upon the obsolescence of
any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to
comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
ARTICLE XIII
NOTICES
SECTION XIII.1. Giving Notice. All notices and other
communications provided to any party hereto under this Agreement
or any other Loan Document shall be in writing or by facsimile
and addressed or delivered to such party at its address set forth
below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or
if transmitted by facsimile, shall be deemed given when received.
SECTION XIII.2. Change of Address. The Borrower, the
Administrative Agent and any Lender may each change the address
for service of notice upon it by a notice in writing to the other
parties hereto.
ARTICLE XIV
COUNTERPARTS
This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall
be effective when it has been executed by the Borrower, the
Administrative Agent and the Lenders and each party has notified
the Administrative Agent by facsimile or telephone, that it has
taken such action.
IN WITNESS WHEREOF, the Borrower, the Lenders and the
Administrative Agent have executed this Agreement as of the date
first above written.
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By:
Title:
Commitments
Facility A Facility B
$16,000,000.00 $44,000,000.00 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Syndication
Agent
and Administrative Agent
By:
Title:
One First National Plaza
Chicago, IL 60670
Attention:
Commitments
Facility A Facility B
$16,000,000.00 $44,000,000.00 ROYAL BANK OF CANADA,
Individually and as Syndication
Agent and Joint Arranger
By:
Title:
Address: Financial Square, 23rd Floor
Old Slip and Front Street
New York, NY 10005-3531
Attention: Andrea M. Sickler
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Syndication Agent
By:
Title:
Address: 1850 Gateway Blvd.
Concord, CA 94520
Attention: Karen Meyers
Telephone: (510) 675-7487
Telecopier: (510) 675-7531
with a copy to: Energy Group
333 Clay Street, Suite 4550
Houston, TX 77002
Attention: Michael J. Dillon
Commitments
Facility A Facility B
$16,000,000.00 $44,000,000.00 BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
Individually
By:
Title:
Address: 1850 Gateway Blvd.
Concord, CA 94520
Attention: Karen Meyers
Telephone: (510) 675-7487
Telecopier: (510) 675-7531
with a copy to: Energy Group
333 Clay Street, Suite 4550
Houston, TX 77002
Attention: Michael J. Dillon
BANCAMERICA SECURITIES, INC.,
Joint Arranger
By:
Title:
Address: Loan Syndications and Trading
555 California Street, 12th Floor
San Francisco, CA 94104
Attention:
FIRST CHICAGO CAPITAL MARKETS, INC.,
Joint Arranger
By:
Title:
Address: One First National Plaza
Chicago, IL 60670
Attention:
Facility A Facility B
$10,666,666.67 $29,333,333.33 DEN NORSKE BANK
By:
Morten Bjornsen
Title:
Address: 333 Clay Street, Suite 4890
Houston, TX 77002
Attention: Morten Bjornsen
Telephone: (713) 844-9251
Facsimile: (713) 757-1167
Facility A Facility B
$10,666,666.67 $29,333,333.33 BANK AUSTRIA AKTIENGESELLSCHAFT
By:
Title:
By:
Title:
Address: 565 Fifth Avenue
New York, NY 10017
Attention: George M. Williams III
Telephone: (212) 880-1044
Telecopy: (212) 880-1080
Facility A Facility B
$6,333,333.33 $17,416,666.67 BANK BRUSSELS LAMBERT, NEW YORK BRANCH
By:
Cheryl LaBelle
Title: Vice President and Manager
By:
Dominique Vangaever
Title: Senior Vice President
Address: 630 Fifth Avenue
New York, NY 10111
Attention: Cheryl LaBelle
Telephone: (212) 632-5332
Telecopy: (212) 333-5786
Facility A Facility B
$8,000,000.00 $22,000,000.00 CAISSE NATIONAL DE CREDIT AGRICOLE
By:
Title:
Address: 55 East Monroe, Suite 4700
Chicago, IL 6060
with a copy to:
Attention: Kevin Costello
Credit Agricole
600 Travis Street, Suite 2340
Houston, TX 77002
Telephone: (713) 223-7003
Telecopy: (713) 223-7029
Facility A Facility B
$10,666,666.67 $29,333,333.33 THE DAI-ICHI KANGYO BANK, LIMITED
By:
Kelton Glasscock
Title:
Address: 1100 Louisiana, Suite 4940
Houston, TX 77002
Attention: Kelton Glasscock
Telephone: (713) 654-5055
Telecopy: (713) 654-1667
Facility A Facility B
$6,333,333.33 $17,416,666.67 THE SUMITOMO BANK, LIMITED
By:
Title:
Address: 700 Louisiana Street, Suite 1750
Houston, TX 77002
Attn: William R. McKown
Energy Group
Telephone: (713) 238-8217
Telecopy: (713) 759-0020
with a copy to:
The Sumitomo Bank, Limited
277 Park Avenue
New York, NY 10172
Attn: Ms. Andrea Wei, V.P.
PANA - Legal Dept.
Facility A Facility B
$6,333,333.33 $17,416,666.67 CIBC INC.
By:
Title:
Address: CIBC Inc.
Attention:
Telephone:
Telecopy:
with a copy to:
Address: CIBC Inc.
909 Fannin, Suite 1200
Houston, TX 77010
Attention: Bob Long
Telephone: (713) 655-5211
Telecopy: (713) 650-3727
Facility A Facility B
$8,000,000.00 $22,000,000.00 THE SANWA BANK, LIMITED
By:
Joseph P. Howard
Title: Vice President
Address: 10 South Wacker Drive, 31st Floor
Chicago, IL 60606
Attn: Tom Hisey
Telephone: (312) 368-3007
Telecopy: (312) 346-6677
Facility A Facility B
$6,333,333.33 $17,416,666.67 SUNTRUST BANK, ATLANTA
By:
Todd C. Davis
Title:
By:
Title:
Address: 25 Park Place, 24th Floor, MC 120
Atlanta, GA 30303
Attn: Todd C. Davis
Telephone: (404) 658-4917
Telecopy: (404) 827-6270
Facility A Facility B
$6,333,333.33 $17,416,666.67 THE TOYO TRUST & BANKING CO., LTD.
By:
T. Mikumo
Title:
Address: 666 Fifth Avenue, 33rd Floor
New York, NY 10103
Attn: Sharon Bonelli
Telephone: (212) 307-3410
Telecopy: (212) 307-3498
Facility A Facility B
$10,666,666.67 $29,333,333.33 UNION BANK OF SWITZERLAND, HOUSTON AGENCY
By:
Title:
By:
Title:
Address: 1100 Louisiana Street, Suite 4500
Houston, TX 77002
Attn: Evans Swann
Telephone: (713) 665-6500
Telecopy: (713) 655-6555
Facility A Facility B
$6,333,333.33 $17,416,666.67 COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND" NEW YORK BRANCH
By:
Title:
By:
Title:
Address: 245 Park Avenue, 39th Floor
New York, NY 10167
Attn: Corporate Services Dept.
Telephone: (212) 916-7800
Telecopy: (212) 818-0233
Facility A Facility B
$10,666,666.67 $29,333,333.33 BANK OF MONTREAL
By:
Title:
Address: 700 Louisiana Street, Suite 4400
Houston, TX 77002
Attn: Natasha Glossop
Telephone: (713) 546-9752
Telecopy: (713) 223-4007
Facility A Facility B
$6,333,333.33 $17,416,666.67 THE BANK OF NOVA SCOTIA
By:
Title:
Address: 600 Peachtree Street, Suite 2700
Atlanta, GA 30308
Attention:
Telephone:
Telecopy:
Facility A Facility B
$10,666,666.67 $29,333,333.33 THE BANK OF TOKYO-
MITSUBISHI, LTD., HOUSTON AGENCY
By:
Title:
Address: 1100 Louisiana Street, Suite 2800
Houston, TX 77002-5216
Telephone: (713) 655-3815
Telecopy: (713) 655-3855
Facility A Facility B
$6,333,333.33 $17,416,666.67 DEN DANSKE BANK
AKTIESELSKAB, CAYMAN ISLANDS BRANCH
By:
Title:
By:
Title:
Address: c/o Den Danske Bank,
New York Branch
280 Park Avenue, 4th Floor
East Bldg.
New York, NY 10017
Attn: Peter Hargraves
Telephone: (212) 984-8472
Telecopy: (212) 370-9239
Facility A Facility B
$10,666,666.67 $29,333,333.33 THE BANK OF NEW YORK
By:
Title:
Address: One Wall Street, 19th Floor
New York, NY 10286
Attn: Ray Palmer
Telephone: (212) 635-7834
Telecopy: (212) 635-7923
Facility A Facility B
$10,666,666.67 $29,333,333.33 TORONTO DOMINION (TEXAS), INC.
By:
Title:
Address: 909 Fannin, Suite 1700
Houston, TX 77010
Attn: Neva Nesbitt
Telephone: (713) 653-8261
Telecopy: (713) 951-9921
EXHIBIT "A-1"
FACILITY NOTE
$______________________ ___________________, 1997
FOR VALUE RECEIVED, the undersigned, NORTHERN BORDER
PIPELINE COMPANY, a Texas general partnership (the "Borrower"),
promises to pay to the order of _____________________________________
(the "Lender"), for the account of its Lending Installation, on or
before the later of the Facility A Termination Date and the Facility
B Termination Date the lesser of (i) the principal amount of
______________________________($_________________) or (ii) the
aggregate unpaid principal amount of all Facility A Loans and all
Facility B Loans made by the Lender to the Borrower pursuant to
the Credit Agreement (hereinafter defined), in immediately
available funds at the times and in the amounts as set forth in
the Credit Agreement. The Borrower promises to pay interest on
the unpaid principal balance of the Loans, from time to time
outstanding, at the rates and on the dates set forth in the
Credit Agreement. The aggregate unpaid principal amount of all
Loans shall be due and payable on the later of the Facility A
Termination Date and the Facility B Termination Date.
This note is the Facility Note issued pursuant to, and is
entitled to the benefits of, that certain Credit Agreement, dated
as of______________, 1997 (as the same may be amended, modified
or restated from time to time, the "Credit Agreement"), among
Northern Border Pipeline Company, a Texas general partnership, as
Borrower (the "Borrower"), the Lenders (as defined in the Credit
Agreement), The First National Bank of Chicago, as Administrative
Agent (in such capacity, the "Administrative Agent"), The First
National Bank of Chicago, Royal Bank of Canada and Bank of
America, as Syndication Agents (in such capacity "Syndication
Agents") and collectively, with the Administrative Agent, (the
"Agents") and First Chicago Capital Markets, Inc., Royal Bank of
Canada and BancAmerica Securities, Inc., as Joint Arrangers (in
such capacity, collectively the "Joint Arrangers"). All
capitalized terms used but not defined herein shall have the
meaning assigned to them in the Credit Agreement. Reference is
made to the Credit Agreement for, inter alia, provisions for the
prepayment hereof, the acceleration of the maturity hereof and to
the effect that no provision of the Credit Agreement or this
Facility Note shall require the payment or permit the charging or
collection of interest in an amount in excess of the highest non-
usurious or non-criminal amount permitted by applicable law.
All Loans made by the Lender pursuant to the Credit
Agreement and all payments of the principal thereof shall be
endorsed by the holder of this Facility Note on the schedule
annexed hereto (including any additional pages such holder may
add to such schedule), which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed;
provided, however, that the failure of the holder of this
Facility Note to insert any date or amount or other information
on such schedule shall not in any manner affect the obligation of
the Borrower or any other Borrowers to repay any Loans in
accordance with the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and
endorsers of this Facility Note and all other parties now or
hereafter liable hereon, severally waive, except as otherwise
provided in the Credit Agreement or in any other of the Loan
Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of
dishonor, notice of protest, notice of intention to accelerate
and notice of acceleration) and diligence in collecting and
bringing suit against any party hereto, and agree (i) to all
extensions and partial payments, with or without notice, before
or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Facility Note,
(iii) to the release of any party primarily or secondarily liable
hereon and (iv) that it will not be necessary for the Lender, in
order to enforce payment of this Facility Note, to first
institute or exhaust the Lender's remedies against the Borrower
or any other party liable therefor or against any security for
this Facility Note.
This Facility Note may not be changed, modified, or
terminated orally, but only by an agreement in writing signed by
the party to be charged. If any term or provision of this
Facility Note shall be held invalid, illegal or unenforceable,
the validity of all other terms and provisions herein shall in no
way be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS FACILITY
NOTE, THE BORROWER WAIVES THE DEFENSES OF FORUM NON CONVENIENS
AND IMPROPER VENUE. THIS FACILITY NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF BORROWERS
AND INURE TO THE BENEFIT OF THE LENDER AND ITS SUCCESSORS AND
ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS OF
THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Facility Note on the date first above written.
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By:
Name:
Title:
GRID SCHEDULE
Attached to and made part of the Facility Note, dated
______________, 1997, issued pursuant to that certain Credit
Agreement, dated as of June 16, 1997, among Northern Border
Pipeline Company, a Texas general partnership, as Borrower (the
"Borrower"), the Lenders (hereinafter defined), The First
National Bank of Chicago, as Administrative Agent (in such
capacity, the "Administrative Agent"), The First National Bank of
Chicago, Royal Bank of Canada and Bank of America, as Syndication
Agents (in such capacity "Syndication Agents") and collectively,
with the Administrative Agent, (the "Agents") and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers").
FACILITY A
Amount of Name of
Principal Unpaid Principal Person
Principal Amount Paid or Balance Making
Date of Loan of Loan Prepaid (Balance continued) Notation
FACILITY B
Amount of Name of
Principal Unpaid Principal Person
Principal Amount Paid or Balance Making
Date of Loan of Loan Prepaid (Balance continued) Notation
EXHIBIT "A-2"
COMPETITIVE BID NOTE
$_________________ ___________________, 1997
FOR VALUE RECEIVED, the undersigned, NORTHERN BORDER
PIPELINE COMPANY, a Texas general partnership (the "Borrower"),
promises to pay to the order of _________________________ (the
"Lender"), the aggregate unpaid principal amount of all
Competitive Bid Loans made by the Lender to the Borrower pursuant
to Section 2.3 of the Credit Agreement hereinafter referred to
(as the same may be amended or modified, the "Agreement"), in
lawful money of the United States in immediately available funds
at the main office of The First National Bank of Chicago, as
Agent, in Chicago, Illinois or as otherwise directed by the
Administrative Agent pursuant to the terms of the Agreement,
together with interest, in like money and funds, on the unpaid
principal amount hereof at the rates and on the dates determined
in accordance with the Agreement. The Borrower shall pay each
Competitive Bid Loan in full on the earlier of (A) the last day
of such Competitive Bid Loan's applicable Interest Period, (B)
the Termination Date of the applicable Facility.
This note is the Competitive Bid Note issued pursuant to,
and is entitled to the benefits of, that certain Credit
Agreement, dated as of______________, 1997 (as the same may be
amended, modified or restated from time to time, the "Credit
Agreement"), among Northern Border Pipeline Company, a Texas
general partnership, as Borrower (the "Borrower"), the Lenders
(as defined in the Credit Agreement), The First National Bank of
Chicago, as Administrative Agent (in such capacity, the
"Administrative Agent"), The First National Bank of Chicago,
Royal Bank of Canada and Bank of America, as Syndication Agents
(in such capacity "Syndication Agents") and collectively, with
the Administrative Agent, (the "Agents") and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers"). All capitalized terms used
but not defined herein shall have the meaning assigned to them in
the Credit Agreement. Reference is made to the Credit Agreement
for, inter alia, provisions for the prepayment hereof, the
acceleration of the maturity hereof and to the effect that no
provision of the Credit Agreement or this Note shall require the
payment or permit the charging or collection of interest in an
amount in excess of the highest non-usurious or non-criminal
amount permitted by applicable law.
All Competitive Bid Loans made by the Lender pursuant to the
Credit Agreement and all payments of the principal thereof shall
be endorsed by the holder of this Competitive Bid Note on the
schedule annexed hereto (including any additional pages such
holder may add to such schedule), which endorsement shall
constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that the failure of
the holder of this Competitive Bid Note to insert any date or
amount or other information on such schedule shall not in any
manner affect the obligation of the Borrower or any other
Borrowers to repay any Competitive Bid Loans in accordance with
the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and
endorsers of this Competitive Bid Note and all other parties now
or hereafter liable hereon, severally waive, except as otherwise
provided in the Credit Agreement or in any other of the Loan
Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of
dishonor, notice of protest, notice of intention to accelerate
and notice of acceleration) and diligence in collecting and
bringing suit against any party hereto, and agree (i) to all
extensions and partial payments, with or without notice, before
or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Competitive Bid
Note, (iii) to the release of any party primarily or secondarily
liable hereon and (iv) that it will not be necessary for the
Lender, in order to enforce payment of this Competitive Bid Note,
to first institute or exhaust the Lender's remedies against the
Borrower or any other party liable therefor or against any
security for this Competitive Bid Note.
This Competitive Bid Note may not be changed, modified, or
terminated orally, but only by an agreement in writing signed by
the party to be charged. If any term or provision of this
Competitive Bid Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions
herein shall in no way be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS
COMPETITIVE BID NOTE, THE BORROWER WAIVES THE DEFENSES OF FORUM
NON CONVENIENS AND IMPROPER VENUE. THIS COMPETITIVE BID NOTE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE SUCCESSORS
AND ASSIGNS OF BORROWERS AND INURE TO THE BENEFIT OF THE LENDER
AND ITS SUCCESSORS AND ASSIGNS (INCLUDING PARTICIPANTS IN
ACCORDANCE WITH THE TERMS OF THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Competitive Bid Note on the date first above written.
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By:
Name:
Title:
GRID SCHEDULE
Attached to and made part of the Competitive Bid Note, dated
______________, 1997, issued pursuant to that certain Credit
Agreement, dated as of June 16, 1997, among Northern Border
Pipeline Company, a Texas general partnership, as Borrower (the
"Borrower"), the Lenders (hereinafter defined), The First
National Bank of Chicago, as Administrative Agent (in such
capacity, the "Administrative Agent"), The First National Bank of
Chicago, Royal Bank of Canada and Bank of America, as Syndication
Agents (in such capacity "Syndication Agents") and collectively,
with the Administrative Agent, (the "Agents") and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers").
Amount of Name of
Principal Unpaid Principal Person
Principal Amount Paid or Balance Making
Date of Loan of Loan Prepaid (Balance continued) Notation
EXHIBIT "A-3"
SWING LOAN NOTE
$15,000,000.00 ___________________, 1997
FOR VALUE RECEIVED, the undersigned, NORTHERN BORDER
PIPELINE COMPANY, a Texas general partnership (the "Borrower"),
promises to pay to the order of THE FIRST NATIONAL BANK OF
CHICAGO (the "Bank"), for the account of its Lending
Installation, on or before the Facility A Termination Date the
lesser of (i) the principal amount of FIFTEEN MILLION DOLLARS
($15,000,000.00) or (ii) the aggregate unpaid principal amount of
all Swing Loans made by the Bank to the Borrower pursuant to
Section 2.1.3 of the Credit Agreement (hereinafter defined),
whichever is less, in immediately available funds at THE FIRST
NATIONAL BANK OF CHICAGO, at the times and in the amounts as set
forth in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal balance of the Swing Loans, from
time to time outstanding, at the rates and on the dates set forth
in the Credit Agreement. The aggregate unpaid principal amount
of all Swing Loans shall be due and payable on the Facility A
Termination Date.
This note is the Swing Loan Note issued pursuant to, and is
entitled to the benefits of, that certain Credit Agreement, dated
as of______________, 1997 (as the same may be amended, modified
or restated from time to time, the "Credit Agreement"), among
Northern Border Pipeline Company, a Texas general partnership, as
Borrower (the "Borrower"), the Lenders (as defined in the Credit
Agreement), The First National Bank of Chicago, as Administrative
Agent (in such capacity, the "Administrative Agent"), The First
National Bank of Chicago, Royal Bank of Canada and Bank of
America, as Syndication Agents (in such capacity "Syndication
Agents") and collectively, with the Administrative Agent, (the
"Agents") and First Chicago Capital Markets, Inc., Royal Bank of
Canada and BancAmerica Securities, Inc., as Joint Arrangers (in
such capacity, collectively the "Joint Arrangers"). All
capitalized terms used but not defined herein shall have the
meaning assigned to them in the Credit Agreement. Reference is
made to the Credit Agreement for, inter alia, provisions for the
prepayment hereof, the acceleration of the maturity hereof and to
the effect that no provision of the Credit Agreement or this Note
shall require the payment or permit the charging or collection of
interest in an amount in excess of the highest non-usurious or
non-criminal amount permitted by applicable law.
All Swing Loans made by the Administrative Agent pursuant to
the Credit Agreement and all payments of the principal thereof
shall be endorsed by the holder of this Swing Loan Note on the
schedule annexed hereto (including any additional pages such
holder may add to such schedule), which endorsement shall
constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that the failure of
the holder of this Swing Loan Note to insert any date or amount
or other information on such schedule shall not in any manner
affect the obligation of the Borrower or any other Borrowers to
repay any Swing Loans in accordance with the terms of the Credit
Agreement.
The Borrower and any and all sureties, guarantors and
endorsers of this Swing Loan Note and all other parties now or
hereafter liable hereon, severally waive, except as otherwise
provided in the Credit Agreement or in any other of the Loan
Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of
dishonor, notice of protest, notice of intention to accelerate
and notice of acceleration) and diligence in collecting and
bringing suit against any party hereto, and agree (i) to all
extensions and partial payments, with or without notice, before
or after maturity, (ii) to any substitution, exchange or release
of any security now or hereafter given for this Swing Loan Note,
(iii) to the release of any party primarily or secondarily liable
hereon and (iv) that it will not be necessary for the Bank, in
order to enforce payment of this Swing Loan Note, to first
institute or exhaust the Bank's remedies against the Borrower or
any other party liable therefor or against any security for this
Swing Loan Note.
This Swing Loan Note may not be changed, modified, or
terminated orally, but only by an agreement in writing signed by
the party to be charged. If any term or provision of this Swing
Loan Note shall be held invalid, illegal or unenforceable, the
validity of all other terms and provisions herein shall in no way
be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS SWING
LOAN NOTE, THE BORROWER WAIVES THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK AND SHALL BE BINDING UPON THE SUCCESSORS AND ASSIGNS OF
BORROWERS AND INURE TO THE BENEFIT OF THE BANK AND ITS SUCCESSORS
AND ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS
OF THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered
this Swing Loan Note on the date first above written.
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By
Name:
Title:
GRID SCHEDULE
Attached to and made part of the Swing Loan Note, dated
______________, 1997, issued pursuant to that certain Credit
Agreement, dated as of _____________, 1997, among Northern Border
Pipeline Company, a Texas general partnership, as Borrower (the
"Borrower"), the Lenders (hereinafter defined), The First
National Bank of Chicago, as Administrative Agent (in such
capacity, the "Administrative Agent"), The First National Bank of
Chicago, Royal Bank of Canada and Bank of America, as Syndication
Agents (in such capacity "Syndication Agents") and collectively,
with the Administrative Agent, (the "Agents") and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers").
Amount of Name of
Principal Unpaid Principal Person
Principal Amount Paid or Balance Making
Date of Loan of Loan Prepaid (Balance continued) Notation
EXHIBIT "B-1"
Opinion of Janet Place
EXHIBIT "B-2"
Form of Opinion of Chapman and Cutler
EXHIBIT "C"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that
certain Credit Agreement dated as of June , 1997, among the
Borrower, the Lenders party thereto, The First National Bank of
Chicago as Administrative Agent for the Lenders, The First
National Bank of Chicago, Royal Bank of Canada and Bank of
America , as Syndication Agents and First Chicago Capital
Markets, Inc., Royal Bank of Canada and BancAmerica Securities,
Inc., as Joint Arrangers (in such capacity, collectively the
"Joint Arrangers" (the "Agreement"). Unless otherwise defined
herein, the terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ________________ of the
Operator;
2. I have reviewed the terms of the Agreement and I have
made, or have caused to be made under my supervision, a detailed
review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached
financial statements;
3. The examinations described in paragraph 2 did not
disclose, and I have no knowledge of, the existence of any
condition or event which constitutes a Default or Event of
Default during or at the end of the accounting period covered by
the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations
are true, complete and correct.
Described below are the exceptions, if any, to paragraph 3
by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect
to each such condition or event:
The foregoing certifications, together with the computations
set forth in Schedule I hereto and the financial statements
delivered with this Certificate in support hereof, are made and
delivered this day of , 19 .
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By:
Name:
Title:
[SAMPLE]
SCHEDULE I TO COMPLIANCE REPORT
EXHIBIT "D"
NOTICE OF ASSIGNMENT
To: NORTHERN BORDER PIPELINE COMPANY
1111 South 103rd Street
Omaha, NE 68124-1000
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza
Chicago, IL 60670
From: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
______________, 19
1. We refer to that Credit Agreement, dated as of June ,
1997 (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the "Credit
Agreement") among Northern Border Pipeline Company (the
"Borrower"), certain Lenders party thereto (each a "Lender"),
including (the "Assignor") and The First
National Bank of Chicago, as Administrative Agent for the Lenders
(as such, the "Administrative Agent"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and
delivered to Northern Border Pipeline Company and the
Administrative Agent pursuant to Section 12.3.2 of the Credit
Agreement.
3. The Assignor and (the "Assignee")
have entered into an Assignment Agreement, dated as of ,
19 , pursuant to which, among other things, the Assignor has
sold, assigned, delegated and transferred to the Assignee, and
the Assignee has purchased, accepted and assumed from the
Assignor, an undivided interest in and to all of the Assignor's
rights and obligations under the Credit Agreement such that
Assignee's percentage of the Aggregate Commitment shall equal
%, effective as of the Effective Date. The Effective Date shall
be the later of , 19 or two Business Days (or such
shorter period agreed to by the Administrative Agent) after this
Notice of Assignment and any consents and fees required by
Sections 12.3.1 and 12.3.2 of the Credit Agreement have been
delivered to the Administrative Agent, provided that the
Effective Date shall not occur if any condition precedent agreed
to by the Assignor and the Assignee has not been satisfied.
4. As of this date, the percentage of the Assignor in the
Aggregate Commitment and Loans is %. As of the Effective
Date, the percentage of the Assignor in the Aggregate Commitment
and Loans will be % (as such percentage may be reduced or
increased by assignments which become effective prior to the
assignment to the Assignee becoming effective) and the percentage
of the Assignee in the Aggregate Commitment and Loans will be
%.
5. The Assignor and the Assignee hereby give to the
Borrower and the Administrative Agent notice of the assignment
and delegation referred to herein. The Assignor will confer with
the Administrative Agent before , 19
to determine if the Assignment Agreement will become effective on
such date pursuant to Section 3 hereof, and will confer with the
Administrative Agent to determine the Effective Date pursuant to
Section 3 hereof if it occurs thereafter. The Assignor shall
notify the Administrative Agent if the Assignment Agreement does
not become effective on any proposed Effective Date as a result
of the failure to satisfy the conditions precedent agreed to by
the Assignor and the Assignee. At the request of the
Administrative Agent, the Assignor will give the Administrative
Agent written confirmation of the occurrence of the Effective
Date.
6. The Assignee hereby accepts and assumes the assignment
and delegation referred to herein and agrees as of the Effective
Date (i) to perform fully all of the obligations under the Credit
Agreement which it has hereby assumed and (ii) to be bound by the
terms and conditions of the Credit Agreement as if it were a
"Lender".
7. The Assignor and the Assignee request and agree that
any payments to be made by the Administrative Agent to the
Assignor on and after the Effective Date shall, to the extent of
the assignment referred to herein, be made entirely to the
Assignee, it being understood that the Assignor and the Assignee
shall make between themselves any desired allocations.
8. The Assignor or the Assignee shall pay to the
Administrative Agent on or before the Effective Date the
processing fee of $2,500 required by Section 12.3.2 of the Credit
Agreement.
9. The Assignor and the Assignee request and direct that
the Administrative Agent prepare and cause the Borrower to
execute and deliver (i) to the Assignor, a replacement Facility
Note[s] and a Competitive Bid Note[s] payable to the Assignor and
(ii) to the Assignee, [a] [new] [replacement] Facility Note[s]
and a Competitive Bid Note[s] payable to the Assignee in
accordance with Section 12.3.2 of the Credit Agreement. The
Assignor and the Assignee each agrees to deliver to the
Administrative Agent the original Note received by it from the
Borrower upon its receipt of [a] new Facility Note[s] and a
Competitive Bid Note[s] in accordance with Section 12.3.2 of the
Credit Agreement.
10. The Assignee advises the Administrative Agent that the
address listed below is its address for notices under the Credit
Agreement:
ASSIGNOR ASSIGNEE
By: By:
Title: Title:
EXHIBIT "1"
TO
EXHIBIT "D"
CONSENT AND RELEASE
TO: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
, 19
1. The undersigned acknowledge receipt from (the
"Assignor") and (the "Assignee") of the
Notice of Assignment, dated as of , 19 (the
"Notice"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to them in the
Notice.
2. In consideration of the assumption by the Assignee of
the obligations of the Assignor as referred to in the Notice, the
Administrative Agent hereby (i) irrevocably consents, as required
by Section 12.3.1 of the Credit Agreement, to the assignment and
delegation referred to in the Notice, (ii) as of the Effective
Date, irrevocably releases the Assignor from its obligations to
the Administrative Agent under the Loan Documents to the extent
that such obligations have been assumed by the Assignee, and
(iii) agrees that, as of the Effective Date, the Administrative
Agent shall consider the Assignee as a "Lender" for all purposes
under the Loan Documents to the extent of the assignment and
delegation referred to in the Notice.
NORTHERN BORDER PIPELINE THE FIRST NATIONAL BANK
COMPANY OF CHICAGO
By: Northern Plains Natural
Gas Company, Operator
By: By:
Title: Title:
EXHIBIT "E"
COMPETITIVE BID QUOTE REQUEST
(Section 2.3.2)
_______________, 19____
To: The First National Bank of Chicago,
as administrative agent (the "Administrative Agent")
From: Northern Border Pipeline Company (the "Borrower")
Re: Credit Agreement (the "Agreement") dated as of ,
among the Borrower, The First National Bank of Chicago,
individually and as Administrative Agent, the Lenders, The
First National Bank of Chicago, Royal Bank of Canada and
Bank of America, as Syndication Agents and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers.
We hereby give notice pursuant to Section 2.3.2 of the
Agreement that we request Competitive Bid Quotes for the
following proposed Competitive Bid Advance(s):
Borrowing Date: _________________, 19___
Principal Amount 1 Interest Period 2
$
Such Competitive Bid Quotes should offer [a Competitive Bid
Margin] [an Absolute Rate].
Such Competitive Bid Advances are [not] to be subject to
prepayment.
Such Competitive Bid Advances are being requested under
Facility [A] [B].
Upon acceptance by the undersigned of any or all of the
Competitive Bid Advances offered by Lenders in response to this
request, the undersigned shall be deemed to affirm as of the
Borrowing Date thereof the representations and warranties made
in the Agreement to the extent required in Section 4.2(b)
thereof. Capitalized terms used herein have the meanings
assigned to them in the Agreement.
NORTHERN BORDER PIPELINE COMPANY
By: Northern Plains Natural Gas
Company, Operator
By:
Title:
1 Amount must be at least $5,000,000 and an integral multiple
of $1,000,000.
2 One, two, three, six, nine or twelve months (Eurodollar
Auction) or up to 360 days (Absolute Rate Auction), subject
to the provisions of the definitions of Eurodollar Interest
Period and Absolute Rate Interest Period.
EXHIBIT "F"
INVITATION FOR COMPETITIVE BID QUOTES
(Section 2.3.3)
_____________________, 19___
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
Northern Border Pipeline Company (the "Borrower")
Pursuant to Section 2.3.3 of the Credit Agreement dated as
of _________, 1997 (the "Agreement") among the Borrower, the
Lenders parties thereto and the undersigned, as Administrative
Agent, we are pleased on behalf of the Borrower to invite you to
submit Competitive Bid Quotes to the Borrower for the following
proposed Competitive Bid Advance(s):
Borrowing Date: ______________, 19___
Principal Amount Interest Period
$
Such Competitive Bid Quotes should offer [a Competitive Bid
Margin] [an Absolute Rate]. Such Competitive Bid Advances are
[not] to be subject to prepayment. Your Competitive Bid Quote
must comply with Section 2.3.4 of the Agreement and the
foregoing. Capitalized terms used herein have the meanings
assigned to them in the Agreement.
Please respond to this invitation by no later than [9:00
a.m.] [1:00 p.m,.] Chicago time on _________, 19____.
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
By:
Authorized Officer
EXHIBIT "G"
COMPETITIVE BID QUOTE
(Section 2.3.4)
__________________, 19___
To: The First National Bank of Chicago, as Agent
Attn:
Re: Competitive Bid Quote to Northern Border Pipeline Company
(the "Borrower")
In response to your invitation on behalf of the Borrower
dated , 199 , we hereby make the following Competitive
Bid Quote pursuant to Section 2.3.4 of the Credit Agreement
hereinafter referred to and on the following terms:
1. Quoting Lender:
2. Person to contact at Quoting Lender:
3. Borrowing Date: , 19 1
4. We hereby offer to make Competitive Bid Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum Facility
Amount 2 Period 3 Bid Margin] Rate 5] Amount 6
$
1 As specified in the related Invitation For Competitive Bid
Quotes.
2 Principal amount bid for each Interest Period may not exceed
the principal amount requested. Bids must be made for at
least $5,000,000 and an integral multiple of $1,000,000.
3 One, two, three, six, nine or twelve months or up to 360
days, as specified in the related Invitation For Competitive
Bid Quotes.
4 Competitive Bid Margin over or under the Eurodollar ABR
determined for the applicable Interest Period. Specify
percentage (rounded to the nearest 1/100 of 1%) and specify
whether "PLUS" or "MINUS".
5 Specify rate of interest per annum (rounded to the nearest
1/100 of 1%).
6 Specify minimum or maximum amount, if any, which the
Borrower may accept and/or the limit, if any, as to the
aggregate principal amount of the Competitive Bid Loans of
the quoting Lender which the Borrower may accept (see
Section 2.3.4(ii)(d)).
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set
forth in the Credit Agreement dated as of __________, 1997 among
the Borrower, the Lenders party thereto, The First National Bank
of Chicago as Administrative Agent for the lenders, The First
National Bank of Chicago, Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers") (the "Agreement"),
irrevocably obligates us to make the Competitive Bid Loan(s) for
which any offer(s) are accepted, in whole or in part.
Capitalized terms used herein and not otherwise defined herein
shall have their meanings as defined in the Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated: _________________, 19___ By:
Authorized Officer
EXHIBIT "H"
FORM OF OPINION OF MAYER, BROWN & PLATT
(to be provided)
EXHIBIT "I"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement")
between (the "Assignor") and
(the "Assignee") is dated as of , 19 . The parties
hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a
Credit Agreement, dated as of , 19 (which, as it may
be amended, modified, renewed or extended from time to time, is
herein called the "Credit Agreement"), among Northern Border
Pipeline Company, a Texas general partnership, as Borrower (the
"Borrower"), the Lenders (hereinafter defined), The First
National Bank of Chicago, as Administrative Agent (in such
capacity, the "Administrative Agent"), The First National Bank of
Chicago, Royal Bank of Canada and Bank of America as Syndication
Agents (in such capacity "Syndication Agents") and collectively,
with the Administrative Agent, (the "Agents") and First Chicago
Capital Markets, Inc., Royal Bank of Canada and BancAmerica
Securities, Inc., as Joint Arrangers (in such capacity,
collectively the "Joint Arrangers"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings
attributed to them in the Credit Agreement. The Assignor desires
to assign to the Assignee, and the Assignee desires to assume
from the Assignor, an undivided interest (the "Purchased
Percentage") in the Assignor's Commitment such that after giving
effect to the assignment and assumption hereinafter provided, the
Assignee's Commitment shall equal $ and its
Percentage of the Aggregate Commitment shall equal %.
2. ASSIGNMENT. For and in consideration of the assumption
of obligations by the Assignee set forth in Section 3 hereof and
the other consideration set forth herein, and effective as of the
Effective Date (as hereinafter defined), the Assignor does hereby
sell, assign, transfer and convey all of its right, title and
interest in and to the Purchased Percentage of (i) the Commitment
of the Assignor (as in effect on the Effective Date), (ii) any
Loan outstanding on the Effective Date and (iii) the Credit
Agreement and the other Loan Documents. Pursuant to Section
12.3.2 of the Credit Agreement, on and after the Effective Date
the Assignee shall have the same rights, benefits and obligations
as the Assignor had under the Loan Documents with respect to the
Purchased Percentage of the Loan Documents, all determined as if
the Assignee were a "Lender" under the Credit Agreement with %
of the Aggregate Commitment. The Effective Date shall be the
later of or two Business Days (or such shorter period
agreed to by the Administrative Agent) after a Notice of
Assignment substantially in the form of Exhibit "D" to the Credit
Agreement and any consents required to be delivered to the
Administrative Agent by Section 12.3.1 of the Credit Agreement
have been delivered to the Administrative Agent. In no event
will the Effective Date occur if the payments required to be made
by the Assignee to the Assignor on the Effective Date under
Section 4 and 5 hereof are not made on the proposed Effective
Date. The Assignor will notify the Assignee of the proposed
Effective Date on the Business Day prior to the proposed
Effective Date.
3. ASSUMPTION. For and in consideration of the assignment
of rights by the Assignor set forth in Section 2 hereof and the
other consideration set forth herein, and effective as of the
Effective Date, the Assignee does hereby accept that assignment,
and assume and covenant and agree fully, completely and timely to
perform, comply with and discharge, each and all of the
obligations, duties and liabilities of the Assignor under the
Credit Agreement which are assigned to the Assignee hereunder,
which assumption includes, without limitation, the obligation to
fund the unfunded portion of the Aggregate Commitment in
accordance with the provisions set forth in the Credit Agreement
as if the Assignee were a "Lender" under the Credit Agreement
with ____% of the Aggregate Commitment. The Assignee agrees to
be bound by all provisions relating to "Lenders" under and as
defined in the Credit Agreement, including, without limitation,
provisions relating to the dissemination of information and the
payment of indemnification.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date,
the Assignee shall be entitled to receive from the Administrative
Agent all payments of principal, interest and fees with respect
to the Purchased Percentage of the Assignor's Commitment and
Loans. The Assignee shall advance funds directly to the
Administrative Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date. In consideration
for the sale and assignment of Loans hereunder, (i) on the
Effective Date, the Assignee shall pay the Assignor an amount
equal to the Purchased Percentage of all ABR Loans made by the
Assignor outstanding on the Effective Date and (ii) with respect
to each Fixed Rate Loan made by the Assignor outstanding on the
Effective Date, on the last day of the Interest Period therefor
or on such earlier date agreed to by the Assignor and the
Assignee or on the date on which any such Loan either becomes due
(by acceleration or otherwise) or is prepaid, the Assignee shall
pay the Assignor an amount equal to the Purchased Percentage of
such Loan, together with interest on such Loan, at the applicable
rate provided by the Credit Agreement and paid by the Borrower,
for the period from the Effective Date through and including the
date of payment to the Assignor. On and after the Effective
Date, the Assignee will also remit to the Assignor any amounts of
interest on Loans and fees received from the Administrative Agent
which relate to the Purchased Percentage of Loans made by the
Assignor accrued for periods prior to the Effective Date. The
Assignor and the Assignee may agree to adjust the interest rate
payable to the Assignee with respect to a Fixed Rate Loan if the
Assignee elects to pay the Assignor an amount equal to its
Purchased Percentage of a Fixed Rate Loan prior to the last day
of the Interest Period for such Fixed Rate Loan. In the event
that either party hereto receives any payment to which the other
party hereto is entitled under this Assignment Agreement, then
the party receiving such amount shall promptly remit it to the
other party hereto.
5. FEES PAYABLE BY ASSIGNEE.
On each day on which the Assignee receives a payment of
interest or commitment fees under the Credit Agreement (other
than a payment of interest or commitment fees which the Assignee
is obligated to deliver to the Assignor pursuant to Section 4
hereof), the Assignee shall pay to the Assignor a fee. The
amount of such fee shall be the difference between (i) the amount
of the interest or fee, as applicable, received and retained by
the Assignee and (ii) the amount of the interest or fee, as
applicable, which would have been received by the Assignee if
each interest rate was of 1% less than the interest rate
paid by the Borrower or if the commitment fee was of 1% less
than the commitment fee paid by the Borrower, as applicable. In
addition, the Assignee agrees to pay % of the fee required to
be paid to the Administrative Agent pursuant to Section 12.3.2 of
the Credit Agreement.
6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S
LIABILITY. It is understood and agreed the Assignee has made and
shall continue to make its own credit determinations and analysis
based upon such information as the Assignee deemed sufficient to
enter into the transaction contemplated hereby and not based on
any statements or representations by the Assignor. It is
understood and agreed that the assignment and assumption
hereunder are made without recourse to the Assignor and that the
Assignor makes no representation or warranty of any kind to the
Assignee and shall not be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or
collectibility of the Credit Agreement or any other Loan
Document, including without limitation, documents granting the
Assignor and the other Lenders a security interest in assets of
the Borrower or any guarantor, (ii) any representation, warranty
or statement made in or in connection with any of the Loan
Documents, (iii) the financial condition or creditworthiness of
the Borrower or any guarantor, (iv) the performance of or
compliance with any of the terms or provisions of any of the Loan
Documents, (v) inspecting any of the property, books or records
of the Borrower or (vi) the validity, enforceability, perfection,
priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans. Neither the Assignor
nor any of its officers, directors, employees, Administrative
Agents or attorneys shall be liable for any mistake, error of
judgment, or action taken or omitted to be taken in connection
with the Loans or the Loan Documents, except for its or their own
bad faith or willful misconduct.
7. INDEMNITY. The Assignee agrees to indemnify and hold
the Assignor harmless against any and all losses, costs and
expenses (including, without limitation, reasonable attorneys'
fees) and liabilities incurred by the Assignor in connection with
or arising in any manner from the Assignee's performance or
non-performance of obligations assumed under this Assignment
Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the
Assignee shall have the right pursuant to Section 12.3.1 of the
Credit Agreement to assign the rights which are assigned to the
Assignee hereunder to any entity or person, provided that (i) any
such subsequent assignment does not violate any of the terms and
conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained,
(ii) the assignee under such assignment from the Assignee shall
agree to assume all of the Assignee's obligations hereunder in a
manner satisfactory to the Assignor and (iii) the Assignee is not
thereby released from any of its obligations to the Assignor
hereunder.
9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in
the Aggregate Commitment occurs between the date of this
Assignment Agreement and the Effective Date, the Assignee's
Percentage of the Aggregate Commitment shall remain the
percentage specified in Section 1 hereof and the dollar amount of
Assignee's Commitment shall be recalculated based on the reduced
Aggregate Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement [and the
attached consent] embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and
understandings between the parties hereto relating to the subject
matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be
governed by the internal law, and not the law of conflicts, of
the State of New York.
12. NOTICES. Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement. For
the purpose hereof, the addresses of the parties hereto (until
notice of a change is delivered) shall be the address set forth
under each party's name on the signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment Agreement by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
Title:
[NAME OF ASSIGNEE]
By:
Title:
SCHEDULE "1-a"
SERVICE AGREEMENTS
SCHEDULE "1-b"
PRECEDENT AGREEMENTS
SCHEDULE "2"
LITIGATION AND CONTINGENT LIABILITIES
(See Section 5.7)
SCHEDULE "3"
INDEBTEDNESS AND LIENS
(See Sections 5.14 and 6.2.7)
Indebtedness Property Encumbered and Amount of
(If Any) Indebtedness
Senior Notes N/A 250,000,000
Loan Agreement N/A 127,500,000
Credit Agreement N/A 10,000,000
SCHEDULE "4"
OTHER INVESTMENTS
(See Section 6.2.5)
Investment Owned Amount of Percent Jurisdiction of
In By Investment Ownership Organization
None
SCHEDULE "5"
SUPPORT AGREEMENTS
(See Section 1.1)
(i) Escrow Agreement, dated as of October 6,
1989, among the Borrower, Pan-Alberta (U.S.) and
Harris Trust and Savings Bank, together with any
standby letter of credit issued in favor of the
escrow agent under Paragraph 2(d) of the Escrow
Agreement, which letter of credit is currently
issued by Bank of Montreal International
Operations under IMDC/0666/S/146405;
(ii) Guaranty, dated November 27, 1989, by Pan-
Alberta in favor of the Borrower;
(iii) Capacity Transfer Agreement, made as of
October 6, 1989, between Pan-Alberta and the
Borrower;
(iv) Undertaking of NOVA Corporation of Alberta,
dated October 10, 1989, in favor of the Borrower
and First Amending Agreement to the Undertaking of
NOVA Corporation of Alberta dated as of April 5,
1991, and Second Amending Agreement to the
Undertaking of NOVA Corporation of Alberta dated
March 31, 1994;
(v) Collateral Assignment of Certain Revenues and
Related Rights, dated as of October 6, 1989,
between Pan-Alberta (U.S.) and the Borrower and
Amendment to Collateral Assignment of Certain
Revenues and Related Rights, dated as of October
1, 1993;
(vi) Alternative Credit Support Arrangement for
the U.S. Shippers Service Agreement with Natgas
U.S. Inc. (now known as Pan-Alberta Gas (U.S.)
Inc.), dated September 30, 1989, among Pan-Alberta
(U.S.), the Borrower and Pan-Alberta, attached as
Appendix A to the Northern Border Pipeline Company
U.S. Shippers Service Agreement, dated as of
October 6, 1989, between Pan-Alberta (U.S.) and
the Borrower and First Amendment to Appendix A to
the U.S. Shippers Service Agreement between Natgas
U.S. Inc. (now known as Pan-Alberta Gas (U.S.)
Inc.), Pan-Alberta and the Borrower dated as of
October 2, 1991, and Second Amendment to Appendix
A to the U.S. Shippers Service Agreement between
Pan-Alberta Gas (U.S.) Inc., Pan-Alberta and the
Borrower dated October 1, 1993;
(vii) Commitment from Foothills Pipe Lines Ltd. in
Favor of Northern Border Pipeline Company, dated
as of October 6, 1989, between Foothills and the
Borrower; (ix) Commitment from NOVA Corporation of
Alberta in Favor of Northern Border Pipeline
Company, dated October 6, 1989, between NOVA and
the Borrower;
(viii) Guaranty, dated May 25, 1988, of North
Canadian Oils Limited in favor of the Borrower;
(ix) Guaranty, dated August 24, 1989, of Enron
Corp. in favor of the Borrower;
(x) Guaranty, dated June 11, 1997, of Coral
Energy, L.P. in favor of the Borrower;
(xi) Guaranty, dated August 7, 1991, of Husky Oil
Ltd. in favor of the Borrower;
(xii) Guaranty, dated June 1, 1992, of Mobil Oil
Canada in favor of the Borrower;
(xiii) Guaranty, dated October 12, 1994, of Numac
Energy Inc. in favor of the Borrower;
(xiv) Guaranty, dated October 25, 1995, of Numac
Energy Inc. in favor of the Borrower;
(xv) Guaranty, dated October 7, 1993, of Northern
Natural Gas Company in favor of the Borrower;
(xvi) Guaranty, dated October 7, 1993, of Northern
Natural Gas Company in favor of the Borrower;
(xvii) Guaranty, dated October 31, 1992, of
Panhandle Eastern Corporation in favor of the
Borrower;
(xviii) Guaranty, dated October 18, 1994, of
PanCanadian Petroleum Limited in favor of the
Borrower;
(xix) Guaranty, dated June 21, 1996, of Poco
Petroleums Ltd. in favor of the Borrower;
(xx) Guaranty, dated June 21, 1996, of Poco
Petroleums Ltd. in favor of the Borrower;
(xxi) Guaranty, dated April 27, 1995, of
Renaissance Energy Ltd. in favor of the Borrower;
(xxii) Guaranty, dated November 23, 1994, of
Renaissance Energy Ltd. in favor of the Borrower;
(xxiii) Guaranty, dated December 9, 1993, of Wascana
Energy Inc. in favor of the Borrower;
(xxiv) Guaranty dated August 1, 1993, of Union
Energy Inc. in favor of the Borrower;
(xxv) First Amended Appendix A to Alternative
Credit Support Arrangement for the U.S. Shippers
Service Agreement with ProGas U.S.A. Inc., dated
June 20, 1996, between ProGas U.S.A., Borrower and
ProGas Limited, attached to the Northern Border
Pipeline Company U.S. Shippers Service Agreement,
dated November 1, 1994 between ProGas U.S.A. and
Borrower;
(xxvi) Standby Letter of Credit issued by Bank of
Montreal International Operations under
IMDC/0666/S/214702 in favor of Borrower;
(xxvii) Supply Report Agreement, dated as of July 10,
1996, of ProGas U.S.A. Inc. in favor of Borrower;
(xxviii) ProGas - Northern Border - Natural Gas
Clearinghouse Assignment Agreement, dated June 1,
1996, between ProGas U.S.A. and Borrower, and
Natural Gas Clearinghouse Acknowledgment of
Assignment by ProGas U.S.A., Inc. to Northern
Border Pipeline Company, dated August 5, 1996;
(xxviv) ProGas - Northern Border - Tenaska Marketing
Ventures Assignment Agreement, dated June 1, 1996,
between ProGas U.S.A. and Borrower, and Tenaska
Marketing Ventures Acknowledgment of Assignment by
ProGas U.S.A. Inc. to Northern Border Pipeline
Company, dated June 26, 1996;
(xxx) Capacity Transfer Agreement, made as of
November 1, 1994, between ProGas U.S.A. and
Borrower; and
(xxxi) Commitment from NOVA Gas Transmission Ltd. in
favor of Northern Border Pipeline Company, dated
November 25, 1994.
SCHEDULE "5.14"
OWNERSHIP OF PROPERTIES; LIENS
(See Section 5.14)
None
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
SECTION 1.1. Defined Terms. 1
ARTICLE II THE FACILITIES 16
SECTION 2.1. Facility A. 16
SECTION 2.1.1 Description of Facility A 16
SECTION 2.1.2 Availability of Facility A 16
SECTION 2.1.3 Swing Loan 16
SECTION 2.1.4 Facility A Advances 16
SECTION 2.2. Facility B 17
SECTION 2.2.1 Description of Facility B 17
SECTION 2.2.2 Availability of Facility B 17
SECTION 2.2.3 Facility B Advances 17
SECTION 2.3. Competitive Bid Advances 17
SECTION 2.3.1 Competitive Bid Option 17
SECTION 2.3.2 Competitive Bid Quote Request 17
SECTION 2.3.3 Invitation for Competitive Bid
Quotes 18
SECTION 2.3.4 Submission and Contents of
Competitive Bid Quotes 18
SECTION 2.3.5 Notice to the Borrower 20
SECTION 2.3.6 Acceptance and Notice by the
Borrower 20
SECTION 2.3.7 Allocation by the Administrative
Agent 21
SECTION 2.3.8 Administration Fees 21
SECTION 2.4. Types of Advances 21
SECTION 2.5. Facility Fees 21
SECTION 2.6. Reduction or Cancellation 21
SECTION 2.7. Method of Borrowing 22
SECTION 2.8. Method of Borrowing Swing Loan 22
SECTION 2.9. Method of Selecting Rate Options and
Interest Periods 22
SECTION 2.10. Minimum Amount of Each Advance 23
SECTION 2.11. Rate after Maturity 23
SECTION 2.12. Method of Payment 23
SECTION 2.13. Notes; Telephonic Notices 23
SECTION 2.14. Interest Payment Dates; Interest
Basis 23
SECTION 2.15. Notification of Advances, Interest
Rates, Prepayments and Commitment
Reductions 24
SECTION 2.16. Lending Installations 24
SECTION 2.17. Non-Receipt of Funds by the
Administrative Agent 24
SECTION 2.18. Voluntary Prepayments 25
SECTION 2.19. Conversion and Continuation of
Outstanding Advances 25
SECTION 2.20. Rates 25
SECTION 2.21. Withholding Tax Exemption 26
SECTION 2.22. Agent's Fees 28
SECTION 2.23. Extension of Facility A
Termination Date 28
ARTICLE III CHANGE IN CIRCUMSTANCES 30
SECTION 3.1. Yield Protection 30
SECTION 3.2. Changes in Capital Adequacy
Regulations 31
SECTION 3.3. Availability of Types of Advances 31
SECTION 3.4. Funding Indemnification 32
SECTION 3.5. Lender Statements; Survival of
Indemnity 32
SECTION 3.6. Replacement of Lenders 32
ARTICLE IV CONDITIONS PRECEDENT 33
SECTION 4.1. Initial Advance 33
SECTION 4.2. Each Loan and Conversion Date 34
SECTION 4.3. Conversion Date 35
ARTICLE V REPRESENTATIONS AND WARRANTIES 35
SECTION 5.1. General Partnership Existence and
Standing 35
SECTION 5.2. Authorization and Validity 35
SECTION 5.3. No Conflict; Government Consent 36
SECTION 5.4. Financial Statements 36
SECTION 5.5. Material Adverse Change 36
SECTION 5.6. Taxes 36
SECTION 5.7. Litigation and Contingent Obligations 36
SECTION 5.8. Subsidiaries 37
SECTION 5.9. ERISA 37
SECTION 5.10. Accuracy of Information 37
SECTION 5.11. Representation with Respect to
Regulations G, T, U and X 37
SECTION 5.12. Compliance With Laws, Approvals, etc 37
SECTION 5.13. Environmental Matters 37
SECTION 5.14. Ownership of Properties; Liens 38
SECTION 5.15. Investment Company Act 38
SECTION 5.16. Public Utility Holding Company Act 38
SECTION 5.17. Insurance 38
SECTION 5.18. Default 38
SECTION 5.19. Service Agreements and Support
Agreements 38
SECTION 5.20. Partnership Agreement 39
ARTICLE VI COVENANTS 39
SECTION 6.1. Affirmative Covenants 39
SECTION 6.1.1 Financial Reporting 39
SECTION 6.1.2 Use of Proceeds 41
SECTION 6.1.3 [INTENTIONALLY OMITTED] 41
SECTION 6.1.4 Taxes and Other Charges 41
SECTION 6.1.5 Insurance 41
SECTION 6.1.6 Compliance with Laws 41
SECTION 6.1.7 Maintenance of Properties 41
SECTION 6.1.8 Inspection 42
SECTION 6.1.9 Maintenance of Books and Records 42
SECTION 6.1.10 Pari Passu Status 42
SECTION 6.1.11 Tariff 42
SECTION 6.1.12 Preservation of Rights, Etc 42
SECTION 6.1.13 Service Agreements and Support
Agreements 42
SECTION 6.1.14 Shipper Credit Quality 43
SECTION 6.2. Negative Covenants 43
SECTION 6.2.1 Limitation on Negative Pledges 43
SECTION 6.2.2 Limitation on Other Business 43
SECTION 6.2.3 Merger; etc. 43
SECTION 6.2.4 Sale of Assets 43
SECTION 6.2.5 Investments and Acquisitions 44
SECTION 6.2.6 Guaranty 45
SECTION 6.2.7 Liens 45
SECTION 6.2.8 Affiliates 46
SECTION 6.2.9 Judgments. 46
SECTION 6.3. Ratio of Debt 46
ARTICLE VII DEFAULTS 47
SECTION 7.1. False Representation or Warranty 47
SECTION 7.2. Nonpayment of Principal 47
SECTION 7.3. Breach of Other Terms 47
SECTION 7.4. Indebtedness 47
SECTION 7.5. Bankruptcy 47
SECTION 7.6. Appointment of Receiver 48
SECTION 7.7. Condemnation 48
SECTION 7.8. Judgment 48
SECTION 7.9. Action to Change Tariff 48
SECTION 7.10. Regulatory Action to Change Tariff 48
SECTION 7.11. Voting Interest 49
SECTION 7.12. Partnership Agreement 49
SECTION 7.13. Abandonment of the Project 49
SECTION 7.14. Change in Operator 49
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES 49
SECTION 8.1. Acceleration 49
SECTION 8.2. Amendments 49
SECTION 8.3. Preservation of Rights 50
ARTICLE IX GENERAL PROVISIONS 50
SECTION 9.1. Survival of Representations 50
SECTION 9.2. Governmental Regulation 51
SECTION 9.3. Taxes 51
SECTION 9.4. Headings 51
SECTION 9.5. Entire Agreement 51
SECTION 9.6. Several Obligations 51
SECTION 9.7. Expenses; Indemnification 51
SECTION 9.8. Numbers of Documents 52
SECTION 9.9. Accounting 52
SECTION 9.10. Severability of Provisions 52
SECTION 9.11. Nonliability of Lender 52
SECTION 9.12. CHOICE OF LAW 53
SECTION 9.13. CONSENT TO JURISDICTION 53
SECTION 9.14. [INTENTIONALLY OMITTED.] 53
SECTION 9.15. Confidentiality 53
SECTION 9.16. Limitation on Agent and Lender
Liability 53
SECTION 9.17. No Partners' Liability 54
ARTICLE X THE ADMINISTRATIVE AGENT 54
SECTION 10.1. Appointment and Authority of
Administrative Agent 54
SECTION 10.2. Capacity of the Agents 55
SECTION 10.3. No Liability of the Administrative
Agent and Indemnity 55
SECTION 10.4. Employees of Administrative Agent 56
SECTION 10.5. Reliance 56
SECTION 10.6. Several Commitments 56
SECTION 10.7. Notice of Default 56
SECTION 10.8. Lender Credit Decision 57
SECTION 10.9. Successor Administrative Agent 57
SECTION 10.10 Syndication Agents; Joint Arrangers 58
ARTICLE XI SETOFF; RATABLE PAYMENTS 58
SECTION 11.1. Setoff 58
SECTION 11.2. Ratable Payments 58
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 58
SECTION 12.1. Successors and Assigns 58
SECTION 12.2. Participations 59
SECTION 12.2.1 Permitted Participants; Effect 59
SECTION 12.2.2 Voting Rights 59
SECTION 12.2.3 Benefit of Setoff and
Indemnities 59
SECTION 12.3. Assignments 60
SECTION 12.3.1 Permitted Assignments 60
SECTION 12.3.2 Effect; Effective Date 60
SECTION 12.4. Dissemination of Information 61
SECTION 12.5. Tax Treatment 61
ARTICLE XIII NOTICES 61
SECTION 13.1. Giving Notice 61
SECTION 13.2. Change of Address 61
ARTICLE XIV COUNTERPARTS 62
Exhibit A-1 - Form of Facility Note
Exhibit A-2 - Form of Competitive Bid Note
Exhibit A-3 - Form of Swing Loan Note
Exhibit B-1 - Form of Opinion of Janet Place
Exhibit B-2 - Form of Opinion of Chapman & Cutler
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Notice of Assignment
Exhibit E - Form of Competitive Bid Quote Request
Exhibit F - Form of Invitation for Competitive Bid Quotes
Exhibit G - Form of Competitive Bid Quote
Exhibit H - Opinion of Mayer, Brown & Platt
Exhibit I - Assignment Agreement
Schedule 1a - Service Agreements
Schedule 1b - Precedent Agreements
Schedule 2 - Litigation and Contingent Liabilities
Schedule 3 - Indebtedness and Liens
Schedule 4 - Other Investments
Schedule 5 - Support Agreements
Schedule 5.14 - Ownership of Properties; Liens
<PAGE>
EXHIBIT 10(d)
U.S. $175,000,000
CREDIT AGREEMENT,
dated as of November 6, 1997
among
NORTHERN BORDER PARTNERS, L.P.
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
CANADIAN IMPERIAL BANK OF COMMERCE
acting through certain U.S. branches or agencies,
as the Agent for the Lenders.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of November 6, 1997, among
NORTHERN BORDER PARTNERS, L.P., a Delaware limited partnership
(the "Borrower"), the various financial institutions as are or
may become parties hereto (collectively, the "Lenders"), and
CANADIAN IMPERIAL BANK OF COMMERCE, acting through certain of its
U.S. branches or agencies ("CIBC"), as agent (the "Agent") for
the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower owns, through its Subsidiary, the
Intermediate Partnership (as hereinafter defined), a 70% general
partner interest in Northern Border Pipeline Company, a Texas
general partnership ("NBPC"); and
WHEREAS, NBPC intends to extend and expand its pipeline and
related facilities (such extension and expansion, the "Expansion
and Extension"), which Expansion and Extension will be, in part,
funded by contributions from the general partners of NBPC, and
WHEREAS, the Borrower desires to obtain Commitments from the
Lenders pursuant to which Loans, in a maximum aggregate principal
amount at any one time outstanding not to exceed $175,000,000,
will be made to the Borrower from time to time prior to the
applicable Commitment Termination Date for such Commitments; and
WHEREAS, the Lenders are willing, on the terms and subject
to the conditions hereinafter set forth (including Article V), to
extend such Commitments and make such Loans to the Borrower; and
WHEREAS, the proceeds of such Loans will be used
(a) to make contributions to the Intermediate
Partnership (including reimbursement of prior contributions)
to fund such Intermediate Partnership's pro-rata
contribution requirement to NBPC for the construction of the
Expansion and Extension; and
(b) subject to the conditions set forth below, for
general business purposes of the Borrower in an amount not to
exceed $40,000,000 at any time outstanding;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION I.1. Defined Terms. The following terms (whether
or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under
common control with such Person (excluding any trustee under, or
any committee with responsibility for administering, any Plan).
A Person shall be deemed to be "controlled by" any other Person
if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors
or managing general partners; or (b) to direct or cause the
direction of the management and policies of such Person whether
by contract or otherwise.
"Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor
Agent pursuant to Section 9.4.
"Agreement" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or
otherwise modified and in effect on such date.
"Alternate Base Rate" means, on any date and with respect to
all Base Rate Loans, a fluctuating rate of interest per annum
equal to the higher of (a) the rate of interest most recently
announced by CIBC at its Domestic Office as its base rate for
Dollar loans; and (b) the Federal Funds Rate most recently
determined by the Agent plus 0.50%. The Alternate Base Rate is
not necessarily intended to be the lowest rate of interest
determined by CIBC in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans
maintained as Base Rate Loans will take effect simultaneously
with each change in the Alternate Base Rate. The Agent will give
notice promptly to the Borrower and the Lenders of changes in the
Alternate Base Rate.
"Applicable Margin" means with respect to any Loan
maintained as a LIBO Rate Loan (a) on any date prior to the
second anniversary of the Effective Date, a rate per annum equal
to .475% and (b) on the second anniversary of the Effective Date
and on any date thereafter, a rate equal to .625% per annum.
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to the Borrower, those
of its officers whose signatures and incumbency shall have been
certified to the Agent and the Lenders pursuant to Section 5.1.1.
"Authorized Representative" means any Authorized Officer,
the Northern Plains Natural Gas Company's Director, Finance or
the Northern Plains Natural Gas Company's Manager, Debt &
Investment.
"Base Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Alternate Base
Rate.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the
case of LIBO Rate Loans, having the same Interest Period made by
all Lenders on the same Business Day and pursuant to the same
Borrowing Request in accordance with Section 2.1.
"Borrowing Request" means a loan request and certificate
duly executed by an Authorized Representative of the Borrower,
substantially in the form of Exhibit B hereto.
"Business Day" means (a) any day which is neither a Saturday
or Sunday nor a legal holiday on which banks are authorized or
required to be closed in New York, New York; and (b) relative to
the making, continuing, prepaying or repaying of, or rate
selection for, any LIBO Rate Loans, any day other than a Saturday
or Sunday on which commercial banks are open for business in New
York, New York and on which dealings in Dollars are carried on in
the London interbank eurodollar market.
"Capitalization" means, with respect to the Borrower, the
sum of its Indebtedness plus partner equity, determined on a
consolidated basis for the Borrower and the Intermediate
Partnership in accordance with GAAP, except as to consolidation
requirements for Subsidiaries of the Borrower and the
Intermediate Partnership.
"Capitalized Lease Liabilities" means all monetary
obligations of the Borrower or any of its Subsidiaries under any
leasing or similar arrangement which, in accordance with GAAP,
would be classified as capitalized leases, and, for purposes of
this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time: (a) any
evidence of Indebtedness issued or fully guaranteed by the United
States Government maturing no later than one year from such time;
(b) commercial paper rated A-l or better by Standard & Poor's
Corporation or P-l or better by Moody's Investors Service, Inc.;
(c) any certificate of deposit maturing no later than one year
after such time issued by, or any time deposit with either (i) a
commercial banking institution that has a combined capital and
surplus and undivided profits of not less than $500,000,000, or
(ii) any Lender; (d) bonds, debentures, notes or other evidences
of Indebtedness issued by any of the following agencies or such
other like governmental or governmental-sponsored agencies which
may be hereafter created: Bank for Cooperatives, Federal
Intermediate Credit Banks, Federal Financing Banks, Federal Home
Loan Bank System, Export-Import Bank of the United States,
Farmers Home Administration, Small Business Administration,
InterAmerican Development Bank, International Bank for
Reconstruction and Development, Federal Land Banks, the Federal
National Mortgage Association, and the Government National
Mortgage Association, in each case if purchased by the Borrower
from a financial institution referred to in clause (c) above;
provided that such financial institution agrees to repurchase
such securities within 180 days from the purchase by the
Borrower; (e) any repurchase agreement with a term extending no
later than 180 days from such time entered into with any Lender
(or other commercial banking institution which is insured by the
Federal Deposit Insurance Corporation and has a combined capital
and unimpaired surplus of at least $500,000,000, and with members
of the Association of Primary Dealers in United States Government
Securities, the underlying securities of which are of the type
described in clause (a) or (d) above, and each of which is
secured at all times by obligations of the same type that have
fair market value, including accrued interest, at least equal to
the amount of such repurchase agreement, including accrued
interest; (f) obligations of any state within the United States,
any nonprofit corporation or any instrumentality of the
foregoing, maturing no later than one year from such time,
provided that at the time of their purchase, such obligations are
rated in one of the two highest letter rating categories (e.g. in
the case of Standard & Poors, either its AAA or AA category) by a
nationally recognized securities credit rating agency; and
(g) obligations maturing no later than one year from such time,
issued by political subdivisions or municipalities of any state
within the United States, any nonprofit corporation or any
instrumentality of the foregoing, that are rated in one of the
two highest letter rating categories (e.g. in the case of
Standard & Poors, either its AAA or AA category) by a nationally
recognized securities credit rating agency.
"Change" is defined in Section 4.5.
"Change in Control" means the failure of Subsidiaries of
Enron Corp., Duke Energy Corp. and/or The Williams Companies to
own, free and clear of all Liens, general partnership interests
in the Borrower and the Intermediate Partnership such that the
aggregate voting rights of such Persons, together with their
Subsidiaries, is at least 50% of the outstanding voting rights of
all general partners of the Borrower or the Intermediate
Partnership, as the case may be.
"CIBC" is defined in the preamble.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's
obligation to make Loans pursuant to Section 2.1.1.
"Commitment Amount" means, on any date, $175,000,000, as
such amount may be reduced from time to time pursuant to Section
2.2.
"Commitment Letter" is defined in Section 3.3.3.
"Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Commitment Amount is
terminated in full or reduced to zero pursuant to Section
2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c),
the Commitments shall terminate automatically and without any
further action.
"Commitment Termination Event" means (a) the occurrence of
any Default described in clauses (a) through (d) of Section 8.1.9
with respect to the Borrower, NBPC or any Material Subsidiary;
(b) the occurrence and continuance of any other Event of Default
and either (i) the declaration of the Loans to be due and payable
pursuant to Section 8.3, or (ii) in the absence of such
declaration, the giving of notice by the Agent, acting at the
direction of the Required Lenders, to the Borrower that the
Commitments have been terminated; or (c) the occurrence of the
Facility B Termination Date, as such term is defined in the NBPC
Credit Agreement, unless on or before such date the Expansion and
Extension shall have been completed such that NBPC has received
written authorization from the FERC, or its representative, to
commence service on the Expansion and Extension and NBPC shall
have complied in all material respects with the terms of the FERC
Certificate of Public Convenience and Necessity dated August 1,
1997 issued to NBPC, and the Agent shall have received a
certificate from an Authorized Officer of the Borrower certifying
that NBPC has received such written authorization.
"Common Unit" means units representing limited partnership
interests in the Borrower offered for sale to the public.
"Common Units" does not include the Subordinated Units until such
units are converted to Common Units by operation of the
Partnership Agreement.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an
Authorized Representative of the Borrower, substantially in the
form of Exhibit C hereto.
"Controlled Group" means all members of a controlled group
of corporations and all members of a controlled group of trades
or businesses (whether or not incorporated) under common control
which, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section
4001 of ERISA.
"Debt" means the Indebtedness of the Borrower and the
Intermediate Partnership, determined on a consolidated basis
without regard to any other subsidiaries of either which would
otherwise be consolidated under the requirements of GAAP.
"Debt to Capitalization Ratio" means the ratio, expressed as
a percentage, of (a) Debt to (b) Capitalization.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto as Schedule I, as it may be amended, supplemented or
otherwise modified from time to time by the Borrower with the
written consent of the Agent and the Required Lenders.
"Dollar" and the sign "$" mean lawful money of the United
States.
"Domestic Office" means, relative to any Lender, the office
of such Lender designated below its signature hereto or
designated in the Lender Assignment Agreement or such other
office of a Lender (or any successor or assign of such Lender)
within the United States as may be designated from time to time
by notice from such Lender, as the case may be, to each other
Person party hereto.
"Effective Date" means the date this Agreement becomes
effective pursuant to Section 10.8.
"Environmental Laws" means all applicable federal, state and
local statutes, laws, regulations, ordinances, rules, or other
governmental restrictions relating to the regulation or
protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of
hazardous materials into the environment, including, without
limitation, ambient air, soil, surface water, groundwater,
wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of hazardous materials. Without
limiting the foregoing, Environmental Laws shall include, but not
be limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 et seq., as
amended, the Solid Waste Disposal Act, 42 U.S.C. 6901 et seq.,
as amended, the Federal Water Pollution Control Act, 33 U.S.C.
1251 et seq., as amended, the Clean Air Act, 42 U.S.C. 7401 et
seq., as amended, the Toxic Substances Control Act, 15 U.S.C.
2601 et seq., the Emergency Planning and Community Right-to-Know-
Act, 42 U.S.C. 11001 et seq., the Natural Gas Pipeline Safety
Act, 49 App. U.S.C. 1671 et seq., the Liquid Pipeline Safety
Act, 40 U.S.C. 1811, 2001 et seq., the Occupational Safety and
Health Act, 29 U.S.C. 651 et seq., the Hazardous Materials
Transportation Act, 49 U.S. 1801 et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq.,
any analogous state and local laws, and any rules or regulations
promulgated thereunder.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also
refer to any successor sections.
"ERISA Affiliate" means each Person (as defined in
Section 3(9) of ERISA) which together with the Borrower would be
deemed to be a member of the same "controlled group" within the
meaning of Section 414(b) and (c) of the Code.
"Event of Default" is defined in Section 8.1.
"Expansion and Extension" is defined in the second recital.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York; or (b) if such rate is
not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by
CIBC from three federal funds brokers of recognized standing
selected by it.
"FERC" means the Federal Energy Regulatory Commission and
any successor agency.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive
calendar months ending on December 31st; references to a Fiscal
Year with a number corresponding to any calendar year (e.g., the
"1997 Fiscal Year") refer to the Fiscal Year ending on the
December 31st occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"GAAP" is defined in Section 1.4.
"General Partner" means any of Northern Plains Natural Gas
Company, Pan Border Gas Company and Northwest Border Pipeline
Company and their successors and assigns in such capacity.
"Guaranteed Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment,
to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of any Person's
obligation under any Guaranteed Liability shall (subject to any
limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Guaranty" means the Guaranty executed and delivered
pursuant to Section 5.1.3, substantially in the form of Exhibit F
hereto, as amended, supplemented, restated or otherwise modified
from time to time.
"Guaranty Event of Default" has the meaning provided in the
Guaranty;
"Hazardous Material" means (a) any "hazardous substance", as
defined by the Comprehensive Environmental Response Compensation
and Liability Act of 1980 (as amended); (b) any "hazardous
waste", as defined by the Resource Conservation and Recovery Act,
as amended; or (c) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material waste or substance within
the meaning of any other applicable Environmental Law, all as
amended or hereafter amended.
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Loan Document refer to
this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular Section, paragraph or
provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion
or certification of any independent public accountant as to any
consolidated financial statement of the Borrower and its
Subsidiaries, any qualification or exception to such opinion or
certification (a) which is of a "going concern" or similar
nature; (b) which relates to the limited scope of examination of
matters relevant to such financial statement; or (c) which
relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which
would be to cause the Borrower to be in default of any of its
obligations under Section 7.2.3.
"including" means including without limiting the generality
of any description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments; (b) obligations of such Person as
lessee of any real or personal property (or any interest therein)
which have not or should not be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities, other than leases of
property and equipment for annual rentals not in excess of
$3,000,000 in the aggregate in any year; (c) all obligations of
such Person as lessee under leases which have been or should be,
in accordance with GAAP (except as to consolidation requirements
for Subsidiaries of the Borrower and the Intermediate
Partnership), recorded as Capitalized Lease Liabilities;
(d) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, other than accounts payable
arising in the ordinary course of such Person's business payable
on terms customary in the trade, and indebtedness (excluding
prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; and (e) all Guaranteed
Liabilities of such Person in respect of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any
Person shall include the Indebtedness of any partnership or joint
venture in which such Person is liable for such Indebtedness as a
general partner or a joint venturer provided that for purposes of
this Agreement, Indebtedness of the Intermediate Partnership
shall not include the Indebtedness of NBPC unless such
Indebtedness is guaranteed by the Intermediate Partnership.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Interest Period" means, relative to any LIBO Rate Loans,
the period beginning on (and including) the date on which such
LIBO Rate Loan is made or continued as, or converted into, a LIBO
Rate Loan pursuant to Section 2.3 or 2.4 and shall end on (but
exclude) the day which numerically corresponds to such date one,
two, three, six or, if available from all Lenders, twelve months
thereafter (or, if such month has no numerically corresponding
day, on the last Business Day of such month), in either case as
the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have
expiration dates occurring on more than five different
dates;
(b) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the
same duration;
(c) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless such next
following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end
on the Business Day next preceding such numerically
corresponding day); and
(d) no Interest Period may end later than the date set
forth in clause (a) of the definition of "Commitment
Termination Date".
"Intermediate Partnership" means Northern Border
Intermediate Limited Partnership, a limited partnership formed
pursuant to the laws of Delaware.
"Intermediate Partnership Agreement" means that certain
Amended and Restated Agreement of Limited Partnership of Northern
Border Intermediate Limited Partnership dated as of October 1,
1993 as the same may have been or may hereafter be amended,
supplemented, restated or otherwise modified from time to time.
"Investment" means, relative to any Person, (a) any loan or
advance made by such Person to any other Person (excluding
commission, travel and similar advances to officers and employees
made in the ordinary course of business); (b) any Guaranteed
Liability of such Person; and (c) any ownership or similar
interest held by such Person in any other Person. The amount of
any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and
without adjustment by reason of the financial condition of such
other Person) and shall, if made by the transfer or exchange of
property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market
value of such property.
"Lender Assignment Agreement" means a Lender Assignment
Agreement substantially in the form of Exhibit D hereto.
"Lenders" is defined in the preamble.
"Lending Installation" means an office, branch, Subsidiary
or Affiliate of a Lender.
"LIBO Rate" means, as the case may be, (a) relative to any
Interest Period for LIBO Rate Loans, the rate of interest per
annum equal to the average of the offered quotations appearing
on Telerate Page 3750 (or if such Telerate Page shall not be
available, any successor or similar service as may be selected by
the Agent and the Borrower) as of 11:00 a.m., London, England
time (or as soon thereafter as practicable), two Business Days
prior to the beginning of such Interest Period, or (b) if none of
such Telerate Page 3750 nor any successor or similar service is
available, relative to any Interest Period for LIBO Rate Loans,
the rate of interest equal to the average (rounded upwards, if
necessary, to the nearest 1/100 of 1%) of the rates per annum at
which Dollar deposits in immediately available funds are offered
to CIBC's LIBOR Office in the interbank eurodollar market as at
or about 11:00 a.m. London, England time two Business Days prior
to the beginning of such Interest Period for delivery on the
first day of such Interest Period, and in an amount approximately
equal to the amount of CIBC's LIBO Rate Loan and for a period
approximately equal to such Interest Period.
"LIBO Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed
rate of interest determined by reference to the LIBO Rate.
"LIBOR Office" means, relative to any Lender, the office of
such Lender designated as such below its signature hereto or
designated in the Lender Assignment Agreement or such other
office of a Lender as designated from time to time by notice from
such Lender to the Borrower and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate
Loans of such Lender hereunder.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property
to secure payment of a debt or performance of an obligation or
other priority or preferential arrangement of any kind or nature
whatsoever.
"Limited Partnership Units" means Common Units, Subordinated
Units and any other units representing a limited partner's
interest in the Borrower.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Notes, the
Guaranty and the Commitment Letter.
"Material Adverse Effect" means with respect to the Borrower
or any of its Subsidiaries a material adverse effect on (i) the
business, property, financial conditions or operations of the
Borrower or on the Borrower and such Subsidiaries (taken as a
whole) or (ii) on the ability of the Borrower to perform its
Obligations under any of the Loan Documents.
"Material Subsidiary" means any Subsidiary the assets of
which comprised more than 5% of consolidated assets of the
Borrower and its Subsidiaries at the end of the fiscal year of
the Borrower immediately prior to the date of determination, or
the gross revenue of which for any of the three fiscal years of
the Borrower immediately prior to the date of determination
comprised more than 5% of consolidated gross revenue, all as
determined by reference to the applicable financial statements of
such Subsidiary and the Borrower.
"Monthly Payment Date" means the last day of each calendar
month or, if any such day is not a Business Day, the next
succeeding Business Day.
"NBPC" is defined in the first recital.
"NBPC Credit Agreement" means that certain Credit Agreement
among NBPC, as Borrower, 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 and First Chicago Capital
Markets, Inc., Royal Bank of Canada and BancAmerica Robertson
Stephens (formerly known as BancAmerica Securities, Inc.) as
Joint Arrangers, dated as of June 16, 1997, as the same may be
amended, supplemented, restated or otherwise modified from time
to time.
"NBPC Partnership Agreement" means that certain General
Partnership Agreement relating to the formation of NBPC effective
as of March 9, 1978 as heretofore amended, modified and
supplemented and as such agreement may hereafter from time to
time be further amended, modified or supplemented.
"Note" means a promissory note of the Borrower payable to
any Lender, in the form of Exhibit A hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from outstanding Loans, and also means all
other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise)
of the Borrower arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"Operator" means that Person provided for in Section 8 of
the NBPC Partnership Agreement which, at the date of this
Agreement, is Northern Plains Natural Gas Company, a Delaware
corporation.
"Organic Document" means, relative to the Borrower, its
Partnership Agreement and certificate of limited partnership;
relative to the Intermediate Partnership, the Intermediate
Partnership Agreement and its certificate of limited partnership
and relative to NBPC, the NBPC Partnership Agreement.
"Participant" is defined in Section 10.11.
"Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Northern Border Partners,
L.P., dated as of October 1, 1993 as the same may have been or
may hereafter be amended, supplemented, restated or otherwise
modified from time to time.
"Pension Plan" means a "pension plan", as such term is
defined in section 3(2) of ERISA, which is subject to Title IV of
ERISA (other than a multiemployer plan as defined in section
4001(a)(3) of ERISA), and to which the Borrower or any
corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within
the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage
set forth opposite its signature hereto or set forth in the
Lender Assignment Agreement, as such percentage may be adjusted
from time to time pursuant to Lender Assignment Agreement(s)
executed by such Lender and its Assignee Lender(s) and delivered
pursuant to Section 10.11.
"Person" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other
capacity.
"Plan" means any multi-employer plan or single-employer plan
as defined in Section 4001 of ERISA which is maintained or
contributed to, or at any time during the five calendar years
preceding the date of this Agreement was maintained or
contributed to, for employees of the Borrower or an ERISA
Affiliate.
"Quarterly Payment Date" means the last day of each March,
June, September, and December or, if any such day is not a
Business Day, the next succeeding Business Day.
"Required Lenders" means, at any time, Lenders holding at
least 51% of the then aggregate outstanding principal amount of
the Notes then held by the Lenders, or, if no such principal
amount is then outstanding, Lenders having at least 51% of the
Commitments; provided, that, for purposes of the definition of
"Subordinated Debt", "Required Lenders" shall mean Lenders
holding at least 60% of such aggregate outstanding principal
amount or, if no such principal amount is then outstanding,
having at least 60% of the Commitments.
"Risk-Based Capital Guidelines" is defined in Section 4.5.
"Stated Maturity Date" means November 6, 2000.
"Subordinated Debt" means all unsecured Indebtedness of the
Borrower for money borrowed which is subordinated, upon terms
satisfactory to the Required Lenders, in right of payment to the
payment in full in cash of all Obligations.
"Subordinated Units" means those units representing limited
partnership interests in the Borrower which are owned by the
General Partners and are subordinated as to payment of
distributions to the Common Units pursuant to the terms of the
Partnership Agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation of which more than 50% of the outstanding securities
having ordinary voting power (irrespective of whether at the time
capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such
Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person or
(ii) any partnership, association, joint venture, limited
liability company or similar business organization more than 50%
of the ownership interests having ordinary voting power of which
shall at the time be directly or indirectly owned by such Person,
by such Person and one or more Subsidiaries of such Person, or by
one or more Subsidiaries of such Person. For purposes of this
Agreement, the Intermediate Partnership (but not NBPC) is deemed
to be a Subsidiary of the Borrower.
"Taxes" is defined in Section 4.6.
"type" means, relative to any Loan, the portion thereof, if
any, being maintained as a Base Rate Loan, a CD Rate Loan or a
LIBO Rate Loan.
SECTION I.2. Use of Defined Terms. Unless otherwise
defined or the context otherwise requires, terms for which
meanings are provided in this Agreement shall have such meanings
when used in the Disclosure Schedule and in each Note, Borrowing
Request, Continuation/Conversion Notice, Loan Document, notice
and other communication delivered from time to time in connection
with this Agreement or any other Loan Document.
SECTION I.3. Cross-References. Unless otherwise
specified, references in this Agreement and in each other Loan
Document to any Article or Section are references to such Article
or Section of this Agreement or such other Loan Document, as the
case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to
such clause of such Article, Section or definition.
SECTION I.4. Accounting and Financial Determinations.
Unless otherwise specified, all accounting terms used herein or
in any other Loan Document shall be interpreted, all accounting
determinations and computations hereunder or thereunder
(including under Section 7.2.3) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall
be prepared in accordance with, those generally accepted
accounting principles ("GAAP") applied in the preparation of the
financial statements referred to in Section 6.5.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION II.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender
severally agrees to make Loans pursuant to its Commitment
described in this Section 2.1.
SECTION II.1.1. Loan Commitment. From time to time on
any Business Day occurring prior to the Commitment Termination
Date, each Lender will make Loans (relative to such Lender, its
"Loans") to the Borrower equal to such Lender's Percentage of the
aggregate amount of the Borrowing requested by the Borrower to be
made on such day. On the terms and subject to the conditions
hereof, the Borrower may from time to time borrow, prepay and
reborrow Loans.
SECTION II.1.2. Lenders Not Permitted or Required To
Make Loans. No Lender shall be permitted or required to make any
Loan if, after giving effect thereto, the aggregate outstanding
principal amount of all Loans (a) of all Lenders would exceed
the Commitment Amount, or (b) of such Lender would exceed such
Lender's Percentage of the Commitment Amount.
SECTION II.2. Reduction of Commitment Amount. The
Commitment Amount is subject to reduction from time to time
pursuant to this Section 2.2.
The Borrower may, from time to time on any Business Day
occurring after the time of the initial Borrowing hereunder,
voluntarily reduce the Commitment Amount; provided, however, that
all such reductions shall require at least three Business Days'
prior notice to the Agent and be permanent, and any partial
reduction of any Commitment Amount shall be in a minimum amount
of $10,000,000 and in an integral multiple of $5,000,000.
Upon the incurrence of any Indebtedness as described in
Section 7.2.1(e) the Commitment Amount shall be reduced by an
amount equal to the proceeds of such Indebtedness. Upon the sale
pursuant to Section 7.2.9 of any Common Units in the Borrower
other than the sale of Limited Partnership Units issued to the
General Partners pursuant to Section 7.1.9, the Commitment Amount
shall be reduced by an amount equal to (i) the proceeds of such
sale (net of reasonable sale costs) less (ii) the proceeds of
such sale which were raised for the stated purpose of capital
contributions by the Borrower to NBPC, whether directly or
indirectly through the Intermediate Partnership, or for capital
investments or acquisitions by the Borrower either directly or
indirectly through its Subsidiaries which comply with Section
7.2.7, in each case for purposes other than the Expansion and
Extension less (iii) the proceeds of such sale which were raised
for the stated purpose of making capital contributions to NBPC,
whether directly or indirectly through the Intermediate
Partnership (including reimbursement of prior contributions) to
fund the construction of the Expansion and Extension to the
extent that proceeds from such issuance, together with proceeds
of all prior issuances of Common Units since the Effective Date
for the stated purpose of making such contributions, are not in
excess of $25,000,000 in the aggregate.
SECTION II.3. Borrowing Procedure. By delivering a
Borrowing Request to the Agent on or before 12:00 noon, New York,
New York time, on a Business Day, the Borrower may from time to
time irrevocably request, (i) in the case of a Borrowing of LIBO
Rate Loans, on not less than three nor more than five Business
Days' notice and (ii) in the case of a Borrowing of Base Rate
Loans, on the date for such Borrowing, that a Borrowing be made
in a minimum amount of $5,000,000 and an integral multiple of
$1,000,000, or in the unused amount of the Commitment. On the
terms and subject to the conditions of this Agreement, each
Borrowing shall be comprised of the type of Loans, and shall be
made on the Business Day, specified in such Borrowing Request.
On or before 2:00 p.m. (New York, New York time) on such Business
Day each Lender shall deposit with the Agent same day funds in an
amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the
Agent shall specify from time to time by notice to the Lenders.
To the extent funds are received from the Lenders, the Agent
shall make such funds available to the Borrower by wire transfer
to the accounts the Borrower shall have specified in its
Borrowing Request. No Lender's obligation to make any Loan shall
be affected by any other Lender's failure to make any Loan.
SECTION II.4. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Agent on or
before 12:00 noon, New York, New York time, on a Business Day,
the Borrower may from time to time irrevocably elect, on not less
than three nor more than five Business Days' notice that all, or
any portion in an aggregate minimum amount of $5,000,000 and an
integral multiple of $1,000,000, of any Loans be, in the case of
Base Rate Loans, converted into LIBO Rate Loans or, in the case
of LIBO Rate Loans, be converted into a Base Rate Loan or
continued as a LIBO Rate Loan (in the absence of delivery of a
Continuation/ Conversion Notice with respect to any LIBO Rate
Loan at least three Business Days before the last day of the then
current Interest Period with respect thereto, such LIBO Rate Loan
shall, on such last day, automatically convert to a Base Rate
Loan); provided, however, that (i) each such conversion or
continuation shall be pro rated among the applicable outstanding
Loans of all Lenders, and (ii) no portion of the outstanding
principal amount of any Loans may be continued as, or be
converted into, LIBO Rate Loans when any Default has occurred and
is continuing.
SECTION II.5. Funding. Each Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBO Rate
Loans hereunder by causing one of its foreign branches or
Affiliates (or an international banking facility created by such
Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to
have been made and to be held by such Lender, and the obligation
of the Borrower to repay such LIBO Rate Loan shall nevertheless
be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any
determination to be made for purposes of Sections 4.1, 4.2, 4.3
or 4.4, it shall be conclusively assumed that each Lender elected
to fund all LIBO Rate Loans by purchasing Dollar deposits in its
LIBOR Office's interbank eurodollar market.
SECTION II.6. Notes. Each Lender's Loans under its
Commitment shall be evidenced by a Note payable to the order of
such Lender in a maximum principal amount equal to such Lender's
Percentage of the original applicable Commitment Amount. The
Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made) appropriate notations on the grid attached to
such Lender's Note (or on any continuation of such grid) or in
such Lender's other records as it may maintain, which notations,
if made, shall evidence, inter alia, the date of, the outstanding
principal of, and the interest rate and Interest Period
applicable to, the Loans evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error;
provided, however, that the failure of any Lender to make any
such notations shall not limit or otherwise affect any
Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION III.1. Repayments and Prepayments. The Borrower
shall repay in full the unpaid principal amount of each Loan upon
the Stated Maturity Date therefor. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Loans; provided,
however, that (i) any such prepayment shall be made pro rata
among Loans of the same type and, if applicable, having the
same Interest Period of all Lenders; (ii) any such
prepayment of any LIBO Rate Loan made on any day other than
the last day of the Interest Period for such Loan shall be
subject to the provisions of Section 4.4; (iii) all such
voluntary prepayments of LIBO Rate Loans shall require at
least three but no more than five Business Days' prior
written notice and all such voluntary prepayments of Base
Rate Loans shall require at least one but no more than five
Business Days' prior written notice, in each case delivered
to the Agent; and (iv) all such voluntary partial
prepayments shall be in an aggregate minimum amount of
$5,000,000 and an integral multiple of $1,000,000;
(b) shall, on each date when any reduction in the
Commitment Amount shall become effective, including pursuant
to Section 2.2, make a mandatory prepayment of all Loans
equal to the excess, if any, of the aggregate, outstanding
principal amount of all Loans over the Commitment Amount as
so reduced;
(c) unless on or before such date the Expansion and
Extension shall have been completed such that NBPC has
received written authorization from the FERC, or its
representative, to commence service on the Expansion and
Extension and NBPC shall have complied in all material
respects with the terms of the FERC Certificate of Public
Convenience and Necessity dated August 1, 1997 issued to
NBPC, and the Agent shall have received a certificate from
an Authorized Officer of the Borrower certifying that NBPC
has received such written authorization, shall, upon the
occurrence of the Facility B Termination Date (as such term
is defined in the NBPC Credit Agreement), repay all Loans
outstanding; and
(d) shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 8.2 or
Section 8.3, repay all Loans, unless, pursuant to Section
8.3, only a portion of all Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall
be without premium or penalty, except as may be required by
Section 4.4. No voluntary prepayment of principal of any Loans
shall cause a reduction in the Commitment Amount.
SECTION III.2. Interest Provisions. Interest on the
outstanding principal amount of Loans shall accrue and be payable
in accordance with this Section 3.2.
SECTION III.2.1. Rates. Pursuant to an appropriately
delivered Borrowing Request or Continuation/Conversion Notice,
the Borrower may elect that Loans comprising a Borrowing accrue
interest at a rate per annum:
(a) on that portion maintained from time to time as a
Base Rate Loan, equal to the Alternate Base Rate from time
to time in effect; and
(b) on that portion maintained as a LIBO Rate Loan,
during each Interest Period applicable thereto, equal to the
sum of the LIBO Rate for such Interest Period plus the
Applicable Margin.
The LIBO Rate for any Interest Period for LIBO Rate Loans
will be determined by the Agent on the basis of the applicable
rates determined pursuant to clause (a) or (b) in the definition
of "LIBO Rate," as the case may be, two Business Days before the
first day of such Interest Period.
All LIBO Rate Loans shall bear interest from and including
the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest
rate determined as applicable to such LIBO Rate Loan.
SECTION III.2.2. Post-Maturity Rates. After the date any
principal amount of any Loan is due and payable (whether on the
Stated Maturity Date, upon acceleration or otherwise), or after
any other monetary Obligation of the Borrower shall have become
due and payable, the Borrower shall pay, but only to the extent
permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the Alternate Base Rate
plus a margin of 2%.
SECTION III.2.3. Payment Dates. Interest accrued on each
Loan shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole
or in part, of principal outstanding on such Loan;
(c) with respect to Base Rate Loans, on each Quarterly
Payment Date occurring after the date of the initial
Borrowing hereunder;
(d) with respect to LIBO Rate Loans, the last day of
each applicable Interest Period (and, if such Interest
Period shall exceed three months, on the last day of each
three month period of such Interest Period);
(e) with respect to any Base Rate Loans converted into
LIBO Rate Loans on a day when interest would not otherwise
have been payable pursuant to clause (c), on the date of
such conversion; and
(f) on that portion of any Loans the Stated Maturity
Date of which is accelerated pursuant to Section 8.2 or
Section 8.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising
under this Agreement or any other Loan Document after the date
such amount is due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise) shall be payable upon
demand.
SECTION III.3. Fees. The Borrower agrees to pay the fees
set forth in this Section 3.3. All such fees shall be non-
refundable.
SECTION III.3.1. Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Lender, for the period
(including any portion thereof when any of its Commitments are
suspended by reason of the Borrower's inability to satisfy any
condition of Article V) commencing on the Effective Date and
continuing through the final Commitment Termination Date, a
commitment fee at the rate of .15 of 1% per annum on such
Lender's Percentage of the sum of the average daily unused
portion of the Commitment Amount. Such commitment fees shall be
payable by the Borrower in arrears on each Quarterly Payment
Date, commencing with the first such day following the Effective
Date, and on the Commitment Termination Date.
SECTION III.3.2. Upfront Fee. The Borrower agrees to pay
to the Agent for the account of each Lender, an upfront fee in an
amount equal to the amount set forth in a letter to each Lender
from the Agent which amount has been agreed to by the Borrower,
payable on the Effective Date.
SECTION III.3.3. Agent's Fee. To the Agent, for its own
account and for the account of CIBC Oppenheimer Corp. (formerly
known as CIBC Wood Gundy Securities Corp.), an agency fee and a
structuring fee as set forth in that certain letter agreement
dated September 25, 1997 (the "Commitment Letter") between the
Borrower and the Agent.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION IV.1. LIBO Rate Lending Unlawful. If any Lender
determines that the advancement of or maintenance of any of its
LIBO Rate Loans at a suitable Lending Installation would violate
any applicable law, rule, regulation or directive, whether or not
having the force of law, the Agent shall suspend the availability
of LIBO Rate Loans for such Lender and any LIBO Rate Loan for
such Lender shall automatically convert into a Base Rate Loan.
SECTION IV.2. Deposits Unavailable. If the Agent shall
have determined that (a) Dollar deposits in the relevant amount
and for the relevant Interest Period appropriate to match fund
LIBO Rate Loans are not available in the relevant market; or
(b) by reason of circumstances affecting the relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans, then, upon notice from
the Agent to the Borrower and the Lenders, the obligations of all
Lenders under Section 2.3 and Section 2.4 to make or continue any
Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until Dollar deposits in the relevant
amounts and for the relevant Interest Periods are available in
the relevant market and adequate means exist for ascertaining the
applicable interest rate. If after giving effect to amounts
payable under Sections 4.3 and 4.5 an interest rate applicable to
LIBO Rate Loans does not accurately reflect the cost of making a
LIBO Rate Loan, then, if for any reason whatsoever the provisions
of Section 4.3 are inapplicable, the Agent shall suspend the
availability of LIBO Rate Loans made after the date of any such
determination.
SECTION IV.3. Increased LIBO Rate Loan Costs, etc. If any
change in, or introduction of, any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any
interpretation thereof, or compliance of any Lender therewith,
(a) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from
the Borrower (excluding franchise taxes and taxes imposed on the
overall net income of any Lender or applicable Lending
Installation), or changes the basis of taxation of payments to
any Lender in respect of its LIBO Rate Loans or other amounts due
it hereunder, or (b) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender or any applicable Lending
Installation, or (c) imposes any other condition the result of
which is to increase the cost to any Lender or any applicable
Lending Installation of making, funding or maintaining LIBO Rate
Loans or reduces any amount receivable by any Lender or any
applicable Lending Installation in connection with LIBO Rate
Loans, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to the
amount of LIBO Rate Loans held or interest received by it, by an
amount deemed material by such Lender, then, within 15 days of
demand by such Lender specifying, in reasonable detail, the
nature of the change or introduction, the Borrower shall pay such
Lender that portion of such increased expense incurred or
reduction in an amount received which such Lender determines is
attributable to making, funding and maintaining its Loans and its
Commitment. The Borrower shall not be obligated to compensate
any Lender pursuant to this Section 4.3 for any amounts
attributable to a period more than 120 days prior to the giving
of notice by such Lender to the Borrower of its intention to seek
compensation under this Section 4.3 or its request therefor.
SECTION IV.4. Funding Losses. If any payment to any Lender
of a LIBO Rate Loan occurs on a date which is not the last day of
the applicable Interest Period, whether because of acceleration,
prepayment, the replacement of such Lender pursuant to Section
4.8, or otherwise, or a LIBO Rate Loan is not made or converted
on the date specified by the Borrower in a Borrowing Request or
Continuation/Conversion Notice, as the case may be, for any
reason other than default by the relevant Lenders, the Borrower
will indemnify each such Lender, or will cause each such Lender
to be indemnified, for any loss or cost incurred by it resulting
therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain
the LIBO Rate Loan but excluding lost profits. The Borrower
shall not be obligated to compensate any Lender pursuant to this
Section 4.4 for any amounts attributable to a period more than
120 days prior to the giving of notice by such Lender to the
Borrower of its intention to seek compensation under this Section
4.4 or its request therefor.
SECTION IV.5. Increased Capital Costs. If a Lender
determines that the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such
Lender, or any corporation controlling such Lender is increased
as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary
to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender reasonably
determines is attributable to this Agreement, its Loans, or its
obligation to make Loans hereunder (after taking into account
such Lender's policies as to capital adequacy being applied with
respect to customers similarly situated to Borrower with whom
such Lender has a contractual right to so charge such amounts).
"Change" means (i) any change after the Effective Date in the
Risk-Based Capital Guidelines or (ii) any adoption of or change
in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive
(whether or not having the force of law) after the Effective Date
which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any
corporation controlling any Lender. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect
in the United States on the Effective Date, including transition
rules, and (ii) the corresponding capital regulations promulgated
by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition
rules, and any amendments to such regulations adopted prior to
the date of this Agreement. The Borrower shall not be obligated
to compensate any Lender pursuant to this Section 4.5 for any
amounts attributable to a period more than 120 days prior to the
giving of notice by such Lender to the Borrower of its intention
to seek compensation under this Section 4.5 or its request
therefor.
SECTION IV.6. Taxes. All payments by the Borrower of
principal of, and interest on, the Loans and all other amounts
payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or
measured by any Lender's net income or receipts (such non-
excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted; (b) promptly forward to
the Agent an official receipt or other documentation satisfactory
to the Agent evidencing such payment to such authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the
net amount actually received by each Lender will equal the full
amount such Lender would have received had no such withholding or
deduction been required. Moreover, if any Taxes are directly
asserted against the Agent or any Lender with respect to any
payment received by the Agent or such Lender hereunder, the Agent
or such Lender may pay such Taxes and the Borrower will promptly
pay such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received
by such person after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such
person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Agent, for
the account of the respective Lenders, the required receipts or
other required documentary evidence, the Borrower shall indemnify
the Lenders for any incremental Taxes, interest or penalties that
may become payable by any Lender as a result of any such failure.
For purposes of this Section 4.6, a distribution hereunder by the
Agent or any Lender to or for the account of any Lender shall be
deemed a payment by the Borrower.
Upon the request of the Borrower or the Agent, each Lender
that is organized under the laws of a jurisdiction other than the
United States shall, prior to the due date of any payments under
the Notes, execute and deliver to the Borrower and the Agent, on
or about the first scheduled payment date in each Fiscal Year,
one or more (as the Borrower or the Agent may reasonably request)
United States Internal Revenue Service Forms 4224 or Forms 1001
or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to
establish the extent, if any, to which a payment to such Lender
is exempt from withholding or deduction of Taxes.
SECTION IV.7. Lender Statements; Survival of Indemnity. To
the extent reasonably possible, each Lender shall designate an
alternate Lending Installation with respect to its LIBO Rate
Loans to reduce any liability of the Borrower to such Lender
under Section 4.3 or to avoid the unavailability of LIBO Rate
Loans under Section 4.1 or 4.2, so long as such designation is
not disadvantageous to such Lender as determined by such Lender
in good faith. A written statement of a Lender as to the amount
due under Section 4.3, 4.4, 4.5 or 4.6 shall be final, conclusive
and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in
connection with a LIBO Rate Loan shall be calculated as though
each Lender funded its LIBO Rate Loan through the purchase of a
deposit of the type and maturity corresponding to the deposit
used as a reference in determining the LIBO Rate applicable to
such Loan, whether in fact that is the case or not. Unless
otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the
Borrower of the written statement. The obligations of the
Borrower under Sections 4.3, 4.4, 4.5, and 4.6 shall survive
payment of the Obligations and termination of this Agreement.
SECTION IV.8. Replacement of Lenders. If any Lender is
unable to make a LIBO Rate Loan pursuant to Section 4.1 or 4.2,
is subject to increased costs pursuant to Section 4.3, 4.4, 4.5
or 4.6 fails to designate an alternate Lending Installation
pursuant to Section 4.3 or 4.7, or is owed or reasonably
anticipates being owed additional amounts pursuant to Section 4.3
or 4.5 and fails to take action to the extent required under
Section 4.3, 4.5 or 4.7 to avoid or reduce any such additional
amounts, the Borrower shall have the right, if no Event of
Default then exists, to replace such Lender with another
financial institution reasonably acceptable to the Agent provided
that (i) such financial institution shall unconditionally offer
in writing (with a copy to the Agent) to purchase, in accordance
with Section 10.11.1, all of such Lender's rights and obligations
under this Agreement and the Notes, without recourse or expense
to, or warranty (except warranty of ownership which is free and
clear of any adverse claims) by, such Lender being replaced for a
purchase price equal to the aggregate outstanding principal
amount of the Notes payable to such Lender plus accrued but
unpaid fees and interest in respect of such Lender's Commitment
hereunder to the date of such purchase on a date therein
specified, (ii) the Obligations of the Borrower owing pursuant to
Section 4.3, 4.5 and 4.6 to the Lender being replaced and all
costs and expenses owing to such Lender pursuant to Section 4.4
shall be paid in full to the Lender being replaced concurrently
with such replacement, (iii) the replacement financial
institution shall execute a Lender Assignment Agreement pursuant
to which it shall become a party hereto as provided in Section
10.11.1 and shall pay the processing fee required pursuant to
such Section, and (iv) upon compliance with the provisions for
assignment provided in Section 10.11.1 and the payment of amounts
referred to in clause (i), the replacement financial institution
shall constitute a "Lender" hereunder and the Lender being so
replaced shall no longer constitute a "Lender" hereunder;
provided that (x) if such Lender accepts such an offer and such
financial institution fails to purchase on such specified date in
accordance with the terms of such offer, the Borrower shall
continue to be obligated to pay the increased cost, amounts,
expenses and taxes under Sections 4.3, 4.4, 4.5 and 4.6 above to
such Lender and (y) if such Lender fails to accept such purchase
offer, the Borrower shall not be obligated to pay such Lender
such increased cost pursuant to such Sections from and after the
date of such purchase offer.
SECTION IV.9. Payments, Computations, etc. Unless
otherwise expressly provided, all payments by the Borrower
pursuant to this Agreement, the Notes or any other Loan Document
shall be made by the Borrower to the Agent for the pro rata
account of the Lenders entitled to receive such payment. All
such payments required to be made to the Agent shall be made,
without setoff, deduction or counterclaim, not later than 12:00
noon, New York, New York time, on the date due, in same day or
immediately available funds, to such account as the Agent shall
specify from time to time by notice to the Borrower. Funds
received after that time shall be deemed to have been received by
the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if
any, of such payments received by the Agent for the account of
such Lender. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360 days
(or, in the case of interest on a Base Rate Loan, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall
otherwise be due on a day which is not a Business Day, such
payment shall (except as otherwise required by clause (c) of the
definition of the term "Interest Period" with respect to LIBO
Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and
fees, if any, in connection with such payment.
SECTION IV.10. Sharing of Payments. If any Lender shall
obtain any payment or other recovery (whether voluntary, involun
tary, by application of setoff or otherwise) on account of any
Loan (other than pursuant to the terms of Sections 4.3, 4.4 and
4.5) in excess of its pro rata share of payments then or
therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Loans made by them
as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender
shall repay to the purchasing Lender the purchase price to the
ratable extent of such recovery together with an amount equal to
such selling Lender's ratable share (according to the proportion
of (a) the amount of such selling Lender's required repayment to
the purchasing Lender to (b) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights
of payment (including pursuant to Section 4.11) with respect to
such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law,
any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on
such secured claim.
SECTION IV.11. Setoff. Each Lender shall, upon the
occurrence of any Default described in clauses (a) through (d) of
Section 8.1.9 with respect to the Borrower, any Material
Subsidiary or NBPC or, with the consent of the Required Lenders,
upon the occurrence of any other Event of Default, have the right
to appropriate and apply to the payment of the Obligations owing
to it (whether or not then due) any and all balances, credits,
deposits, accounts or moneys of the Borrower then or thereafter
maintained with such Lender; provided, however, that any such
appropriation and application shall be subject to the provisions
of Section 4.10. Each Lender agrees promptly to notify the
Borrower and the Agent after any such setoff and application made
by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in
addition to other rights and remedies (including other rights of
setoff under applicable law or otherwise) which such Lender may
have.
SECTION IV.12. Use of Proceeds. The Borrower shall apply
the proceeds of each Borrowing in accordance with clauses (a) and
(b) of the fifth recital; provided that, proceeds of any
Borrowing may be used for general business purposes of the
Borrower as set forth in clause (b) of the fifth recital only if
prior to such use the Expansion and Extension shall have been
completed such that NBPC has received written authorization from
the FERC, or its representative, to commence service on the
Expansion and Extension and NBPC shall have complied in all
material respects with the terms of the FERC Certificate of
Public Convenience and Necessity dated August 1, 1997 issued to
NBPC, and the Agent shall have received a certificate from an
Authorized Officer of the Borrower certifying that NBPC has
received such written authorization; and further provided that
the amount used for such general business purposes at any one
time outstanding shall be no greater than the lesser of (a) the
difference (if positive) between the Commitment Amount then in
effect and the aggregate principal of Loans outstanding as of the
date such certificate is delivered by an Authorized Officer of
the Borrower and (b) $40,000,000. Without limiting the
foregoing, no proceeds of any Loan will be used to make any
distribution on Limited Partnership Units or General Partners'
interests in the Borrower or to acquire any equity security of a
class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or any "margin stock", as defined
in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO BORROWING
SECTION V.1. Initial Borrowing. The obligations of the
Lenders to fund the initial Borrowing shall be subject to the
prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 5.1.
SECTION V.1.1. Resolutions, etc. The Agent shall have
received from the Secretary or an Assistant Secretary of the
Partnership Policy Committee of each of the Borrower and of the
Intermediate Partner a certificate, dated the Effective Date, as
to
(a) copies of any action taken by the policy and
management committee of the Borrower or Intermediate
Partnership or other partnership action of the Borrower or
Intermediate Partnership with respect to this Agreement, the
Notes, or any other Loan Document to be signed by the
Borrower or the Intermediate Partnership, as the case may
be;
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement,
the Notes and each other Loan Document executed by it on
behalf of the Borrower, and
(c) the Partnership Agreement or Intermediate
Partnership Agreement (as the case may be) and all
amendments and supplements thereto.
The Agent shall have received from each General Partner of
the Borrower and the Intermediate Partnership, a certificate,
dated the Effective Date, of its Secretary or Assistant Secretary
as to
(a) resolutions of its Board of Directors then in full
force and effect with respect to any corporate action taken
authorizing the execution, delivery and performance of, this
Agreement on behalf of such General Partner, and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement on
behalf of such General Partner.
The Agent shall have received from the Operator a
certificate dated the Effective Date, of an officer of the
Operator familiar with such matters, as to the incumbency and
signature of any of its officers or employees acting as
Authorized Representatives.
Each Lender may conclusively rely upon each certificate
described in this Section 5.1.1 until it shall have received a
further certificate of the Secretary of such General Partner
canceling or amending such prior certificate.
SECTION V.1.2. Delivery of Notes. The Agent shall have
received, for the account of each Lender, its Notes duly executed
and delivered by the Borrower.
SECTION V.1.3. Guaranty. The Agent shall have received the
Guaranty duly executed and delivered by the Intermediate
Partnership.
SECTION V.1.4. Opinions of Counsel. The Agent shall have
received opinions, dated the date of the Effective Date and
addressed to the Agent and all Lenders, from (i) Vinson & Elkins,
L.L.P., counsel to the Borrower and the Intermediate Partnership,
substantially in the form of Exhibit E-1 hereto; (ii) Janet
Place, Vice President and General Counsel of Northern Plains
Natural Gas Company, substantially in the form of Exhibit E-2
hereto; and (iii) counsel for each of the General Partners,
substantially in the form of Exhibit E-3 hereto.
SECTION V.1.5. Closing Fees, Expenses, etc. The Agent
shall have received for its own account, or for the account of
each Lender, as the case may be, all fees, costs and expenses due
and payable pursuant to Sections 3.3 and 10.3, if then invoiced.
SECTION V.2. All Borrowings. The obligation of each
Lender to fund any Loan on the occasion of any Borrowing
(including the initial Borrowing) shall be subject to the
satisfaction of each of the conditions precedent set forth in
this Section 5.2.
SECTION V.2.1. Compliance with Warranties, No Default,
etc. Both before and after giving effect to any Borrowing (but,
if any Default of the nature referred to in Section 8.1.5 shall
have occurred with respect to any other Indebtedness, without
giving effect to the application, directly or indirectly, of the
proceeds thereof) the following statements shall be true and
correct
(a) the representations and warranties set forth in
Article VI hereof and in Article III of the Guaranty
(excluding, however, those contained in Section 6.7 hereof)
shall be true and correct with the same effect as if then
made (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true
and correct as of such earlier date); and
(b) no Default shall have then occurred and be
continuing.
SECTION V.2.2. Material Adverse Change. Since the date of
the financial statements referenced in Section 6.5, there shall
have been no material adverse change in the financial condition,
operations, assets, business or properties of the Borrower, its
Subsidiaries and NBPC, taken as a whole. Since the date of the
financial statements referenced in Section 6.5, there shall have
been no change in the policy of NBPC or the Intermediate
Partnership with respect to cash disbursements and distributions
to the Borrower which would have a Material Adverse Effect on the
Borrower.
SECTION V.2.3. Borrowing Request. The Agent shall have
received a Borrowing Request for such Borrowing. Each of the
delivery of a Borrowing Request and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of
such Borrowing (both immediately before and after giving effect
to such Borrowing and the application of the proceeds thereof)
the statements made in Section 5.2.1 are true and correct.
SECTION V.2.4. Legal Matters. All legal matters incident
to the making of such Loans shall be satisfactory to the Agent
and its counsel.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into
this Agreement and to make Loans hereunder, the Borrower
represents and warrants unto the Agent and each Lender as set
forth in this Article VI.
SECTION VI.1. Organization, etc. The Borrower is a
limited partnership formed and existing and in good standing
under the laws of the State of Delaware, is duly qualified to do
business as a foreign limited partnership and is in good standing
in each jurisdiction where the nature of its business requires
such qualification, and has full power and authority and holds
all requisite governmental licenses, permits and other approvals
to enter into and perform its Obligations under this Agreement,
the Notes and each other Loan Document to which it is a party and
to own and hold under lease its property and to conduct its
business substantially as currently conducted by it. NBPC is a
general partnership duly formed, validly existing and in good
standing under the laws of the State of Texas, and has full power
and authority and holds all requisite governmental licenses,
permits and other approvals to own and hold under lease its
property and to conduct its business substantially as currently
conducted by it in each jurisdiction in which its business is
conducted.
SECTION VI.2. Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Borrower of this
Agreement, the Notes and each other Loan Document executed or to
be executed by it, and the Borrower's ownership of interests in
the Intermediate Partnership and, indirectly through the
Intermediate Partnership, of interests in NBPC and NBPC's
construction of the Expansion and Extension are within the
Borrower's, the Intermediate Partnership's and NBPC's partnership
powers, as the case may be, have been duly authorized by all
necessary action, and do not
(a) contravene the Organic Documents of the Borrower,
the Intermediate Partnership or NBPC, as the case may be;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on
or affecting the Borrower, the Intermediate Partnership or
NBPC; or
(c) result in, or require the creation or imposition
of, any Lien on any of the Borrower's, the Intermediate
Partnership's or NBPC's properties.
SECTION VI.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery or
performance by the Borrower of this Agreement, the Notes or any
other Loan Document, or for the Borrower's ownership of its
interests in the Intermediate Partnership or, indirectly through
the Intermediate Partnership, of interests in NBPC. Neither the
Borrower nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended. The Borrower and its Subsidiaries are not subject to,
or are exempt from regulation as, a "holding company" or a
"subsidiary company" of a "holding company" under, the Public
Utility Holding Company Act of 1935, as amended, in each case as
such terms are defined in that Act.
SECTION VI.4. Validity, etc. This Agreement constitutes,
and the Notes and each other Loan Document executed by the
Borrower will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms,
except as such enforceability may be limited by any applicable
bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and except that enforceability
under the Loan Documents is subject to general principles of
equity (regardless of whether such enforceability is considered
at law or in equity).
SECTION VI.5. Financial Information. The
(a) consolidated financial statements of the Borrower dated as of
June 30, 1997, which reflect the consolidated financial
information for the Borrower, all Subsidiaries of the Borrower
and NBPC and (b) the unconsolidated financial statements of the
Borrower dated as of June 30, 1997, which reflect solely the
combined financial information for the Borrower and the
Intermediate Partnership on a stand-alone basis, copies of which
in each case have been furnished to the Agent and each Lender,
have been prepared in accordance with GAAP consistently applied,
except as to consolidation requirements in the case of the
financial statements referred to in clause (b), and present
fairly the consolidated or unconsolidated financial condition of
the Borrower, as the case may be, and the partnerships covered
thereby at the dates thereof and the results of their operations
for the periods then ended.
SECTION VI.6. No Material Adverse Change. Since the date
of the financial statements described in Section 6.5, there has
been no material adverse change in the financial condition,
operations, assets, business or properties of the Borrower or the
Intermediate Partnership.
SECTION VI.7. Litigation, Labor Controversies, etc.
There is no pending or, to the knowledge of the Borrower,
threatened litigation, action, proceeding, or labor controversy
affecting the Borrower, NBPC or any of the Borrower's
Subsidiaries, or any of their respective properties, businesses,
assets or revenues, which could reasonably be expected to have a
Material Adverse Effect on the Borrower or which purports to
affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, except as
disclosed in the Form 10-K of the Borrower dated as of December
31, 1996 or the Form 10-Q of the Borrower dated as of June 30,
1997.
SECTION VI.8. Material Subsidiaries. As of the Effective
Date, the Borrower has no Material Subsidiaries, except the
Intermediate Partnership.
SECTION VI.9. Ownership of Properties. The Borrower owns
good and marketable title to all of its properties and assets,
real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, trade names, service
marks and copyrights), free and clear of all Liens, charges or
claims (including infringement claims with respect to patents,
trademarks, copyrights and the like) except as permitted pursuant
to Section 7.2.2.
SECTION VI.10. Taxes. The Borrower and each of its
Material Subsidiaries has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes
and governmental charges thereby shown to be owing, except any
such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books.
SECTION VI.11. ERISA Plans. As of the Effective Date, the
Borrower has no Plans, and as of any date thereafter, shall have
no Plans except Plans which conform to Section 7.2.14.
SECTION VI.12. Environmental Matters. None of the
Borrower, any of its Subsidiaries or NBPC is subject to any
liability or obligation for remedial action under any
Environmental Laws which could reasonably be expected to have a
Material Adverse Effect on the Borrower, its Subsidiaries and
NBPC, taken as a whole. There is no pending or, to the best of
the Borrower's knowledge, threatened investigation or inquiry
regarding the Borrower, any of its Subsidiaries or NBPC or any
properties of any of the foregoing (i) pertaining to any
violation of any Environmental Law relating to Hazardous
Materials, or (ii) which could reasonably be expected to result
in any requirement that the Borrower, such Subsidiary or NBPC
conduct any clean-up or remediation activities with respect to
any Hazardous Materials which could reasonably be expected to
have a Material Adverse Effect on the Borrower, its Subsidiaries
and NBPC, taken as a whole. There are no Hazardous Materials
located on or under any of the properties of the Borrower, any of
its Subsidiaries or NBPC which could reasonably be expected to
have a Material Adverse Effect on the Borrower, its Subsidiaries
and NBPC, taken as a whole. None of the Borrower, any of its
Subsidiaries or NBPC has caused or permitted any Hazardous
Material to be disposed of on or under or released from any of
its properties which disposal or release could reasonably be
expected to have a Material Adverse Effect on the Borrower, its
Subsidiaries and NBPC, taken as a whole. The Borrower has no
knowledge of any violation of any Environmental Law by any
previous owner of any of its properties or properties owned by
any of its Subsidiaries or NBPC that could reasonably be expected
to have a Material Adverse Effect on the Borrower, its
Subsidiaries and NBPC, taken as a whole.
SECTION VI.13. Regulations G, U and X. The Borrower is
not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of any
Loans will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X
or any regulations substituted therefor, as from time to time in
effect, are used in this Section with such meanings.
SECTION VI.14. Default. No Default or Event of Default
has occurred and is continuing. To the knowledge of the
Borrower, no default in the payment when due, whether by
acceleration or otherwise, of any Indebtedness of NBPC has
occurred and is continuing.
SECTION VI.15. Accuracy of Information. All factual
information (taken as a whole) heretofore or contemporaneously
furnished by or on behalf of the Borrower in writing to the Agent
or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all
other such factual information hereafter furnished by or on
behalf of the Borrower to the Agent or any Lender will be, true
and accurate in every material respect on the date as of which
such information is dated or certified and as of the date of
execution and delivery of this Agreement by the Agent and such
Lender, and such information is not, or shall not be, as the case
may be, incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which
such information was provided.
ARTICLE VII
COVENANTS
SECTION VII.1. Affirmative Covenants. The Borrower agrees
with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this
Section 7.1.
SECTION VII.1.1. Financial Information, Reports, Notices,
etc. The Borrower will furnish, or will cause to be furnished,
to each Lender and the Agent copies of the following financial
statements, reports, notices and information:
(a) as soon as available and in any event within 60
days after the end of each of the first three Fiscal
Quarters of each Fiscal Year of the Borrower,
(i) consolidated financial statements of the Borrower which
reflect consolidated information for the Borrower, its
Subsidiaries and NBPC dated as of the end of such Fiscal
Quarter, (ii) consolidating financial statements of the
Borrower and of the Intermediate Partnership dated as of the
end of such Fiscal Quarter, which reflect solely the
information of the Borrower and of the Intermediate
Partnership, exclusive of any other subsidiaries and (iii) a
statement reconciling the items of Indebtedness and
Capitalization as reported on the balance sheets contained
in the financial statements described in clauses (i) and
(ii) above, in each case for such Fiscal Quarter and for the
period commencing at the end of the previous Fiscal Year and
ending with the end of such Fiscal Quarter, certified by the
chief financial Authorized Officer of the Borrower;
(b) as soon as available and in any event within 120
days after the end of each Fiscal Year of the Borrower, a
copy of the annual audit report for such Fiscal Year for the
Borrower for the consolidated balance sheets of the Borrower
as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Borrower for
such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner acceptable to the
Agent and the Required Lenders by independent public
accountants acceptable to the Agent and the Required
Lenders;
(c) as soon as available and in any event within 120
days after the end of each Fiscal Year of the Borrower:
(i) financial statements of the Borrower dated as of the end
of such Fiscal Year, which reflect the consolidated
financial information for the Borrower, its Subsidiaries,
and NBPC, (ii) consolidating financial statements of the
Borrower and of the Intermediate Partnership dated as of the
end of such Fiscal Year, which reflect solely the financial
information for the Borrower and for the Intermediate
Partnership, exclusive of any other subsidiaries; and
(iii) a statement reconciling items of Indebtedness and
Capitalization as reported on the balance sheets contained
in the financial statements described in clauses (i) and
(ii) above; in each case certified by the chief financial
Authorized Officer of the Borrower;
(d) as soon as available and in any event as of the
date of delivery of the financial statements required above
after the end of each Fiscal Quarter, a certificate,
executed by the chief financial Authorized Officer of the
Borrower, stating that the financial statements fairly
present the Borrower's financial condition and results of
operations and showing (in reasonable detail and with
appropriate calculations and computations in all respects
satisfactory to the Agent) compliance with the financial
covenant set forth in Section 7.2.3;
(e) as soon as possible and in any event within ten
Business Days after an Authorized Officer has knowledge of
the occurrence of each Default, a statement of the chief
financial Authorized Officer of the Borrower setting forth
details of such Default and the action which the Borrower
has taken and proposes to take with respect thereto;
(f) as soon as possible and in any event within ten
Business Days after (x) the occurrence of any adverse
development with respect to any litigation, action,
proceeding, or labor controversy described in Section 6.7 or
(y) the commencement of any labor controversy, litigation,
action, proceeding of the type described in Section 6.7, in
each case which could reasonably be expected to have a
Material Adverse Effect on the Borrower or which purports to
affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, notice
thereof and copies of all documentation relating thereto;
(g) promptly after the sending or filing thereof,
copies of all reports which the Borrower sends to any of its
security holders, and all reports and registration
statements which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission or any
national securities exchange; and
(h) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any
of its Subsidiaries as any Lender through the Agent may from
time to time reasonably request.
SECTION VII.1.2. Compliance with Laws, etc. The Borrower
will comply, and in the case of clause (b) below will cause each
of its Subsidiaries and NBPC to comply, in all material respects
with all applicable laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards except where the
failure to so comply will not reasonably be expected to have a
Material Adverse Effect, such compliance to include (without
limitation): (a) the maintenance and preservation of its
existence and qualification as a foreign limited partnership;
(b) compliance with all Environmental Laws; and (c) the payment,
before the same become delinquent, of all taxes, assessments and
governmental charges imposed upon it or upon its property except
to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books.
SECTION VII.1.3. Maintenance of Properties. The Borrower
will, and will cause each of its Material Subsidiaries to,
maintain, preserve, protect and keep its properties in good
repair, working order and condition in accordance with prudent
industry practices, and make necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith in accordance with prudent industry
practices, ordinary wear and tear excepted unless the Borrower or
such Material Subsidiary determines in good faith that the
continued maintenance of any of the properties of the Borrower or
such Material Subsidiary is no longer economically desirable.
SECTION VII.1.4. Insurance. The Borrower will maintain or
cause to be maintained with responsible insurance companies
insurance with respect to its properties and business against
such casualties and contingencies and of such types and in such
amounts as is consistent with prudent industry practice and will,
upon request of the Agent, furnish to each Lender at reasonable
intervals a certificate of an Authorized Officer of the Borrower
setting forth the nature and extent of all insurance maintained
by the Borrower in accordance with this Section.
SECTION VII.1.5. Books and Records. The Borrower will keep
books and records which accurately reflect all of its business
affairs and transactions and permit the Agent and each Lender or
any of their respective representatives, at reasonable times and
intervals (during normal business hours), to visit all of its
offices, to discuss its financial matters with its officers and,
upon reasonable notice, to examine (and, at the expense of the
Borrower, photocopy extracts from) any of its books or other
corporate records.
SECTION VII.1.6. [Reserved.]
SECTION VII.1.7. Pari Passu Status. The Borrower will
ensure that the claims and rights of the Lenders against it under
this Agreement and each other Loan Document will not be
subordinate to, and will rank at all times at least pari passu
with, all other Indebtedness of the Borrower. The Borrower will
not amend, modify or supplement any credit agreement, notes or
other document relating to its Indebtedness in any manner which
would make them materially more onerous to the Borrower than the
provisions of this Agreement and the Notes as in effect from time
to time.
SECTION VII.1.8. Maintenance of Tax Status. The Borrower
shall take all action necessary to prevent the Borrower, the
Intermediate Partnership or NBPC from being, and will take no
action which would have the effect of causing any of the
Borrower, the Intermediate Partnership or NBPC to be, treated as
an association taxable as a corporation or otherwise to be taxed
as an entity for federal income tax purposes.
SECTION VII.1.9. Obligations to Make Loans or Purchase
Units. If for any period the aggregate amount of cash
distributions on the Limited Partnership Units and the General
Partners' interests which the Partnership Policy Committee of the
Borrower, in its sole discretion, determines are to be made for
such period is greater than cash available from (a) funds held by
the Borrower or the Intermediate Partnership resulting from
Borrowings for the reimbursement of equity contributions for the
Expansion and Extension prior to the Effective Date,(b) funds
held by the Borrower or the Intermediate Partnership at the
beginning of such period as a result of distributions from
Subsidiaries and NBPC to the Borrower or the Intermediate
Partnership in prior periods which have not yet been distributed
by the Borrower and (c) distributions made to the Borrower or the
Intermediate Partnership by Subsidiaries and NBPC with respect to
such period, the General Partners of the Borrower, each on a
several basis in proportion to their respective general partner
interest in the Borrower hereby agree to make loans to the
Borrower (which loans shall constitute Subordinated Debt) on
terms and conditions satisfactory to the Required Lenders or to
purchase additional Subordinated Units in an amount sufficient to
provide for such cash distributions.
SECTION VII.2. Negative Covenants. The Borrower agrees
with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this
Section 7.2.
SECTION VII.2.1. Indebtedness. The Borrower will not, and
will not permit the Intermediate Partnership to, create, incur,
assume or suffer to exist or otherwise become or be liable in
respect of any Indebtedness, other than, without duplication, the
following:
(a) Indebtedness in respect of the Loans and other
Obligations;
(b) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by
suppliers on normal trade terms in connection with purchases
of goods and services, but excluding Indebtedness incurred
through the borrowing of money or Guaranteed Liabilities);
(c) [Reserved.];
(d) Indebtedness in an aggregate amount not to exceed
$25,000,000 the proceeds of which are incurred for the
stated purpose of capital contributions to NBPC, whether
directly or through the Intermediate Partnership or for
acquisitions or capital investments by the Borrower, either
directly or indirectly through its Subsidiaries;
(e) other Indebtedness of the Borrower not permitted
pursuant to clauses (a) or (d) above for borrowed money for
which, pursuant to Section 2.2, the Commitment Amount
hereunder shall be reduced;
(f) Indebtedness constituting Subordinated Debt
resulting from loans made by any Subsidiary of the Borrower,
NBPC or the General Partners of the Borrower to the Borrower
on terms and conditions satisfactory to the Required
Lenders, acting in good faith, solely for the purpose of
making distributions to the Common Unit holders as described
in Section 7.1.9 hereof;
(g) Indebtedness of the Intermediate Partnership
resulting from loans made by any Subsidiary of the
Intermediate Partnership or its General Partners to the
Intermediate Partnership on terms and conditions
satisfactory to the Required Lenders, acting in good faith,
provided that, payment obligations of the Intermediate
Partnership resulting from any Indebtedness of the
Intermediate Partnership pursuant to loans from its General
Partners or a Subsidiary of the Intermediate Partnership
shall be subordinated on terms and conditions satisfactory
to the Required Lenders in right of payment to its
obligations under the Guaranty; and
(h) Indebtedness of the Intermediate Partnership
resulting from loans made by the Borrower to the
Intermediate Partnership, provided that, such loans from the
Borrower comply with Section 7.2.4 hereof;
provided, however, that no Indebtedness otherwise permitted by
clauses (b), (d), (e) or (h) shall be permitted if, after giving
effect to the incurrence thereof, any Default shall have occurred
and be continuing.
SECTION VII.2.2. Liens. The Borrower will not, and will not
permit the Intermediate Partnership to, create, incur, assume or
suffer to exist any Lien upon any of its property, revenues or
assets, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter
payable without penalty or being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside
on its books;
(b) Liens of carriers, operators, warehousemen,
mechanics, materialmen and landlords incurred in the
ordinary course of business for sums not overdue or being
diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(c) Liens incurred in the ordinary course of business
in connection with workmen's compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed
money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds;
(d) judgment Liens in existence less than 30 days
after the entry thereof or with respect to which execution
has been stayed or the payment of which is covered in full
(subject to a customary deductible) by insurance maintained
with responsible insurance companies; and
(e) Liens securing Indebtedness of the Borrower if,
and only if, concurrently with the creation of such Lien,
all senior unsecured Indebtedness of the Borrower hereunder
is equally and ratably secured by such Liens.
SECTION VII.2.3. Financial Condition. The Borrower will not
permit its Debt to Capitalization Ratio to be greater than 35%.
SECTION VII.2.4. Investments. The Borrower will not make,
incur, assume or suffer to exist any Investment in any other
Person, except:
(a) Investments existing on the Effective Date and
identified in Item 7.2.4(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as
Indebtedness pursuant to Section 7.2.1;
(d) in the ordinary course of business, Investments,
including contributions of capital, loans and advances, by
the Borrower, directly or through the Intermediate
Partnership, (i) in NBPC, and (ii) acquisitions and capital
investments which comply with Section 7.2.7;
(e) Eurodollar deposits having a term of no more than
180 days with the overseas branch of any Lender or any
domestic bank having a capital and surplus of at least
$500,000,000; or
(f) participations having a term of no more than 90
days with (i) any Lender or (ii) any financial institution,
the unsecured debt of which is rated in one of the two
highest letter rating categories (e.g. in the case of
Standard & Poors, either its AAA or AA category) by a
nationally recognized securities credit rating agency, in
loans made or owned by such Lender or other financial
institution to Persons which have open market commercial
paper rated in either of the two highest short-term rating
categories by a nationally recognized securities credit
rating agency;
provided, however, that
(g) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that
such Investment if made thereafter would not comply with
such requirements; and
(h) no Investment otherwise permitted by clause (d) or
clause (f) shall be permitted to be made if, immediately
before or after giving effect thereto, any Default shall
have occurred and be continuing.
SECTION VII.2.5. Payments to Limited Partnership Units, etc.
On and at all times after the Effective Date:
(a) the Borrower will not declare, pay or make any
distribution (in cash, property or obligations) on any
interests (now or hereafter outstanding) in the Borrower or
apply any of its funds, property or assets to the purchase
of any partnership interests in the Borrower; provided,
that, the Borrower may make distributions on the Limited
Partnership Units and General Partners' interests in
accordance with the Partnership Agreement during any period
in the amount determined by the Partnership Policy Committee
of the Borrower in its sole discretion.
(b) the Borrower will not, and will not permit any of
its Subsidiaries to
(i) make any payment or prepayment of principal
of, or make any payment of interest on, any
Subordinated Debt on any day other than the stated,
scheduled date for such payment or prepayment set forth
in the documents and instruments memorializing such
Subordinated Debt, or which would violate the
subordination provisions of such Subordinated Debt; or
(ii) redeem, purchase or defease, any
Subordinated Debt; and
(c) the Borrower will not, and will not permit any
Subsidiary to, make any deposit for any of the foregoing
purposes.
SECTION VII.2.6. Rental Obligations. The Borrower will not,
and will not permit the Intermediate Partnership to, enter into
at any time any arrangement which does not create a Capitalized
Lease Liability and which involves the leasing by the Borrower or
any of its Subsidiaries from any lessor of any real or personal
property (or any interest therein), except arrangements which,
together with all other such arrangements which shall then be in
effect, will not require the payment of an aggregate amount of
rentals by the Borrower and its Subsidiaries in excess of
(excluding escalations resulting from a rise in the consumer
price or similar index) $1,000,000 for any Fiscal Year or
$3,000,000 during the full remaining term of such arrangements;
provided, however, that any calculation made for purposes of this
Section shall exclude any amounts required to be expended for
maintenance and repairs, insurance, taxes, assessments, and other
similar charges.
SECTION VII.2.7. Limitation on Business Activities. The
Borrower will not engage in any business activity except the
ownership of a limited partner interest in the Intermediate
Partnership and such activities as may be incidental or related
thereto. The Borrower shall not permit NBPC or any Subsidiary of
the Borrower to engage, directly or indirectly, in any business
activity except (a) existing business activities consisting of
the ownership and operation of natural gas and coal pipelines,
the extension and expansion of such pipelines and related
facilities, services related to transportation and marketing of
natural gas and coal and such activities as may be incidental or
related to the aforementioned and (b) new business activities in
the area of exploration, development, production, processing,
refining, transportation or marketing of gas, oil, coal or
products thereof, provided that the gross income of such
activities allows the Borrower to meet the exception in Section
7704 of the Code.
SECTION VII.2.8. Consolidation, Merger, etc. Except as
provided in its Partnership Agreement, the Borrower will not
liquidate or dissolve, consolidate with, or merge into or with,
any other partnership, corporation or other entity, or purchase
or otherwise acquire all or substantially all of the assets of
any Person (or of any division thereof) and each General Partner
agrees that it will not sell, assign or transfer its interest in
the Borrower or Intermediate Partnership or make any material
change in the voting structure of the Borrower or Intermediate
Partnership, except that a General Partner may sell, assign or
transfer its partnership interest in the Borrower or Intermediate
Partnership or consent to a change in voting structure if
(a) such sale, assignment, transfer or change in voting
structure, after taking into account all sales, assignments or
transfers occurring since the Effective Date (including
contemporaneous sales, assignments or transfers, if any) of an
interest in the Borrower and Intermediate Partnership by a
General Partner and each change in voting structure occurring
since the Effective Date (including contemporaneous changes, if
any), will not result in a Change in Control and (b) such sale,
assignment or transfer is to an entity the senior unsecured debt
of which is rated at least BBB by Standard & Poor's or at least
Baa2 by Moody's Investors Services.
SECTION VII.2.9. Issuance of Units. The Borrower will not
issue additional Common Units or Subordinated Units unless (a)
upon the issuance of any Common Units the Commitment Amount shall
be reduced as set forth in Section 2.2 and (b) the proceeds from
the issuance of any additional Subordinated Units (net of
reasonable issuance costs) shall be used for distributions to the
Common Unit holders pursuant to Section 7.1.9.
SECTION VII.2.10. Asset Dispositions, etc. The Borrower
will not sell, transfer, lease, contribute or otherwise convey,
or grant options, warrants or other rights with respect to, all
or any substantial part of its assets (including accounts
receivable and partnership interests in Material Subsidiaries) to
any Person, unless such sale, transfer, lease, contribution or
conveyance is in the ordinary course of its business or is a
disposition of assets which are obsolete or are no longer used or
useful in the business of the Borrower.
SECTION VII.2.11. Modification of Certain Agreements.
The Borrower will not consent to any amendment, supplement or
other modification of any of the terms or provisions contained in
any document or instrument evidencing or applicable to any
Subordinated Debt, other than any amendment, supplement or other
modification which extends the date or reduces the amount of any
required repayment or redemption.
The General Partners and the Borrower each agrees that it
shall not, and the Intermediate Partnership shall not, consent to
or vote in favor of any amendment of (a) the cash distribution
policies of NBPC or the Intermediate Partnership in any manner
which would have a Material Adverse Effect on the Borrower or
materially adversely affect the rights and remedies of the
Lenders under and in connection with this Agreement, the Notes or
any other Loan Document; or (b) the NBPC Partnership Agreement or
the Intermediate Partnership Agreement in any manner which would
(i) have a material adverse effect on the rights and remedies of
the Lenders under and in connection with this Agreement, the
Notes or any other Loan Document; or (ii) have a Material Adverse
Effect on the Borrower. Each of the General Partners and the
Borrower agree that there shall be no change in the Operator
without the consent of the Required Lenders except upon a finding
by the requisite number of Representatives to the Management
Committee (such terms used herein as defined in the NBPC
Partnership Agreement) of NBPC (other than the Representative
designated by Northern Plains Natural Gas Company) pursuant to
Section 8.4.2 of the NBPC Partnership Agreement that the Operator
has, through misfeasance, nonfeasance or gross negligence, acted
in a manner contrary to the best interests of NBPC. Each General
Partner agrees that it shall not consent to or vote in favor of
any amendment of the Partnership Agreement which would have a
Material Adverse Effect on the rights and remedies of the Lenders
under and in connection with this Agreement, the Notes or any
other Loan Document or have a Material Adverse Effect on the
Borrower.
SECTION VII.2.12. Transactions with Affiliates. The
Borrower will not, and will not permit any of its Material
Subsidiaries to, enter into, or cause, suffer or permit to exist
any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is fair and equitable to the
Borrower or such Material Subsidiary and is an arrangement or
contract of the kind which would be entered into by a prudent
Person in the position of the Borrower or such Material
Subsidiary with a Person which is not one of its Affiliates.
SECTION VII.2.13. Negative Pledges, Restrictive
Agreements, etc. The Borrower will not, and will not permit any
of its Material Subsidiaries to, enter into any agreement
(excluding this Agreement and each other Loan Document and any
other document or agreement governing Indebtedness permitted by
Section 7.2.1) prohibiting (a) the creation or assumption of any
Lien upon its properties, revenues or assets, whether now owned
or hereafter acquired, or the ability of the Borrower to amend or
otherwise modify this Agreement or any other Loan Document; or
(b) the ability of any Material Subsidiary to make any payments,
directly or indirectly, to the Borrower by way of distributions,
advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals
or other returns on investments, or any other agreement or
arrangement which restricts the ability of any such Subsidiary to
make any payment, directly or indirectly, to the Borrower.
SECTION VII.2.14. ERISA. Neither the Borrower nor any
ERISA Affiliate shall maintain or contribute to any Plan without
obtaining prior written consent of the Required Lenders unless
such Plan is a Pension Plan and is maintained in a manner that
could not reasonably be expected to give rise to an Event of
Default pursuant to Section 8.1.7.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION VIII.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 8.1
shall constitute an "Event of Default".
SECTION VIII.1.1. Non-Payment of Obligations. The
Borrower shall default in the payment or prepayment when due of
any principal of any Loan, or the Borrower shall default (and
such default shall continue unremedied for a period of five
Business Days) in the payment of interest when due on any Loan,
or in the payment when due of any commitment fee or of any other
Obligation.
SECTION VIII.1.2. Breach of Warranty. Any
representation or warranty of the Borrower or the Intermediate
Partnership made or deemed to be made hereunder or in any other
Loan Document or any other writing or certificate furnished by or
on behalf of the Borrower or Intermediate Partnership to the
Agent or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any
certificates delivered pursuant to Article V) is or shall be
incorrect when made in any material respect.
SECTION VIII.1.3. Non-Performance of Certain Covenants
and Obligations. The Borrower shall default in the due
performance and observance of any of its obligations under
Section 7.2 or Section 7.1.8. Any General Partner shall default
in the due performance and observation of its obligations set
forth in Section 7.1.9, 7.2.8 or 7.2.11.
SECTION VIII.1.4. Non-Performance of Other Covenants and
Obligations. The Borrower shall default in the due performance
and observance of any other agreement contained herein or in any
other Loan Document, and such default shall continue unremedied
for a period of 30 days after notice thereof shall have been
given to the Borrower by the Agent or any Lender.
SECTION VIII.1.5. Default on Other Indebtedness. A
default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise,
of any Indebtedness (other than Indebtedness described in Section
8.1.1) of the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of
$15,000,000, or a default shall occur in the performance or
observance of any obligation or condition with respect to such
Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit
the holder or holders of such Indebtedness, or any trustee or
agent for such holders, to cause such Indebtedness to become due
and payable prior to its expressed maturity.
SECTION VIII.1.6. Judgments. Any judgment or order for
the payment of money in excess of $5,000,000 shall be rendered
against the Borrower or any of its Subsidiaries and either
(a) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order; or (b) there shall be any
period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect.
SECTION VIII.1.7. Pension Plans. Any of the following
events shall occur with respect to any Pension Plan (a) the
institution of any steps by the Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan
if, as a result of such termination, the Borrower or any such
member could be required to make a contribution to such Pension
Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $10,000,000; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under section 302(f) of
ERISA.
SECTION VIII.1.8. Control of the Borrower, etc. Any
Change in Control shall occur, or any of the Borrower, the
Intermediate Partnership or NBPC shall (a) be dissolved for any
reason other than a withdrawal or removal of a General Partner or
(b) be dissolved by reason of the withdrawal or removal of a
General Partner and (i) such partnership shall have begun the
process of winding up and liquidating or (ii) the remaining
partners of such partnership shall not have taken all necessary
action and made all necessary filings required to continue the
business of the partnership pursuant to the terms of its
partnership agreement and applicable law and delivered to the
Agent such agreements, ratifications, certificates and opinions
and other documents as the Agent may reasonably request with
respect to such continuation, all in form and substance
satisfactory to the Agent, within the ninety day period
immediately following the date of such dissolution.
SECTION VIII.1.9. Bankruptcy, Insolvency, etc. The
Borrower, any of its Material Subsidiaries or NBPC shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they
become due; (b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower, any of its Material Subsidiaries, or
NBPC or any property of any thereof, or make a general assignment
for the benefit of creditors; (c) in the absence of such
application, consent or acquiescence, permit or suffer to exist
the appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower, any of its Material Subsidiaries or
NBPC or for a substantial part of the property of any thereof,
and such trustee, receiver, sequestrator or other custodian shall
not be discharged within 60 days, provided that the Borrower,
each Material Subsidiary and NBPC hereby expressly authorizes the
Agent and each Lender to appear in any court conducting any
relevant proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Borrower,
any of its Material Subsidiaries or NBPC and, if any such case or
proceeding is not commenced by the Borrower, such Material
Subsidiary or NBPC, such case or proceeding shall be consented to
or acquiesced in by the Borrower, such Material Subsidiary or
NBPC, as the case may be, or shall result in the entry of an
order for relief or shall remain for 60 days undismissed,
provided that the Borrower, each Material Subsidiary and NBPC
hereby expressly authorizes the Agent and each Lender to appear
in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend their rights under
the Loan Documents; or (e) take any action authorizing, or in
furtherance of, any of the foregoing.
SECTION VIII.1.10. Payment Default by NBPC. Notice shall
have been delivered to the Borrower or the Borrower otherwise
knows of a default by NBPC in the payment when due (subject to
any applicable grace period), whether by acceleration or
otherwise, of any Indebtedness for borrowed money of NBPC having
a principal amount in the aggregate in excess of $15,000,000 and
such payment default shall not have been cured.
SECTION VIII.1.11. Operator. Except for a change in the
Operator permitted pursuant to Section 7.2.11 of this Agreement,
the Operator for NBPC shall have changed.
SECTION VIII.1.12. Guaranty Event of Default. A Guaranty
Event of Default shall have occurred and be continuing.
SECTION VIII.2. Action if Bankruptcy. If any Event of
Default described in clauses (a) through (d) of Section 8.1.9
shall occur, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal
amount of all outstanding Loans and all other Obligations shall
automatically be and become immediately due and payable, without
notice or demand.
SECTION VIII.3. Action if Other Event of Default. If any
Event of Default (other than any Event of Default described in
clauses (a) through (d) of Section 8.1.9) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the
Agent, upon the direction of the Required Lenders, shall by
notice to the Borrower declare all or any portion of the
outstanding principal amount of the Loans and other Obligations
to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the
case may be, the Commitments shall terminate.
ARTICLE IX
THE AGENT
SECTION IX.1. Actions. Each Lender hereby appoints CIBC
as its Agent under and for purposes of this Agreement, the Notes
and each other Loan Document. Each Lender authorizes the Agent
to act on behalf of such Lender under this Agreement, the Notes
and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time
by the Agent (with respect to which the Agent agrees that it will
comply, except as otherwise provided in this Section or as
otherwise advised by counsel), to exercise such powers hereunder
and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender
hereby indemnifies (which indemnity shall survive any termination
of this Agreement) the Agent, pro rata according to such Lender's
Percentage, from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any
kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, the Agent in any way relating
to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which
the Agent is not reimbursed by the Borrower; provided, however,
that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from
the Agent's gross negligence or wilful misconduct. The Agent
shall not be required to take any action hereunder, under the
Notes or under any other Loan Document, or to prosecute or defend
any suit in respect of this Agreement, the Notes or any other
Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or
become, in the Agent's determination, inadequate, the Agent may
call for additional indemnification from the Lenders and cease to
do the acts indemnified against hereunder until such additional
indemnity is given.
SECTION IX.2. Funding Reliance, etc. Unless the Agent
shall have been notified by telephone, confirmed in writing, by
any Lender by 5:00 p.m., New York, New York time, on the day
prior to a Borrowing that such Lender will not make available the
amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such
Lender has made such amount available to the Agent and, in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If and to the extent that such Lender
shall not have made such amount available to the Agent, such
Lender and the Borrower severally agree to repay the Agent
forthwith on demand such corresponding amount together with
interest thereon, for each day from the date the Agent made such
amount available to the Borrower to the date such amount is
repaid to the Agent. With respect to the Borrower, such interest
shall accrue at the interest rate applicable at the time to Loans
comprising such Borrowing as set forth in this Agreement. As to
any Lender, such interest shall accrue for the first three days
at the Federal Funds Rate and thereafter at the interest rate
applicable at the time to Loans comprising such Borrowing.
SECTION IX.3. Exculpation. Neither the Agent nor any of
its directors, officers, employees or agents shall be liable to
any Lender for any action taken or omitted to be taken by it
under this Agreement or any other Loan Document, or in connection
herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan
Document, nor to make any inquiry respecting the performance by
the Borrower of its obligations hereunder or under any other Loan
Document. Any such inquiry which may be made by the Agent shall
not obligate it to make any further inquiry or to take any
action. The Agent shall be entitled to rely upon advice of
counsel concerning legal matters and upon any notice, consent,
certificate, statement or writing which the Agent believes to be
genuine and to have been presented by a proper Person.
SECTION IX.4. Successor. The Agent may resign as such at
any time upon at least 30 days' prior notice to the Borrower and
all Lenders. If the Agent at any time shall resign, the Required
Lenders may, with the consent of the Borrower which consent shall
not be unreasonably withheld or delayed, appoint another Lender
as a successor Agent which shall thereupon become the Agent
hereunder. If no successor Agent shall have been so appointed by
the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, with the consent of the
Borrower, which consent shall not be unreasonably withheld or
delayed, on behalf of the Lenders, appoint a successor Agent,
which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State
thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of (a) this
Article IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Agent under this
Agreement; and (b) Section 10.3 and Section 10.4 shall continue
to inure to its benefit.
SECTION IX.5. Loans by CIBC. CIBC shall have the same
rights and powers with respect to (x) the Loans made by it or any
of its Affiliates, and (y) the Notes held by it or any of its
Affiliates as any other Lender and may exercise the same as if it
were not the Agent. CIBC and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of business
with the Borrower or any Subsidiary or Affiliate of the Borrower
as if CIBC were not the Agent hereunder.
SECTION IX.6. Credit Decisions. Each Lender acknowledges
that it has, independently of the Agent and each other Lender,
and based on such Lender's review of the financial information of
the Borrower, this Agreement, the other Loan Documents (the terms
and provisions of which being satisfactory to such Lender) and
such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to
extend its Commitments. Each Lender also acknowledges that it
will, independently of the Agent and each other Lender, and based
on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own
credit decisions as to exercising or not exercising from time to
time any rights and privileges available to it under this
Agreement or any other Loan Document.
SECTION IX.7. Copies, etc. The Agent shall give prompt
notice to each Lender of each notice or request required or
permitted to be given to the Agent by the Borrower pursuant to
the terms of this Agreement (unless concurrently delivered to the
Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and
copies of all other communications received by the Agent from the
Borrower for distribution to the Lenders by the Agent in
accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION X.1. Waivers, Amendments, etc. The provisions
of this Agreement and of each other Loan Document may from time
to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the
Borrower and the Required Lenders; provided, however, that no
such amendment, modification or waiver which would: (a) modify
any requirement hereunder that any particular action be taken by
all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender; (b) modify this Section 10.1,
change the definition of "Required Lenders", increase any
Commitment Amount or the Percentage of any Lender, reduce any
fees described in Article III, extend any Commitment Termination
Date, release (in whole or in part) or terminate the Guaranty, or
permit the assignment of the Guaranty shall be made without the
consent of each Lender and each holder of a Note; (c) extend the
due date for, or reduce the amount of, any scheduled repayment or
prepayment of principal of or interest on any Loan (or reduce
the principal amount of or rate of interest on any Loan) shall be
made without the consent of the holder of that Note evidencing
such Loan; or (d) affect adversely the interests, rights or
obligations of the Agent in its capacity as the Agent shall be
made without consent of the Agent. No failure or delay on the
part of the Agent, any Lender or the holder of any Note in
exercising any power or right under this Agreement or any other
Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude
any other or further exercise thereof or the exercise of any
other power or right. No notice to or demand on the Borrower in
any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated in
such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted
hereunder.
SECTION X.2. Notices. All notices and other
communications provided to any party hereto under this Agreement
or any other Loan Document shall be in writing or by facsimile
and addressed, delivered or transmitted to such party at its
address or facsimile number set forth below its signature hereto
or set forth in the Lender Assignment Agreement or at such other
address or facsimile number as may be designated by such party in
a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be
deemed given when transmitted.
SECTION X.3. Payment of Costs and Expenses. The
Borrower agrees to pay on demand all reasonable expenses of the
Agent (including the fees and out-of-pocket expenses of counsel
to the Agent and of local counsel, if any, who may be retained by
counsel to the Agent) in connection with the negotiation,
preparation, execution and delivery of this Agreement and of each
other Loan Document, including schedules and exhibits, and any
amendments, waivers, consents, supplements or other modifications
to this Agreement or any other Loan Document as may from time to
time hereafter be required, whether or not the transactions
contemplated hereby are consummated, the preparation and review
of the form of any document or instrument relevant to this
Agreement or any other Loan Document. The Borrower further
agrees to pay, and to save the Agent and the Lenders harmless
from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this
Agreement, the borrowings hereunder, or the issuance of the Notes
or any other Loan Documents. The Borrower also agrees to
reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including attorneys' fees and
legal expenses) incurred by the Agent or such Lender in
connection with (x) the negotiation of any restructuring or "work-
out", whether or not consummated, of any Obligations and (y) the
enforcement of any Obligations.
SECTION X.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the
extension of the Commitments, the Borrower hereby indemnifies,
exonerates and holds the Agent and each Lender and each of their
respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from
and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such
Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to (a) any
transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan; (b) any
investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not the Agent or such Lender is party thereto;
(c) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating
to the protection of the environment or the release (as defined
in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended) by the Borrower or any of its
Subsidiaries of any Hazardous Material; or (d) the presence on or
under, or the escape, seepage, leakage, spillage, discharge,
emission, discharging or releases from, any real property owned
or operated by the Borrower or any Subsidiary thereof of any
Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within
the control of, the Borrower or such Subsidiary, except for any
such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant
Indemnified Party's gross negligence or wilful misconduct. If
and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under
applicable law.
SECTION X.5. Survival. The obligations of the Borrower
under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the
obligations of the Lenders under Section 9.1, shall in each case
survive any termination of this Agreement, the payment in full of
all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower in this
Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan
Document.
SECTION X.6. Severability. Any provision of this
Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or
affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION X.7. Headings. The various headings of this
Agreement and of each other Loan Document are inserted for
convenience only and shall not affect the meaning or
interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION X.8. Execution in Counterparts, Effectiveness,
etc. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be executed by the
Borrower and the Agent and be deemed to be an original and all of
which shall constitute together but one and the same agreement.
This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice
thereof satisfactory to the Agent) shall have been received by
the Agent and notice thereof shall have been given by the Agent
to the Borrower and each Lender.
SECTION X.9. Governing Law; Entire Agreement. THIS
AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the
other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect
thereto.
SECTION X.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
provided, however, that: (a) the Borrower may not assign or
transfer its rights or obligations hereunder without the prior
written consent of the Agent and all Lenders; and (b) the rights
of sale, assignment and transfer of the Lenders are subject to
Section 10.11.
SECTION X.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or
sell participations in, its Loans and Commitments to one or more
other Persons in accordance with this Section 10.11.
SECTION X.11.1. Assignments. Any Lender, (a) with the
written consents of the Borrower and the Agent (which consents
shall not be unreasonably delayed or withheld and which consent,
in the case of the Borrower, shall be deemed to have been given
in the absence of a written notice delivered by the Borrower to
the Agent, on or before the fifth Business Day after receipt by
the Borrower of such Lender's request for consent, stating, in
reasonable detail, the reasons why the Borrower proposes to
withhold such consent) may at any time assign and delegate to one
or more commercial banks or other financial institutions in a
minimum amount equal to $10,000,000 or, if less, its total Loans
and Commitments, and (b) with notice to the Borrower and the
Agent, but without the consent of the Borrower or the Agent, may
assign and delegate to any of its Affiliates or to any other
Lender (each Person described in either of the foregoing clauses
as being the Person to whom such assignment and delegation is to
be made, being hereinafter referred to as an "Assignee Lender"),
all or any fraction of such Lender's total Loans and Commitments
(which assignment and delegation shall in each case be of a
constant, and not a varying, percentage of all the assigning
Lender's Loans and Commitments); provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions
contained in the last sentence of Section 4.6 and further,
provided, however, that, the Borrower and the Agent shall be
entitled to continue to deal solely and directly with such Lender
in connection with the interests so assigned and delegated to an
Assignee Lender until (c) written notice of such assignment and
delegation, together with payment instructions, addresses and
related information with respect to such Assignee Lender, shall
have been given to the Borrower and the Agent by such Lender and
such Assignee Lender, (d) such Assignee Lender shall have
executed and delivered to the Borrower and the Agent a Lender
Assignment Agreement, accepted by the Agent, and (e) the
processing fees described below shall have been paid. From and
after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent
that rights and obligations hereunder have been assigned and
delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a
Lender hereunder and under the other Loan Documents, and (y) the
assignor Lender, to the extent that rights and obligations
hereunder have been assigned and delegated by it in connection
with such Lender Assignment Agreement, shall be released from its
obligations hereunder and under the other Loan Documents. Within
five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower
shall execute and deliver to the Agent (for delivery to the
relevant Assignee Lender) new Notes evidencing such Assignee
Lender's assigned Loans and Commitments and, if the assignor
Lender has retained Loans and Commitments hereunder, replacement
Notes in the principal amount of the Loans and Commitments
retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by
such assignor Lender). Each such Note shall be dated the date of
the predecessor Notes. The assignor Lender shall mark the
predecessor Notes "exchanged" and deliver them to the Borrower.
Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part
of the predecessor Notes evidenced by the replacement Notes shall
be paid to the assignor Lender. Accrued interest and accrued
fees shall be paid at the same time or times provided in the
predecessor Notes and in this Agreement. Such assignor Lender or
such Assignee Lender must also pay a processing fee to the Agent
upon delivery of any Lender Assignment Agreement in the amount of
$3,000. Any attempted assignment and delegation not made in
accordance with this Section 10.11.1 shall be null and void.
SECTION X.11.2. Participations. Any Lender may at any time
sell to one or more commercial banks or other Persons (each of
such commercial banks and other Persons being herein called a
"Participant") participating interests in any of the Loans,
Commitments, or other interests of such Lender hereunder;
provided, however, that (a) no participation contemplated in this
Section 10.11 shall relieve such Lender from its Commitments or
its other obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under this Agreement and each of the other Loan
Documents, (d) no Participant, unless such Participant is an
Affiliate of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from taking
any action hereunder or under any other Loan Document, except
that such Lender may agree with any Participant that such Lender
will not, without such Participant's consent, take any actions of
the type described in clause (b) or (c) of Section 10.1, and
(e) the Borrower shall not be required to pay any amount under
Sections 4.3, 4.4, 4.5 or 4.6 that is greater than the amount
which it would have been required to pay had no participating
interest been sold. The Borrower acknowledges and agrees that
each Participant, for purposes of Sections 4.3, 4.4, 4.5, 4.6,
4.10, 4.11, 10.3 and 10.4, shall be considered a Lender.
SECTION X.12. Other Transactions. Nothing contained
herein shall preclude the Agent or any other Lender from engaging
in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of
its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION X.13. No General Partners' Liability. The
Lenders agree for themselves and their respective successors and
assigns, including any subsequent holder of any Note, that any
claim against the Borrower which may arise under any Loan
Document shall be made only against and shall be limited to the
assets of the Borrower, except to the extent the Intermediate
Partnership may have obligations with respect to such claim
pursuant to the terms of the Guaranty, and that no judgment,
order or execution entered in any suit, action or proceeding,
whether legal or equitable, on this Agreement, such Note or any
of the other Loan Documents shall be obtained or enforced against
any General Partner or its assets for the purpose of obtaining
satisfaction and payment of such Note, the Indebtedness evidenced
thereby or any claims arising thereunder or under this Agreement
or any other Loan Document, any right to proceed against the
General Partners individually or their respective assets being
hereby expressly waived, renounced and remitted by the Lenders
for themselves and their respective successor and assigns.
Nothing in this Section 10.13, however, shall be construed so as
to prevent the Agent, any Lender or any other holder of any Note
from commencing any action, suit or proceeding with respect to or
causing legal papers to be served upon any General Partner for
the purpose of obtaining jurisdiction over the Borrower.
SECTION X.14. Forum Selection and Consent to
Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS
OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF
THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY
SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY
MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
SECTION X.15. Notice. THIS WRITTEN AGREEMENT TOGETHER
WITH THE OTHER LOAN DOCUMENTS REPRESENTS THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
NORTHERN BORDER PARTNERS, L.P.
By:
Title:
Address:
Facsimile No.:
Attention:
CANADIAN IMPERIAL BANK OF COMMERCE,
acting through its U.S. branches
and agencies, as Agent
By:
Title:
Address:
Facsimile No.:
Attention:
With respect to Sections 7.1.9,
7.2.8 and 7.2.11 only:
NORTHERN PLAINS NATURAL GAS COMPANY
By:
Title:
Address:
Facsimile No.:
Attention:
With respect to Sections 7.1.9,
7.2.8 and 7.2.11 only:
PAN BORDER GAS COMPANY
By:
Title:
Address:
Facsimile No.:
Attention:
With respect to Sections 7.1.9,
7.2.8 and 7.2.11 only:
NORTHWEST BORDER PIPELINE COMPANY
By:
Title:
Address:
Facsimile No.:
Attention:
PERCENTAGE LENDERS
CIBC INC.
28.571428571%
By:
Title:
Domestic
Office: 425 Lexington Avenue
New York, New York 10017
Facsimile No.:(212) 856-4000
Attention: Syndication Manager
Operations
LIBOR
Office: 425 Lexington Avenue
New York, New York 10017
Facsimile No.:(212) 856-4000
Attention: Syndication Manager
Operations
BANK OF MONTREAL IRELAND plc
14.285714285%
By:
Title:
LIBOR
Office: Segrave House, 4th Floor
19/20 Earlsfort Terrace
Dublin 2, Ireland
Facsimile No.: 011-353-1-6629301
Attention: Eric Lindstrom
Domestic
Contact: 700 Louisiana, Suite 4400
Houston, Texas 77002
Facsimile No.: 713-233-4007
Attention: Cahal Carmody
TORONTO DOMINION (TEXAS), INC.
14.285714285%
By:
Title:
Domestic
Office: 909 Fannin, Suite 1700
Houston, Texas 77010
Facsimile No.: 713/951-9921
Attention: Neva Nesbitt
LIBOR
Office: 909 Fannin, Suite 1700
Houston, Texas 77010
Facsimile No.: 713/951-9921
Attention: Neva Nesbitt
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
8.571428571%
By:
Title:
Domestic
Office: 1850 Gateway Boulevard
Concord,California 94520
Facsimile No.: 510-603-8208
Attention: May Seeman
LIBOR
Office: 1850 Gateway Boulevard
Concord, California 94520
Facsimile No.: 510-603-8208
Attention: May Seeman
With a
Copy to: 333 Clay Street, Suite 4550
Houston, Texas 77002
Facsimile No.: 713-651-4808
Attention: Michael J. Dillon
DEN NORSKE BANK ASA
8.571428571%
By:
Title:
By:
Title:
Domestic
Office: 200 Park Avenue
New York, New York 10166
Facsimile No.: 212-681-3900
Attention: ______________
LIBOR
Office: 200 Park Avenue
New York, New York 10166
Facsimile No.: 212-681-3900
Attention: ______________
ROYAL BANK OF CANADA
8.571428571%
By:
Title:
Domestic
Office: Financial Square
23rd Floor
New York, NY 10005-3531
Telephone No.: 212/428-6321
Facsimile No.: 212/428-2372
Attention: Assistant Manager,
Loan Processing
With a
copy to: 12450 Greenspoint Dr.
Suite 1450
Houston, Texas 77060
Telephone No.: 281/874-5664
Facsimile No.: 281-874-0081
Attention: J.D. (Doug) Frost
LIBOR
Office: Financial Square
23rd Floor
New York, NY 10005-3531
Telephone No.: 212/428-6321
Facsimile No.: 212/428-2372
Attention: Assistant Manager,
Loan Processing
With a
copy to: 12450 Greenspoint Dr.
Suite 1450
Houston, Texas 77060
Telephone No.: 281/874-5664
Facsimile No.: 281-874-0081
Attention: J.D. (Doug) Frost
THE SANWA BANK, LIMITED
8.571428571%
By:
Title:
Domestic
Office: 10 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Facsimile No.: 312-346-6677
Attention: ______________
LIBOR
Office: 10 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Facsimile No.: 312-346-6677
Attention: ______________
THE FIRST NATIONAL BANK OF CHICAGO
8.571428571%
By:
Title:
Domestic
Office: One First National Plaza
Chicago, IL 60670
Facsimile No.: _______________
Attention: ______________
LIBOR
Office: One First National Plaza
Chicago, IL 60670
Facsimile No.: _______________
Attention: ______________
___________
100%
with a copy to:
1100 Louisiana, Suite 3200
Houston, Texas 77002
Facsimile No.: 713-654-7370
Attention: ______________
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 6.7 Litigation.
Description of Proceeding Action or Claim Sought
ITEM 6.12 Environmental Matters.
ITEM 7.2.4(a) Ongoing Investments.
EXHIBIT A
REVOLVING NOTE
$___________ November 6, 1997
FOR VALUE RECEIVED, the undersigned, NORTHERN BORDER
PARTNERS, L.P., a Delaware limited partnership (the "Borrower"),
promises to pay to the order of ______________________ (the
"Lender") on the Stated Maturity Date (as defined in the Credit
Agreement referenced below) the principal sum of
__________________ DOLLARS ($___________) or, if less, the
aggregate unpaid principal amount of all Loans shown on the
schedule attached hereto (and any continuation thereof) made by
the Lender pursuant to that certain Credit Agreement, dated as of
November 6, 1997 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto,
the "Credit Agreement"), among the Borrower, CANADIAN IMPERIAL
BANK OF COMMERCE, as Agent, and the various financial
institutions (including the Lender) as are, or may from time to
time become, parties thereto.
The Borrower also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the
date hereof until maturity (whether by acceleration or otherwise)
and, after maturity, until paid, at the rates per annum and on
the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in
lawful money of the United States of America in same day or
immediately available funds to the account designated by the
Agent pursuant to the Credit Agreement.
This Note is one of the Revolving Notes referred to in, and
evidences Indebtedness incurred under, the Credit Agreement, to
which reference is made for statement of the terms and conditions
on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness
evidenced by this Note and on which such Indebtedness may be
declared to be immediately due and payable. Unless otherwise
defined, terms used herein have the meanings provided in the
Credit Agreement.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand,
protest and notice of dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
NORTHERN BORDER PARTNERS, L.P.
By_____________________________
Title:
REVOLVING LOANS AND PRINCIPAL PAYMENTS
Amount of Amount of Unpaid
Revolving Principal Principal
Loan Made Repaid Balance
Interest
Base LIBO Period (if Base LIBO Base LIBO Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
EXHIBIT B
BORROWING REQUEST
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York _________
Attention: Syndication Manager
Operations
NORTHERN BORDER PARTNERS, L.P.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to
Section 2.3 of the Credit Agreement, dated as of November 6, 1997
(together with all amendments, if any, from time to time made
thereto, the "Credit Agreement"), among NORTHERN BORDER PARTNERS,
L.P., a Delaware limited partnership (the "Borrower"), certain
financial institutions and Canadian Imperial Bank of Commerce
(the "Agent"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided
in the Credit Agreement.
The Borrower hereby requests that a Loan be made in the
aggregate principal amount of $__________ on __________, [19]___
as a [LIBO Rate Loan having an Interest Period of _______ months]
[Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section
5.2.3 of the Credit Agreement, each of the delivery of this
Borrowing Request and the acceptance by the Borrower of the
proceeds of the Loans requested hereby constitute a
representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the
application of the proceeds therefrom, all statements set forth
in Section 5.2.1 are true and correct in all material respects.
The Borrower agrees that if prior to the time of the
Borrowing requested hereby any matter certified to herein by it
will not be true and correct at such time as if then made, it
will immediately so notify the Agent. Except to the extent, if
any, that prior to the time of the Borrowing requested hereby the
Agent shall receive written notice to the contrary from the
Borrower, each matter certified to herein shall be deemed once
again to be certified as true and correct at the date of such
Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the
accounts of the following persons at the financial institutions
indicated respectively:
Amount to be Person to be Paid Name, Address, etc.
Transferred Name Account No. of Transferee Lender
$___________ ____________ __________ ____________________
____________________
Attention: _________
$___________ ____________ ___________ ____________________
____________________
Attention: _________
Balance of The Borrower ___________ ____________________
such proceeds ____________________
Attention: _________
The Borrower has caused this Borrowing Request to be
executed and delivered, and the certification and warranties
contained herein to be made, by its duly Authorized
Representative this ___ day of ___________, [199]_.
NORTHERN BORDER PARTNERS, L.P.
By
Title:
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Syndication Manager
Operations
NORTHERN BORDER PARTNERS, L.P.
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you
pursuant to Section 2.4 of the Credit Agreement, dated as of
November 6, 1997 (together with all amendments, if any, from time
to time made thereto, the "Credit Agreement"), among NORTHERN
BORDER PARTNERS, L.P., a Delaware limited partnership (the
"Borrower"), certain financial institutions and CANADIAN IMPERIAL
BANK OF COMMERCE (the "Agent"). Unless otherwise defined herein
or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, [19]___,
(1) $___________ of the presently outstanding
principal amount of the Loans originally made on __________,
[19]___ and Loans originally made on __________, [19]___,
(2) and all presently being maintained as *[Base Rate
Loans] [LIBO Rate Loans],
(3) be [converted into] [continued as],
(4) [LIBO Rate Loans having an Interest Period of
______ months] [Base Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Default has
occurred and is continuing; and
(b) agrees that if prior to the time of such
continuation or conversion any matter certified to herein by
it will not be true and correct at such time as if then
made, it will immediately so notify the Agent.
______________
* Select appropriate interest rate option.
Except to the extent, if any, that prior to the time of the
continuation or conversion requested hereby the Agent shall
receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed to be certified at the
date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice
to be executed and delivered, and the certification and
warranties contained herein to be made, by its Authorized
Representative this ___ day of _________, [19]___.
NORTHERN BORDER PARTNERS, L.P.
By
Title:
EXHIBIT D
LENDER ASSIGNMENT AGREEMENT
To: NORTHERN BORDER PARTNERS, L.P.
To: CANADIAN IMPERIAL BANK OF COMMERCE
as the Agent
NORTHERN BORDER PARTNERS, L.P.
Gentlemen and Ladies:
We refer to clause (d) of Section 10.11.1 of the Credit
Agreement, dated as of November 6, 1997 (together with all
amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"), among NORTHERN
BORDER PARTNERS, L.P., a Delaware limited partnership (the
"Borrower"), the various financial institutions (the "Lenders")
as are, or shall from time to time become, parties thereto, and
CANADIAN IMPERIAL BANK OF COMMERCE, as agent (the "Agent") for
the Lenders. Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided
in the Credit Agreement.
This agreement is delivered to you pursuant to clause (d) of
Section 10.11.1 of the Credit Agreement and also constitutes
notice to each of you, pursuant to clause (c) of Section 10.11.1
of the Credit Agreement, of the assignment and delegation to
_______________ (the "Assignee") of ___% of the Loans and
Commitments of _____________ (the "Assignor") outstanding under
the Credit Agreement on the date hereof. After giving effect to
the foregoing assignment and delegation, the Assignor's and the
Assignee's Percentages for the purposes of the Credit Agreement
are set forth opposite such Person's name on the signature pages
hereof.
[Add paragraph dealing with accrued interest and fees with
respect to Loans assigned.]
The Assignee hereby acknowledges and confirms that it has
received a copy of the Credit Agreement and the exhibits related
thereto, together with copies of the documents which were
required to be delivered under the Credit Agreement as a
condition to the making of the Loans thereunder. The Assignee
further confirms and agrees that in becoming a Lender and in
making its Commitments and Loans under the Credit Agreement, such
actions have and will be made without recourse to, or
representation or warranty by the Agent.
Except as otherwise provided in the Credit Agreement,
effective as of the date of acceptance hereof by the Agent
(a) the Assignee (ii) shall be deemed automatically to have
become a party to the Credit Agreement, have all the rights and
obligations of a "Lender" under the Credit Agreement and the
other Loan Documents as if it were an original signatory thereto
to the extent specified in the second paragraph hereof; and
(iii) agrees to be bound by the terms and conditions set forth in
the Credit Agreement and the other Loan Documents as if it were
an original signatory thereto; and (b) the Assignor shall be
released from its obligations under the Credit Agreement and the
other Loan Documents to the extent specified in the second
paragraph hereof.
The Assignor and the Assignee hereby agree that the
[Assignor] [Assignee] will pay to the Agent the processing fee
referred to in Section 10.11.1 of the Credit Agreement upon the
delivery hereof.
The Assignee hereby advises each of you of the following
administrative details with respect to the assigned Loans and
Commitments and requests the Agent to acknowledge receipt of this
document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
LIBOR Office:
Telephone:
Facsimile:
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by the
second to last sentence of Section 4.6 (if so required) of the
Credit Agreement no later than the date of acceptance hereof by
the Agent.
This Agreement may be executed by the Assignor and Assignee
in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
Adjusted Percentage [ASSIGNOR]
Term Loan Commitment
and
Term Loans: __%
Loan
Commitment
and
Loans: __%
By:_______________________
Title:
Percentage [ASSIGNEE]
Term Loan Commitment
and
Term Loans: __%
Loan
Commitment
and
Loans: __%
By:_______________________
Title:
Accepted and Acknowledged
this __ day of _______, [19]__
__________________________,
as Agent
By:________________________
Title:
EXHIBIT E-1
[Form of Opinion of Counsel to the Borrower]
EXHIBIT E-2
[Form of Opinion of Counsel to Northern Plains
Natural Gas Company as General Partner of the Borrower]
EXHIBIT E-3
[Form of Opinion of Counsel to Each General Partner]
EXHIBIT F
[Form of Guaranty]
Table of Contents
Page
I DEFINITIONS AND ACCOUNTING TERMS 2
1.1. Defined Terms 2
1.2. Use of Defined Terms 16
1.3. Cross-References 16
1.4. Accounting and Financial Determinations 16
II COMMITMENTS, BORROWING PROCEDURES AND NOTES 16
2.1. Commitments 16
2.1.1. Loan Commitment 16
2.1.2. Lenders Not Permitted or Required
To Make Loans 17
2.2. Reduction of Commitment Amount 17
2.3. Borrowing Procedure 18
2.4. Continuation and Conversion Elections 18
2.5. Funding 18
2.6. Notes 19
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES 19
3.1. Repayments and Prepayments 19
3.2. Interest Provisions 20
3.2.1. Rates 20
3.2.2. Post-Maturity Rates 21
3.2.3. Payment Dates 21
3.3. Fees 22
3.3.1. Commitment Fee 22
3.3.2. Upfront Fee 22
3.3.3. Agent's Fee 22
IV CERTAIN LIBO RATE AND OTHER PROVISIONS 22
4.1. LIBO Rate Lending Unlawful 22
4.2. Deposits Unavailable 22
4.3. Increased LIBO Rate Loan Costs, etc. 23
4.4. Funding Losses 24
4.5. Increased Capital Costs 24
4.6. Taxes 25
4.7. Lender Statements; Survival of Indemnity. 26
4.8. Replacement of Lenders. 26
4.9. Payments, Computations, etc. 27
4.10. Sharing of Payments 28
4.11. Setoff 28
4.12. Use of Proceeds 29
V CONDITIONS TO BORROWING 29
5.1. Initial Borrowing 29
5.1.1. Resolutions, etc. 29
5.1.2. Delivery of Notes 30
5.1.3. Guaranty. 30
5.1.4. Opinions of Counsel 31
5.1.5. Closing Fees, Expenses, etc. 31
5.2. All Borrowings 31
5.2.1. Compliance with Warranties, No
Default, etc. 31
5.2.2. Material Adverse Change 31
5.2.3. Borrowing Request 32
5.2.4. Legal Matters 32
VI REPRESENTATIONS AND WARRANTIES 32
6.1. Organization, etc. 32
6.2. Due Authorization, Non-Contravention, etc. 32
6.3. Government Approval, Regulation, etc. 33
6.4. Validity, etc. 33
6.5. Financial Information 33
6.6. No Material Adverse Change 34
6.7. Litigation, Labor Controversies, etc. 34
6.8. Material Subsidiaries 34
6.9. Ownership of Properties 34
6.10. Taxes 34
6.11. ERISA Plans 35
6.12. Environmental Matters 35
6.13. Regulations G, U and X 35
6.14. Default 35
6.15. Accuracy of Information 36
VII COVENANTS 36
7.1. Affirmative Covenants 36
7.1.1. Financial Information, Reports,
Notices, etc. 36
7.1.2. Compliance with Laws, etc. 38
7.1.3. Maintenance of Properties 38
7.1.4. Insurance 39
7.1.5. Books and Records 39
7.1.6. [Reserved.] 39
7.1.7. Pari Passu Status 39
7.1.8. Maintenance of Tax Status 39
7.1.9. Obligations to Make Loans or
Purchase Units. 39
7.2. Negative Covenants 40
7.2.1. Indebtedness 40
7.2.2. Liens 41
7.2.3. Financial Condition 42
7.2.4. Investments 42
7.2.5. Payments to Limited Partnership
Units, etc. 43
7.2.6. Rental Obligations 44
7.2.7. Limitation on Business Activities 44
7.2.8. Consolidation, Merger, etc. 44
7.2.9. Issuance of Units. 45
7.2.10.Asset Dispositions, etc. 45
7.2.11.Modification of Certain Agreements 45
7.2.12.Transactions with Affiliates 46
7.2.13.Negative Pledges, Restrictive
Agreements, etc. 46
7.2.14.ERISA. 47
VIII EVENTS OF DEFAULT 47
8.1. Listing of Events of Default 47
8.1.1. Non-Payment of Obligations 47
8.1.2. Breach of Warranty 47
8.1.3. Non-Performance of Certain
Covenants and Obligations 47
8.1.4. Non-Performance of Other Covenants
and Obligations 47
8.1.5. Default on Other Indebtedness 48
8.1.6. Judgments 48
8.1.7. Pension Plans 48
8.1.8. Control of the Borrower, etc 48
8.1.9. Bankruptcy, Insolvency, etc. 49
8.1.10.Payment Default by NBPC. 49
8.1.11.Operator. 50
8.1.12.Guaranty Event of Default. 50
8.2. Action if Bankruptcy 50
8.3. Action if Other Event of Default 50
X THE AGENT 50
9.1. Actions 50
9.2. Funding Reliance, etc. 51
9.3. Exculpation 51
9.4. Successor 52
9.5. Loans by CIBC 52
9.6. Credit Decisions 53
9.7. Copies, etc. 53
X MISCELLANEOUS PROVISIONS 53
10.1. Waivers, Amendments, etc. 53
10.2. Notices 54
10.3. Payment of Costs and Expenses 54
10.4. Indemnification 55
10.5. Survival 56
10.6. Severability 56
10.7. Headings 56
10.8. Execution in Counterparts, Effectiveness, etc. 56
10.9. Governing Law; Entire Agreement 56
10.10. Successors and Assigns 57
10.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes 57
10.11.1.Assignments 57
10.11.2.Participations 58
10.12. Other Transactions 59
10.13. No General Partners' Liability 59
10.14. Forum Selection and Consent to Jurisdiction 59
10.15. Notice 60
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Revolving Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Continuation/Conversion Notice
EXHIBIT D - Form of Lender Assignment Agreement
EXHIBIT E-1 - Form of Opinion of Counsel to the Borrower
EXHIBIT E-2 - Form of Opinion of Counsel to Northern
Plains Natural Gas Company as General Partner of
the Borrower
EXHIBIT E-3 - Form of Opinion of Counsel to Each
General Partner
EXHIBIT F - Form of Guaranty
