Exhibit 10.1
Execution Copy
 
OMNIBUS AGREEMENT
AMONG
WILLIAMS ENERGY SERVICES, LLC
WILLIAMS ENERGY, L.L.C.
WILLIAMS DISCOVERY PIPELINE LLC
WILLIAMS PARTNERS HOLDINGS LLC
WILLIAMS PARTNERS GP LLC
WILLIAMS PARTNERS L.P.
WILLIAMS PARTNERS OPERATING LLC
AND
(FOR PURPOSES OF ARTICLES V AND VI ONLY) THE WILLIAMS COMPANIES, INC.
 

 

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OMNIBUS AGREEMENT
     THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing
Date, among Williams Energy Services, LLC, a Delaware limited liability company
(“WES”), Williams Energy, L.L.C., a Delaware limited liability company
(“Williams Energy”), Williams Discovery Pipeline LLC, a Delaware limited
liability company (“Williams Discovery”), Williams Partners Holdings LLC, a
Delaware limited liability company (“Williams Holdings,” and with WES, Williams
Energy and Williams Discovery, the “Williams Indemnitors”), Williams Partners GP
LLC, a Delaware limited liability company (including any permitted successors
and assigns under the MLP Agreement (as defined herein)), the “General
Partner”), for itself and on behalf of the MLP in its capacity as general
partner, Williams Partners L.P., a Delaware limited partnership (the “MLP”),
Williams Partners Operating LLC, a Delaware limited liability company (the
“OLLC”), and, for purposes of Articles V and VI hereof only, The Williams
Companies, Inc., a Delaware corporation (“Williams”). The above-named entities
are sometimes referred to in this Agreement each as a “Party” and collectively
as the “Parties.”
R E C I T A L S:
     The Parties desire by their execution of this Agreement to evidence their
understanding, (i) as more fully set forth in Article II and Article III of this
Agreement, with respect to certain indemnification and reimbursement obligations
of the Parties, (ii) as more fully set forth in Article IV of this Agreement,
with respect to the partial credit to be provided to the MLP with respect to
general and administrative services provided by the Williams Entities (as
defined herein) for and on behalf of the Partnership Group (as defined herein)
and (iii) as more fully set forth in Article V of this Agreement, with respect
to grants of intellectual property from Williams to the Licensees (as defined
herein).
     In consideration of the premises and the covenants, conditions, and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
ARTICLE I
Definitions
1.1 Definitions. (a) Capitalized terms used herein but not defined shall have
the meanings given them in the MLP Agreement.
(b) As used in this Agreement, the following terms shall have the respective
meanings set forth below:
     “Additional Expenditures” has the meaning given such term in Section 3.1 of
this Agreement.
     “Agreement” means this Omnibus Agreement, as it may be amended, modified,
or supplemented from time to time in accordance with the terms hereof.
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     “Cap” has the meaning give n such term in Section 2.4(a).
     “Change of Control” means, with respect to any Person (the “Applicable
Person”), any of the following events: (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the Applicable Person’s assets to any other Person, unless
immediately following such sale, lease, exchange or other transfer such assets
are owned, directly or indirectly, by the Applicable Person; (ii) the
dissolution or liquidation of the Applicable Person; (iii) the consolidation or
merger of the Applicable Person with or into another Person pursuant to a
transaction in which the outstanding Voting Securities of the Applicable Person
are changed into or exchanged for cash, securities or other property, other than
any such transaction where (a) the outstanding Voting Securities of the
Applicable Person are changed into or exchanged for Voting Securities of the
surviving corporation or its parent and (b) the holders of the Voting Securities
of the Applicable Person immediately prior to such transaction own, directly or
indirectly, not less than a majority of the outstanding Voting Securities of the
surviving corporation or its parent immediately after such transaction; and
(iv) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of
the Exchange Act) being or becoming the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the
then outstanding Voting Securities of the Applicable Person, except in a merger
or consolidation which would not constitute a Change of Control under clause
(iii) above.
     “Closing Date” means the date of the closing of the initial public offering
of common units representing limited partner interests in the MLP.
     “Common Unit” has the meaning given such term in the MLP Agreement.
     “Conflicts Committee” has the meaning given such term in the MLP Agreement.
     “Conway Plumes” has the meaning given such term in Section 2.1(b).
     “Covered Environmental Losses” means all environmental losses, damages,
liabilities, claims, demands, causes of action, judgments, settlements, fines,
penalties, costs and expenses (including, without limitation, costs and expenses
of any Environmental Activity, court costs and reasonable attorney’s and
experts’ fees) of any and every kind or character, suffered or incurred by the
Partnership Group by reason of or arising out of:
(i) any violation or correction of violation, including without limitation
performance of any Environmental Activity, of Environmental Laws; or
     (ii) any event, omission or condition associated with ownership or
operation of the Assets (including, without limitation, the exposure to or
presence of Hazardous Substances on, under, about or migrating to or from the
Assets or the exposure to or Release of Hazardous Substances arising out of
operation of the Assets at non-Asset locations) including, without limitation,
(A) the cost and expense of any Environmental Activities, (B) the cost or
expense of the preparation and implementation of any closure,
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remedial or corrective action or other plans required or necessary under
Environmental Laws and (C) the cost and expense for any environmental or toxic
tort pre-trial, trial or appellate legal or litigation support work; provided,
in the case of clauses (A) and (B), such cost and expense shall not include the
costs of and associated with project management and soil and ground water
monitoring;
but only to the extent that such violation complained of under clause (i), or
such events or conditions included in clause (ii), occurred before the Closing
Date.
     “Covered Shipper Refunds” has the meaning given such term in Section 3.2 of
this Agreement.
     “Discovery” means, collectively, Discovery Producer Services LLC, a
Delaware limited liability company, and its wholly owned subsidiary Discovery
Gas Transmission LLC, a Delaware limited liability company.
     “Discovery LLC Agreement” means the Third Amended and Restated Limited
Liability Company Agreement of Discovery Producer Services LLC, dated June 13,
2005 to be effective on the Effective Date (as defined therein), by and among
Duke Energy Field Services, LP, Williams Energy and the OLLC.
     “Discovery Assets” means the assets owned by Discovery as of the Closing
Date.
     “Environmental Activities” shall mean any investigation, study, assessment,
evaluation, sampling, testing, monitoring, containment, removal, disposal,
closure, corrective action, remediation (regardless of whether active or
passive), natural attenuation, restoration, bioremediation, response, repair,
corrective measure, cleanup, or abatement that is required or necessary under
any applicable Environmental Law, including, but not limited to, institutional
or engineering controls or participation in a governmental voluntary cleanup
program to conduct voluntary investigatory and remedial actions for the
clean-up, removal or remediation of Hazardous Substances that exceed actionable
levels established pursuant to Environmental Laws, or participation in a
supplemental environmental project in partial or whole mitigation of a fine or
penalty.
     “Environmental Laws” means all federal, state, and local laws, statutes,
rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees,
Environmental Permits and other legally enforceable requirements and rules of
common law relating to (a) pollution or protection of the environment or natural
resources including, without limitation, the federal Comprehensive Environmental
Response, Compensation and Liability Act, the Superfund Amendments and
Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Oil Pollution Act of 1990, the Hazardous Materials
Transportation Act, the Marine Mammal Protection Act, the Endangered Species
Act, the National Environmental Policy Act, and other environmental conservation
and protection laws, each as amended through the Closing Date, (b) any Release
or threatened Release of, or any exposure of any Person or property
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to, any Hazardous Substances and (c) the generation, manufacture, processing,
distribution, use, treatment, storage, transport, or handling of any Hazardous
Substances.
     “Environmental Permit” means any permit, approval, identification number,
license, registration, consent, exemption, variance, or other authorization
required under or issued pursuant to any applicable Environmental Law.
     “Environmental Policy” means that certain Pollution Legal Liability Select
Clean-up Cost Cap Insurance Policy, Policy number PLCC 1959233, effective as of
April 30, 2004, issued by American International Specialty Lines Ins. Co., as
modified by the related declarations and endorsements attached thereto, and held
by Mid-Continent Fractionation & Storage, LLC, as first named insured, pursuant
to an assignment from WMNGL.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “General Partner” has the meaning given such term in the introduction to
this Agreement.
     “Hazardous Substance” means (a) any substance that is designated, defined
or classified as a hazardous waste, solid waste, hazardous material, pollutant,
contaminant or toxic or hazardous substance, or terms of similar meaning, or
that is otherwise regulated under any Environmental Law, including, without
limitation, any hazardous substance as defined under the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, (b) oil as
defined in the Oil Pollution Act of 1990, as amended, including oil, gasoline,
natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other
refined petroleum hydrocarbons and petroleum products and (c) radioactive
materials, asbestos containing materials or polychlorinated biphenyls.
     “Indemnified Party” means the Partnership Group or the Williams Entities,
as the case may be, in their capacity as the parties entitled to indemnification
in accordance with Article II.
     “Indemnifying Party” means either the Partnership Group or the Williams
Indemnitors, as the case may be, in their capacity as the parties from whom
indemnification may be required in accordance with Article II.
     “KDHE” means the Kansas Department of Health and Environement.
     “Licensees” means, for purposes of Article V hereof, the Partnership
Entities.
     “Licensor” means, for purposes of Article V hereof, Williams.
     “Losses” has the meaning given such term in Section 2.1(b).
     “MAPCO” means MAPCO, Inc., a Delaware corporation and a wholly owned
indirect subsidiary of Williams.
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     “Marks” means all trademarks, tradenames, logos and/or service marks
identified on Schedule I attached hereto.
     “MLP” has the meaning given such term in the introduction to this
Agreement.
     “MLP Agreement” means the Amended and Restated Agreement of Limited
Partnership of the MLP, dated as of the Closing Date, as such agreement is in
effect on the Closing Date, to which reference is hereby made for all purposes
of this Agreement. An amendment or modification to the MLP Agreement subsequent
to the Closing Date shall be given effect for the purposes of this Agreement
only if it has received the approval of the Conflicts Committee that would be
required, if any, pursuant to Section 6.6 hereof if such amendment or
modification were an amendment or modification of this Agreement.
     “MLP Assets” means the pipeline, natural gas fractionator, NGL storage
facility or related equipment or asset, or portion thereof, conveyed,
contributed or otherwise transferred or intended to be conveyed, contributed or
otherwise transferred to any member of the Partnership Group, or owned by or
necessary for the operation of the business, properties or assets or any member
of the Partnership Group, prior to or as of the Closing Date; provided, the MLP
Assets do not include the Discovery Assets.
     “OLLC” has the meaning given such term in the introduction to this
Agreement.
     “Organizational Documents” means certificates of incorporation, by-laws,
certificates of formation, limited liability company operating agreements,
certificates of limited partnership or limited partnership agreements or other
formation or governing documents of a particular entity.
     “Partnership Entities” means the General Partner and each member of the
Partnership Group.
     “Partnership Group” means the MLP, the OLLC and any Subsidiary of the OLLC;
provided, the Partnership Group does not include Discovery.
     “Person” means an individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or any other
entity.
     “Release” means any depositing, spilling, leaking, pumping, pouring,
placing, emitting, discarding, abandoning, emptying, discharging, migrating,
injecting, escaping, leaching, dumping, or disposing into the environment.
     “Subsidiary” has the meaning given such term in the MLP Agreement.
     “Tahiti AFE” means the AFE (approval for expenditure) approved by the
management committee of Discovery, as of July 22, 2005, with respect to the
construction of the Tahiti Lateral and the Upstream Pipeline.
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     “Tahiti Construction Agreement” means the Coordination and Construction
Agreement, dated July 21, 2005, by and among Discovery Producer Services, LLC,
Shell Gulf of Mexico Inc., Chevron U.S.A. Inc. and Statoil Gulf of Mexico LLC.
     “Tahiti Escrow Account” means the escrow account to fund the pro rata
portion of expenditures covered by the Tahiti AFE attributable to Williams and
the MLP established by Discovery pursuant to Article XV of the Coordination and
Construction Agreement, dated July 21, 2005, by and among Discovery, Shell Gulf
of Mexico Inc., Chevron U.S.A. Inc. and Statoil Gulf of Mexico LLC.
     “Tahiti Lateral” has the meaning assigned to such term in the Tahiti
Construction Agreement.
     “UOP” means UOP Process Division (a division of Universal Oil Products
Company, a Delaware corporation).
     “Upstream Pipeline” has the meaning assigned to such term in the Tahiti
Construction Agreement.
     “Voting Securities” means securities of any class of Person entitling the
holders thereof to vote in the election of, or to appoint, members of the board
of directors or other similar governing body of the Person.
     “WES” has the meaning given such term in the introduction to this
Agreement.
     “Williams” has the meaning given such term in the introduction to this
Agreement.
     “Williams Discovery” has the meaning given such term in the introduction to
this Agreement.
     “Williams Energy” has the meaning given such term in the introduction to
this Agreement.
     “Williams Entities” means Williams and any Person controlled by Williams,
other than the Partnership Entities. For purposes of this definition, “control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of Voting Securities, by contract or otherwise.
     “Williams Holdings” has the meaning given such term in the introduction to
this Agreement.
     “Williams Indemnitors” has the meaning given such term in the introduction
to this Agreement.
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     “WMNGL” means Williams Midstream Natural Gas Liquids, Inc., a Delaware
corporation.
ARTICLE II
Indemnification
     2.1 Environmental Indemnification.
     (a) Subject to the provisions of Section 2.4 and Section 2.5, the Williams
Indemnitors shall indemnify, defend and hold harmless the Partnership Group from
and against any Covered Environmental Losses relating to the MLP Assets and the
Discovery Assets for a period of three (3) years from the Closing Date;
provided, the Williams Indemnitors shall only be obligated to indemnify, defend
and hold harmless the Partnership Group for forty percent (40.0%) of any Covered
Environmental Losses associated with the Discovery Assets.
     (b) Without limiting the indemnity provided pursuant to Section 2.1(a),
subject to the provisions of Section 2.4 and Section 2.5, the Williams
Indemnitors shall also indemnify, defend and hold harmless the Partnership Group
from and against any losses, damages, liabilities, claims, demands, causes of
action, judgments, settlements, fines, penalties, costs and expenses (including,
without limitation, court costs and reasonable attorney’s and experts’ fees) of
any and every kind or character (collectively, “Losses”) suffered or incurred by
the Partnership Group by reason of or arising out of:
     (i) the completion of the currently ongoing or scheduled remediation
projects at the storage caverns in or in the vicinity of Conway, Kansas pursuant
to consent orders issued by the Kansas Department of Health and Environment, as
more fully described on Schedule II hereto (the “Conway Plumes”), excluding
costs of and associated with project management and soil and groundwater
monitoring or operation and maintenance relating thereto;
     (ii) the performance of any Environmental Activities arising out of or
associated with the natural gas liquids and other hydrocarbons in localized
groundwater resources around two abandoned storage caverns in Conway, Kansas not
covered by the consent orders referred to in clause (i) above;
     (iii) the repair and/or replacement costs as well as any fines and
penalties directly associated with the Louisiana Department of Environmental
Quality’s Notice of Potential Penalty issued for the flare at Discovery’s
Fractionation Plant in Paradis, St. Charles Parish, Louisiana;
     (iv) the performance of any Environmental Activities arising out of or
associated with the discontinuance of use and any abandonment of Discovery’s
shared concrete storage tank which resides on a Chevron affiliate’s property
adjacent to Discovery’s Fractionation Plant, in Paradis, St. Charles Parish,
Louisiana; and
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     (v) the completion of the construction and maintenance of the Marsh
Mitigation Project Phase II, related to the Louisiana Department of Natural
Resources Coastal Management Division and the U.S. Army Corps of Engineers
Permits granted on April 23, 1998, and which includes administratively approved
wetland mitigation for 37.211 acres of marshland that was impacted by the
April-October 1998 construction of the Discovery Gas Transmission natural gas
pipeline;
provided, however, that in the case of such events or conditions described in
clauses (ii), (iii), (iv) and (v) above, such indemnification obligations shall
survive for three (3) years from the Closing Date; and, provided, further, that
in the case of such events or conditions described in clauses (iii), (iv) and
(v) above, that the Williams Indemnitors shall only be obligated to indemnify,
defend and hold harmless the Partnership Group for forty percent (40.0%) of the
Losses associated with such events or conditions.
     (c) The Partnership Group shall indemnify, defend and hold harmless the
Williams Entities from and against any Covered Environmental Losses relating to
the MLP Assets occurring after the Closing Date, except to the extent that the
Partnership Group is indemnified with respect to any of such Covered
Environmental Losses under Section 2.1(a) or 2.1(b).
2.2 Indemnification for Certain Repair and Compliance Costs. Subject to the
provisions of Section 2.4 and Section 2.5, the Williams Indemnitors shall also
indemnify, defend and hold harmless the Partnership Group from and against any
Losses suffered or incurred by the Partnership Group by reason of or arising out
of:
     (a) the repair and/or replacement of the overburden along the Carbonate
Trend natural gas pipeline as a result of erosion caused by Hurricane Ivan in
2004;
     (b) the compliance with the KDHE-required installation of wellhead control
equipment and well meters associated with the following KDHE regulations, which
pertain to underground liquified petroleum gas or hydrocarbon storage
cavern/well permits: Kan. Admin. Regs. §§ 28-45a-1 to 28-45a-19 (2003) and Kan.
Admin. Regs. §§ 28-45-2a to 28-45-30 (2003)) ; and
     (c) the repair and/or replacement costs associated with changing piping and
flow processes and the installation of a new separator tank that are directly
associated with the discontinuance of Discovery’s shared concrete storage tank
which resides on a Chevron affiliate’s property adjacent to Discovery’s
Fractionation Plant in Paradis, St. Charles Parish, Louisiana;
provided, however, that in the case of such events or conditions described in
clause (c) above, the Williams Indemnitors shall only be obligated to indemnify,
defend and hold harmless the Partnership Group for forty percent (40.0%) of the
Losses associated with such events or conditions.
     2.3 Additional Indemnification
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     (a) Subject to the provisions of Section 2.4 and Section 2.5, the Williams
Indemnitors shall indemnify, defend and hold harmless the Partnership Group from
and against any Losses suffered or incurred by the Partnership Group by reason
of or arising out of:
     (i) the failure of the Partnership Group to be the owner of valid and
indefeasible easement rights, leasehold and/or fee ownership interests in and to
the lands on which are located any MLP Assets, and such failure renders the
Partnership Group liable or unable to use or operate the MLP Assets in
substantially the same manner that the Pipeline Assets were used and operated by
the Williams Entities immediately prior to the Closing Date;
     (ii) the failure of the Partnership Group to have on the Closing Date any
consent or governmental permit necessary to allow any such MLP Assets referred
to in clause (ii) of this Section 2.1 to cross the roads, waterways, railroads
and other areas upon which any such Pipeline Assets are located as of the
Closing Date, and such failure renders the Partnership Group unable to use or
operate the MLP Assets in substantially the same manner that the MLP Assets were
owned and operated by the Williams Entities immediately prior to the Closing
Date;
     (iii) all federal, state and local income tax liabilities attributable to
the ownership or operation of the MLP Assets prior to the Closing Date,
including any such income tax liabilities of the Williams Entities that may
result from the consummation of the formation transactions for the Partnership
Group, but excluding any federal, state and local income taxes reserved on the
books of the Partnership Group as of the Closing Date; and
     (iv) the failure of MAPCO to assign or extend that certain License
Agreement, dated March 21, 1973, between MAPCO and UOP, to a member of the
Partnership Group prior to or on the Closing Date or any payment made by a
member of the Partnership Group to obtain a consent from UOP to permit the
assignment or extension of such License Agreement to a member of the Partnership
Group;
provided, however, that, in the case of clauses (i) and (ii) above, such
indemnification obligations shall survive for three (3) years from the Closing
Date; that in the case of clause (iii) above, such indemnification obligations
shall survive until sixty (60) days after the expiration of any applicable
statute of limitations; and that in the case of clause (iv) above, such
indemnification obligations shall survive without termination; and provided,
further, that the indemnification obligations under clauses (i) and (ii) above
do not include any pipeline or related equipment owned by Discovery.
     (b) In addition to and not in limitation of the indemnification provided
under this Article II, the Partnership Group shall indemnify, defend, and hold
harmless the Williams Entities from and against any Losses suffered or incurred
by the Williams
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Entities by reason of or arising out of events and conditions associated with
the operation of the MLP Assets and occurring on or after the Closing Date.
     2.4 Limitations Regarding Indemnification.
     (a) The aggregate liability of the Williams Indemnitors under
Sections 2.1(a), 2.1(b) and 2.2 shall not exceed $14.0 million (the “Cap”);
provided, however, the Cap shall be reduced by the amount of any recoveries
under the Environmental Policy. To the extent that any of the events and
conditions described in such Sections 2.1(a), 2.1(b) and 2.2 are insured against
under the Environmental Policy, the Partnership Group agrees to use commercially
reasonable efforts to pursue the recovery of such Losses under the Environmental
Policy for a reasonable period of time before seeking indemnification with
respect thereto from the Williams Indemnitors under this Agreement. In the case
of recoveries under the Environmental Policy made after indemnification has been
provided by the Williams Indemnitors in respect of a Loss pursuant to
Section 2.1(a), 2.1(b) or 2.2, the Partnership Group shall promptly remit to the
Williams Indemnitors an amount equal to the amount of such recovery.
     (b) No claims may be made against the Williams Indemnitors for
indemnification pursuant to Sections 2.1(a), 2.1(b) or 2.2 unless the aggregate
dollar amount of such claims for indemnification exceed $250,000, after such
time the Williams Indemnitors shall be liable for the full amount of such
claims.
     (c) Notwithstanding anything herein to the contrary, in no event shall the
Williams Indemnitors have any indemnification obligations under this Agreement
for claims made as a result of additions to or modifications of Environmental
Laws promulgated after the Closing Date.
     2.5 Indemnification Procedures.
     (a) The Indemnified Party agrees that within a reasonable period of time
after it becomes aware of facts giving rise to a claim for indemnification
pursuant to this Article II, they will provide notice thereof in writing to the
Indemnifying Party specifying the nature of and specific basis for such claim;
provided, however, that the Indemnified Party shall not submit claims more
frequently than once a calendar quarter (or twice in the case of the last
calendar quarter prior to the expiration of the applicable indemnity coverage
under this Agreement).
     (b) The Indemnifying Party shall have the right to control all aspects of
the defense of (and any counterclaims with respect to) any claims brought
against the Indemnified Party that are covered by the indemnification set forth
in this Article II, including, without limitation, the selection of counsel,
determination of whether to appeal any decision of any court and the settling of
any such matter or any issues relating thereto; provided, however, that no such
settlement shall be entered into without the consent (which consent shall not be
unreasonably withheld, conditioned or delayed) of the Indemnified Party unless
it includes a full release of the Indemnified Party from such matter or issues,
as the case may be.
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     (c) The Indemnified Party agrees to cooperate fully with the Indemnifying
Party with respect to all aspects of the defense of any claims covered by the
indemnification set forth in Article II, including, without limitation, the
prompt furnishing to the Indemnifying Party of any correspondence or other
notice relating thereto that the Indemnified Party may receive, permitting the
names of the Indemnified Party to be utilized in connection with such defense,
the making available to the Indemnifying Party of any files, records or other
information of the Indemnified Party that the Indemnifying Party considers
relevant to such defense and the making available to the Indemnifying Party of
any employees of the Indemnified Party; provided, however, that in connection
therewith the Indemnifying Party agrees to use reasonable efforts to minimize
the impact thereof on the operations of the Indemnified Party and further agrees
to maintain the confidentiality of all files, records and other information
furnished by the Indemnified Party pursuant to this Section 2.5. In no event
shall the obligation of the Indemnified Party to cooperate with the Indemnifying
Party as set forth in the immediately preceding sentence be construed as
imposing upon the Indemnified Party an obligation to hire and pay for counsel in
connection with the defense of any claims covered by the indemnification set
forth in this Article II; provided, however, that the Indemnified Party may, at
its own option, cost and expense, hire and pay for counsel in connection with
any such defense. The Indemnifying Party agrees to keep any such counsel hired
by the Indemnified Party reasonably informed as to the status of any such
defense, but the Indemnifying Party shall have the right to retain sole control
over such defense.
     (d) In determining the amount of any loss, cost, damage or expense for
which the Indemnified Party is entitled to indemnification under this Agreement,
the gross amount of the indemnification will be reduced by (i) any insurance
proceeds realized by the Indemnified Party, and such correlative insurance
benefit shall be net of any incremental insurance premium that becomes due and
payable by the Indemnified Party as a result of such claim and (ii) all amounts
recovered by the Indemnified Party under contractual indemnities from third
Persons. The Partnership hereby agrees to use commercially reasonable efforts to
realize any applicable insurance proceeds or amounts recoverable under such
contractual indemnities.
ARTICLE III
Additional Reimbursement Obligations
3.1 Tahiti Reimbursement. The Williams Indmenitors hereby agree to contribute to
the MLP funds in an amount equal to forty percent (40.0%) of any Additional
Expenditures by Discovery covered by the Tahiti AFE; provided, the Williams
Indemnitors shall have no obligation to make any contribution to the MLP
pursuant to this Section 3.1 until all amounts in the Tahiti Escrow Account
attributable to the MLP have been withdrawn by Discovery and used to fund
expenditures covered by the Tahiti AFE; and, provided, further, the maximum
amount that the Williams Indemnitors shall be required to contribute to the MLP
pursuant to this Section 3.1 shall be $3.4 million. For purposes of this
Article III, “Additional Expenditures” shall mean those expenditures by
Discovery covered by the Tahiti AFE in excess of $61.0 million.
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3.2 Reimbursement for Shipper Refunds. The Williams Indemnitors hereby agree to
contribute to the MLP funds in an amount equal to forty percent (40.0%) of any
amounts that the FERC requires Discovery to refund to shippers for retained
system gas gains or over-recovery of lost and unaccounted for gas in excess of
$4.0 million; provided, that the reimbursement obligation of the Williams
Indemnitors under this Section 3.2 shall only apply to refunds in excess of such
$4.0 million amount (“Covered Shipper Refunds”). For purposes of this
Section 3.2, in-kind refunds of natural gas to shippers will be valued at the
cost to Discovery for purchases of natural gas in the month such in-kind
repayments occur.
3.3 Reimbursement Procedures. The Williams Indemnitors shall have no obligation
to make any contribution to the MLP pursuant to Section 3.1 until the three
(3) business days following receipt by the Williams Indemnitors of written
notice from the MLP that either (a) the MLP has received a written request from
Discovery pursuant to Section 3.2 of the Discovery LLC Agreement for the MLP to
make a capital contribution to Discovery for the express purpose of funding
Additional Expenditures covered by the Tahiti AFE or (b) Discovery has actually
paid or incurred Additional Expenditures covered by the Tahiti AFE. The Williams
Indemnitors shall have no obligation to make any contribution to the MLP
pursuant to Section 3.2 until three (3) business days following receipt by the
Williams Indemnitors of written notice from the MLP that either (a) the MLP has
received a written request from Discovery pursuant to Section 3.2 of the
Discovery LLC Agreement for the MLP to make a capital contribution to Discovery
for the express purpose of funding Covered Shipper Refunds or (b) Discovery has
actually paid or incurred Covered Shipper Refunds. The Williams Indemnitors
shall not be required to make a contribution to the MLP in response to receipt
of such notices more frequently than once each calendar quarter. Upon receipt of
such notice, the Williams Indemnitors shall promptly contribute to the MLP funds
in amount equal to forty percent (40.0%) of, as applicable, the amount of
Additional Expenditures covered by the Tahiti AFE or Covered Shipper Refunds
specified in such notice.
ARTICLE IV
Partial Credit for General and Administrative Expenses
4.1 General. Pursuant to the MLP Agreement, the Partnership Group is required to
reimburse the General Partner for, among other things, all general and
administrative expenses incurred or payments made by the General Partner or
another Williams Entity on behalf of the Partnership Group. Pursuant to this
Article IV, the General Partner will provide an annual credit to the Partnership
Group for a portion of the amount of such reimbursement obligation with respect
to general and administrative expenses, with such credit to be recognized
ratably over the course of the Partnership’s fiscal year. The amount of the
credit for general and administrative expenses to be provided by the General
Partner in each fiscal year, or portion thereof, from the Closing Date shall be:
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     (a) for the fiscal year ending December 31, 2005, the amount of the credit
shall be $3.9 million times a fraction the number of which is the number of days
from the Closing Date through December 31, 2005 and the denominator of which is
365;
     (b) for the fiscal year ending December 31, 2006, the amount of the credit
shall be $3.2 million;
     (c) for the fiscal year ending December 31, 2007, the amount of the credit
shall be $2.4 million;
     (d) for the fiscal year ending December 31, 2008, the amount of the credit
shall be $1.6 million; and
     (e) for the fiscal year ending December 31, 2009, the amount of this credit
shall be $0.8 million.
After December 31, 2009, the Partnership Group shall not be entitled to receive
any credit from the General Partner or any other Williams Entity relating to the
Partnership Group’s reimbursement obligations under the MLP Agreement.
ARTICLE V
License Agreement
5.1 Grant of License. Subject to the terms and conditions herein, Licensor
hereby grants to Licensees the right and license to use the Marks solely in
connection with the Licensees’ businesses and the services performed therewith
within the United States during the term of this Agreement.
5.2 Restrictions on Marks. In order to ensure the quality of uses under the
Marks, and to protect the goodwill of the Marks, Licensees agree as follows:
     (a) Licensees will only use the Marks in formats approved by Licensor and
only in strict association with the Licensees’ businesses and the services
performed therewith;
     (b) Prior to publishing any new format or appearance of the Marks or any
advertising or promotional materials that incorporate the Marks, Licensees shall
first provide such format, appearance or materials to Licensor for its approval.
If Licensor does not inform Licensees in writing within fourteen (14) days from
the date of the receipt of such new format, appearance, or materials that such
new format, appearance, or materials is unacceptable, then such new format,
appearance or materials shall be deemed to be acceptable and approved by
Licensor. Licensor may withhold approval of any proposed changes to the format,
appearance or materials which Licensees propose to use in Licensor’s sole
discretion; and
     (c) Licensees shall not use any other trademarks, service marks, trade
names or logos in connection with the Marks or use the Marks or any trademark or
service mark
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confusingly similar to the Marks after the termination of this Agreement.
Licensor will not use the Marks in such a manner so as to impair the validity or
enforceability or in any way disparage or dilute the Marks.
5.3 Ownership. Licensor shall own all right, title and interest, including all
goodwill relating thereto, in and to the Marks, and all trademark rights
embodied therein shall at all times be solely vested in Licensor. Licensees have
no right, title, interest or claim of ownership in the Marks, except for the
licenses granted in this Agreement. All use of the Marks shall inure to the
benefit of Licensor. Licensees agree that they will not attack the title of
Licensor in and to the Marks.
5.4 Confidentiality. The Licensees shall maintain in strictest confidence all
confidential or nonpublic information or material disclosed by Licensors and in
the materials supplied hereunder in connection with the license of the Marks,
whether in writing or orally and whether or not marked as confidential. Such
confidential information includes, but is not limited to, algorithms,
inventions, ideas, processes, computer system architecture and design, operator
interfaces, operational systems, technical information, technical
specifications, training and instruction manuals, and the like. In furtherance
of the foregoing confidentiality obligation, Licensees shall limit disclosure of
such confidential information to those of their employees, contractors or agents
having a need to access the confidential information for the purpose of
exercising rights granted hereunder.
5.5 Estoppel. Nothing in this Agreement shall be construed as conferring by
implication, estoppel, or otherwise upon Licensees (a) any license or other
right under the intellectual property rights of Licensor other than the license
granted herein to the Marks as set forth expressly herein or (b) any license
rights other than those expressly granted herein.
5.6 Warranties; Disclaimers.
     (a) The Licensor represents and warrants that (i) it owns and has the right
to license the Marks licensed under this Agreement and (ii) the Marks do not
infringe upon the rights of any third parties.
     (b) EXCEPT FOR THE WARRANTIES AND REPRESENTATIONS DESCRIBED IN SECTION
5.6(a), LICENSOR DISCLAIMS ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS
(EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO THE SUBJECT MATTER HEREOF,
OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OF
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE
(WHETHER ANY LICENSEE KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS
OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE) WHETHER ALLEGED TO ARISE BY LAW, BY
REASON OF CUSTOM OR USAGE IN THE TRADE OR BY COURSE OF DEALING.
     5.7 Indemnification.
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     (a) Each Licensee shall jointly and severally, and to the fullest extent
permitted by applicable law, defend, indemnify and hold harmless the Licensor
and its successors and assigns authorized hereunder and any of their respective
officers, directors, employees, agents and representatives from and against any
and all claims, demands, damages, losses, costs and expenses arising out of or
related in any way to this Article V to the extent such claims are attributable
to such Licensee’s failure to comply with its obligations under this Article V
or such Licensee’s negligence or the negligence of such Licensee’s employees,
agents, subcontractors or other representatives regarding this Article V.
     (b) Licensor shall jointly and severally, and to the fullest extent
permitted by applicable law, defend, indemnify and hold harmless the Licensees
and their respective successors and assigns authorized hereunder and any of
their respective officers, directors, employees, agents and representatives from
and against any and all claims, demands, damages, losses, costs and expenses
arising out of or related in any way to this Article V to the extent such claims
are attributable to (i) Licensor’s failure to comply with its obligations under
this Article V, (ii) any claim of infringement or ownership asserted by a third
party as to the Marks or (iii) Licensor’s negligence or the negligence of
Licensor’s employees, agents, subcontractors or other representatives regarding
this Article V.
5.8 Remedies and Enforcement. Each Licensee acknowledges and agrees that a
breach by such Licensee of its obligations under this Article V would cause
irreparable harm to Licensor and that monetary damages would not be adequate to
compensate Licensor. Accordingly, each Licensee agrees that Licensor shall be
entitled to immediate equitable relief, including, without limitation, a
temporary or permanent injunction, to prevent any threatened, likely or ongoing
violation by such Licensee, without the necessity of posting bond or other
security. Licensor’s right to equitable relief shall be in addition to other
rights and remedies available to Licensor for monetary damages or otherwise.
5.9 In the Event of Termination. In the event of termination of this Agreement
pursuant to Section 6.4 or otherwise, the Licensees’ right to utilize or possess
the Marks licensed under this Agreement shall automatically cease, and
concurrently with such termination of this Agreement, the Licensees shall
(i) cease all use of the Marks and shall adopt new trademarks, service marks,
and trade names that are not confusingly similar to the Marks and (ii) no later
than ninety (90) days following the termination of this Agreement, the General
Partner shall have caused each of the Partnership Entities to change its legal
name so that there is no longer any reference therein to the name “Williams” or
any variation, derivation or abbreviation thereof, and in connection therewith,
the General Partner shall cause each such Partnership Entity to make all
necessary filings of certificates with the Secretary of State of the State of
Delaware and to otherwise amend its Organizational Documents by such date.
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5.10 Acknowledgment. Each member of the Partnership Group hereby acknowledges
that Williams is a party to this Agreement only for purposes of the provisions
of this Article V and Article VI only and no other provision of this Agreement.
ARTICLE VI
Miscellaneous
6.1 Choice of Law; Submission to Jurisdiction. This Agreement shall be subject
to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state. Each Party hereby
submits to the jurisdiction of the state and federal courts in the State of
Texas and to venue in Texas.
6.2 Notice. All notices or requests or consents provided for or permitted to be
given pursuant to this Agreement must be in writing and must be given by
depositing same in the United States mail, addressed to the Person to be
notified, postpaid, and registered or certified with return receipt requested or
by delivering such notice in person or by telecopier or telegram to such Party.
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient’s normal business hours, or at the
beginning of the recipient’s next business day after receipt if not received
during the recipient’s normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below or at such other address as such Party may stipulate to the other Parties
in the manner provided in this Section 6.2.

     
 
  For notices to The Williams Companies, Inc., Williams Energy Services,
 
  LLC; Williams Energy, L.L.C.; Williams Discovery Pipeline LLC,
 
  Williams Partners Holdings LLC or Williams Partners GP LLC:
 
   
 
  One Williams Center
 
  Tulsa, Oklahoma 74172
 
  Phone: (918) 573-2000
 
  Fax: (918) 573-5942
 
  Attention: General Counsel
 
   
 
  For notices to Williams Partners L.P. or Williams Partners
Operating LLC:
 
   
 
  One Williams Center
 
  Tulsa, Oklahoma 74172
 
  Phone: (918) 573-2000
 
  Fax: (918) 573-5942
 
  Attention: General Counsel

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6.3 Entire Agreement. This Agreement constitutes the entire agreement of the
Parties relating to the matters contained herein, superseding all prior
contracts or agreements, whether oral or written, relating to the matters
contained herein.
6.4 Termination. The provisions of Article III, Article IV and Article V of this
Agreement shall terminate upon a Change of Control of the General Partner or the
MLP.
6.5 Effect of Waiver or Consent. No waiver or consent, express or implied, by
any Party to or of any breach or default by any Person in the performance by
such Person of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or of any other breach or default in the performance by
such Person of the same or any other obligations of such Person hereunder.
Failure on the part of a Party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues,
shall not constitute a waiver by such Party of its rights hereunder until the
applicable statute of limitations period has run.
6.6 Amendment or Modification. This Agreement may be amended or modified from
time to time only by the written agreement of all the Parties; provided,
however, that the MLP and the OLLC may not, without the prior approval of the
Conflicts Committee, agree to any amendment or modification of this Agreement
that, in the reasonable discretion of the General Partner, will adversely affect
the holders of Common Units. Each such instrument shall be reduced to writing
and shall be designated on its face an “Amendment” or an “Addendum” to this
Agreement.
6.7 Assignment; Third Party Beneficiaries. No Party shall have the right to
assign its rights or obligations under this Agreement without the consent of the
other Parties. Each of the Parties hereto specifically intends that each entity
comprising the Williams Entities or the Partnership Entities, as applicable,
whether or not a Party to this Agreement, shall be entitled to assert rights and
remedies hereunder as third-party beneficiaries hereto with respect to those
provisions of this Agreement affording a right, benefit or privilege to any such
entity.
6.8 Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all signatory Parties had signed the same document.
All counterparts shall be construed together and shall constitute one and the
same instrument.
6.9 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other Persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
6.10 Gender, Parts, Articles and Sections. Whenever the context requires, the
gender of all words used in this Agreement shall include the masculine, feminine
and neuter, and the number of all words shall include the singular and plural.
All references to Article numbers and Section numbers refer to Articles and
Sections of this Agreement.
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6.11 Further Assurances. In connection with this Agreement and all transactions
contemplated by this Agreement, each Party agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may
be necessary or appropriate to effectuate, carry out and perform all of the
terms, provisions and conditions of this Agreement and all such transactions.
6.12 Withholding or Granting of Consent. Each Party may, with respect to any
consent or approval that it is entitled to grant pursuant to this Agreement,
grant or withhold such consent or approval in its sole and uncontrolled
discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.
6.13 Laws and Regulations. Notwithstanding any provision of this Agreement to
the contrary, no Party shall be required to take any act, or fail to take any
act, under this Agreement if the effect thereof would be to cause such Party to
be in violation of any applicable law, statute, rule or regulation.
6.14 Negation of Rights of Williams, Limited Partners, Assignees, and Third
Parties. The provisions of this Agreement are enforceable solely by the Parties,
and no stockholder of Williams and no limited partner, member, or assignee the
MLP or the OLLC or other Person shall have the right, separate and apart from
Williams, the MLP or the OLLC, to enforce any provision of this Agreement or to
compel any Party to comply with the terms of this Agreement.
6.15 No Recourse Against Officers or Directors. For the avoidance of doubt, the
provisions of this Agreement shall not give rise to any right of recourse
against any officer or director of any Williams Entity or any Partnership
Entity.
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     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.

                  WILLIAMS ENERGY SERVICES, LLC    
 
           
 
  By:   /s/ Alan S. Armstrong    
 
           
 
      Name: Alan S. Armstrong    
 
      Title: Senior Vice President    
 
                WILLIAMS ENERGY, L.L.C.    
 
           
 
  By:   /s/ Alan S. Armstrong    
 
           
 
      Name: Alan S. Armstrong    
 
      Title: Senior Vice President and General Manager
           — Business Development    
 
                WILLIAMS DISCOVERY PIPELINE LLC    
 
           
 
  By:   /s/ Alan S. Armstrong    
 
           
 
      Name: Alan S. Armstrong    
 
      Title: Senior Vice President and General Manager    
 
                WILLIAMS PARTNERS HOLDINGS LLC    
 
           
 
  By:   /s/ Alan S. Armstrong    
 
           
 
      Name: Alan S. Armstrong    
 
      Title: Chief Operating Officer    
 
                WILLIAMS PARTNERS GP LLC    
 
           
 
  By:   /s/ Alan S. Armstrong    
 
           
 
      Name: Alan S. Armstrong    
 
      Title: Chief Operating Officer    

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                      WILLIAMS PARTNERS L.P.    
 
                    By:   Williams Partners GP LLC, its general partner    
 
               
 
      By:   /s/ Alan S. Armstrong    
 
               
 
          Name: Alan S. Armstrong    
 
          Title: Chief Operating Officer    
 
                    WILLIAMS PARTNERS OPERATING LLC    
 
                    By:   WILLIAMS PARTNERS L.P., its sole member    
 
                    By:   Williams Partners GP LLC, its general partner    
 
               
 
      By:   /s/ Alan S. Armstrong    
 
               
 
          Name: Alan S. Armstrong    
 
          Title: Chief Operating Officer    
 
                    THE WILLIAMS COMPANIES, INC. (For
      purposes of Articles V and VI only)    
 
                    By:   /s/ Donald R. Chappel                           Name:
Donald R. Chappel             Title: Senior Vice President and Chief Financial
Officer    

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Schedule I
Marks
The Williams name and logo necessary for the following MLP name and logo:
(WILLIAMS PARTNERS L.P. LOGO) [d28418d2841800.gif]
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Schedule II
Conway Plumes
Remediation activities related to past releases at the Conway West Storage
Facility as required by and described in the Kansas Department of Health and
Environment Consent Order 92-E-274, dated September 13, 1993.
Remediation activities related to past releases at the Conway East Storage
Facility as required by and described in the Kansas Department of Health and
Environment Consent Order 94-E-0201, dated December 19, 1994.
Remediation activities related to past releases at the Mitchell Storage Facility
as required by and described in the Kansas Department of Health and Environment
Consent Order 96-E-0273, dated April 24, 1997.
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