Document:

exv10w12

 

Exhibit 10.12

ADMINISTRATIVE SERVICES AGREEMENT

     This Administrative Services Agreement (“Agreement”) is effective as of October 1, 2007 (the
“Effective Date”), by and between Northwest Pipeline Services LLC, a Delaware limited liability
company (“Contractor”), and Northwest Pipeline GP, a Delaware general partnership (“Northwest”).

RECITALS

     A. Northwest is in the business of owning and operating natural gas pipeline, storage, and
related facilities used in the transportation and storage of natural gas in interstate commerce
(the “Business”).

     B. Effective as of September 30, 2007 at 11:59 p.m., Contractor entered into a Personnel
Services Agreement with Williams WPC — I , a Delaware corporation (“WPC”), pursuant to which WPC
will be the employer primarily for payroll, benefits and administrative operations and Contractor
will be the employer primarily with respect to business operations (the “WPC Agreement”).

     C. Northwest requires certain services to operate the Business and to fulfill other general
and administrative functions relating to the Business.

     D. Contractor has agreed to provide such services in accordance with the terms of this
Agreement, and Northwest is willing to engage Contractor subject to the terms and conditions of
this Agreement.

AGREEMENT

     In consideration of the foregoing recitals, which are incorporated herein by this reference,
and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

1. Definitions.

     1.1 Definitions. In addition to the terms defined above and the other terms defined herein,
as used in this Agreement, the following capitalized terms shall have the meanings set forth below:

     “Affiliate” means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question, with the term “control” meaning 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.

     “Bankrupt” with respect to any Person means the Person shall generally be unable to pay its
debts as such debts become due, or shall so admit in writing or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against the Person seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,

 

 

reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), shall remain undismissed or unstayed for a period
of 30 days; or the Person shall take any action to authorize any of the actions set forth above.

     “Confidential Information” means non-public information about the disclosing party’s or any of
its Affiliates’ business or activities that is proprietary and confidential, which shall include
all business, financial, technical and other information, including software (source and object
code) and programming code, of a party or its Affiliates marked or designated “confidential” or
“proprietary” or by its nature or the circumstances surrounding its disclosure it should reasonably
be regarded as confidential, regardless of the means by which it was disclosed. Confidential
Information does not include information that (i) is in or enters the public domain without breach
of this Agreement, or (ii) the receiving party lawfully receives from a third party without
restriction on disclosure and to the receiving party’s knowledge without breach of a nondisclosure
obligation.

     “Default Rate” means an interest rate (which shall in no event be higher than the rate
permitted by applicable law) equal to the prime interest rate of Contractor’s principal lender.

     “Governmental Approval” means any material consent, authorization, certificate, permit,
right-of-way grant or approval of any Governmental Authority that is necessary for the
construction, ownership, or operation of the Business in accordance with applicable Laws.

     “Governmental Authority” means any court or tribunal in any jurisdiction or any federal,
state, tribal, municipal, or local government or other governmental body, agency, authority,
department, commission, board, bureau, instrumentality, arbitrator, or arbitral body or any
quasi-governmental or private body lawfully exercising any regulatory or taxing authority.

     “Laws” means any applicable statute, common law, rule, regulation, judgment, order, ordinance,
writ, injunction, or decree issued or promulgated by any Governmental Authority.

     “Payment Amount” has the meaning set forth in Section 5.1.

     “Person” means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization, association, government agency or political
subdivision thereof, or other entity.

     “Services” has the meaning set forth in Section 2.2.

     1.2 Construction. Unless a clear contrary intention appears, as used herein (a) the singular
includes the plural and vice versa, (b) reference to any document means such document as amended
from time to time, (c) “include” or “including” means including without limiting the generality of
any description preceding such term, (d) the word “or” is not exclusive, unless otherwise expressly
stated, (e) the terms “hereof,” “herein,” “hereby,” and derivative or similar words refer to this
entire Agreement including the Exhibits attached hereto and incorporated herein by this reference,
as the same may be amended from time to time, (f) headings are for

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convenience only and do not constitute a part of this Agreement, (g) references to money refer
to legal currency of the United States of America, and (h) all accounting terms shall be
interpreted and all accounting determinations shall be made in accordance with U.S. generally
accepted accounting principles.

2. Retention of Contractor; Scope of Services.

     2.1 Retention of Contractor. Northwest engages Contractor to perform the Services and to
provide all personnel and any facilities, goods, and equipment not otherwise provided by Northwest
necessary to operate the Business as provided below, and Contractor accepts such engagement.

     2.2 Scope of Services; Performance Standards. The “Services” shall consist of such services
Northwest determines may be reasonable and necessary to operate the Business, including employees
(subject to the terms and conditions of the WPC Agreement), accounting, information technology,
company development, operations, administration, insurance, risk management, tax, audit, finance,
land, marketing, legal, and engineering, which Services may be expanded, modified, or reduced from
time to time as agreed upon by the parties. Contractor shall perform the Services substantially in
accordance with industry standards and substantially in accordance with all applicable material
Governmental Approvals and Laws. Except as provided above, Contractor makes no representations or
warranties regarding the Services and Contractor does not warrant or guarantee any particular
outcome as a result of the Services.

     2.3 Intellectual Property.

          2.3.1 Any (i) inventions, whether patentable or not, developed or invented, or (ii)
copyrightable material (and the intangible rights of copyright therein) developed, by
Contractor or its Affiliates or its or their employees in connection with the performance of
the Services shall be the property of Contractor except that during the term of this
Agreement (A) Northwest shall be granted an irrevocable, royalty-free, non-exclusive and
non-transferable right and license to use such inventions or material, and (B) Northwest
shall only be granted such a right and license to the extent such grant does not conflict
with, or result in a breach, default, or violation of a right or license to use such
inventions or material granted to Contractor by any Person other than an Affiliate of
Contractor. Notwithstanding the foregoing, Contractor shall use commercially reasonable
efforts to grant such right and license to Northwest.

          2.3.2 Northwest grants to Contractor and its Affiliates an irrevocable, royalty-free,
non-exclusive, and non-transferable right and license to use, during the term of this
Agreement, any intellectual property provided by Northwest to Contractor or its Affiliates,
but only to the extent such use is necessary for the performance of the Services.
Contractor shall, and shall cause its Affiliates to, utilize such intellectual property
solely in connection with the performance of the Services.

     2.4 Limitation of Authority. Northwest shall have the exclusive authority to appoint an
independent registered public accounting firm to audit the financial statements of Northwest.
Notwithstanding such right, nothing in this Agreement shall limit Contractor’s or Contractor’s

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Affiliates’ right to audit the books and records of Northwest pursuant to any other agreement
between the parties.

3. Relationship; Delegation of Duty.

     3.1 Independent Contractor. The parties to this Agreement are independent contractors, and
none of the provisions of this Agreement shall be interpreted or deemed to create any relationship
between or between the parties other than that of independent contractors. Nothing contained in
this Agreement shall be construed to create a relationship of employer and employee, master and
servant, principal and agent, or partners or joint-venturers between Northwest and Contractor,
between Northwest and any employee or agent of Contractor, or between Contractor and any employee
or agent of Northwest. Without limiting the generality of the foregoing, Northwest shall have no
right to control or direct the details, manner, or means by which Contractor perform the Services.
Under no circumstances shall Contractor’s or Contractor’s Affiliates’ employees be considered or
deemed to be employees of Northwest.

     3.2 Delegation of Duty. In the performance of its obligations under this Agreement, Contractor
may act directly or through its Affiliates, agents, counsel (in-house or outside) or other persons,
may delegate the performance of functions and may consult with agents, counsel (in-house or
outside) and other Persons. Contractor, and any Person to whom its obligations have been delegated
including any of its Affiliates, shall be entitled to conclusively rely for all purposes upon any
notice, document, correspondence, request or directive received by it from Northwest or its
Affiliates, or any officer or director of Northwest or its Affiliates, and shall not be obligated
to inquire (a) as to the authority or power of any person executing or presenting any such notice,
document, correspondence, request or directive, or (b) as to the truthfulness of any statements set
forth therein.

4. Books, Records and Reporting.

     4.1 Books and Records. Contractor shall maintain accurate books and records regarding the
performance of the Services and its calculation of the Payment Amount, and shall maintain such
books and records for the period required by applicable accounting practices or Law.

     4.2 Audits. Northwest shall have the right, upon reasonable notice, and at all reasonable
times during usual business hours, to inspect, audit, examine, and make copies of the books and
records referred to above, which right may be exercised through any agent or employee of Northwest
designated in writing by it or by an independent public accountant, engineer, attorney, or other
agent so designated. Northwest shall bear all costs and expenses incurred in any inspection,
examination, or audit unless an audit determines that Northwest has been overcharged, in which
case, in addition to refunding to Northwest the amount of the overcharge, Contractor shall
reimburse Northwest for the cost of the audit together with interest thereon at the Default Rate
from the time of the overcharge until refunded. Contractor shall review and respond in a timely
manner to any claims or inquiries made by Northwest regarding matters revealed by any such
inspection, examination or audit.

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     4.3 Reports. Contractor shall prepare and deliver to Northwest any reports provided for in
this Agreement and such other reports as Northwest may reasonably request from time to time
regarding the performance of the Services.

5. Payment to Contractor.

     5.1 Payment to Contractor. Contractor shall be reimbursed by Northwest on a monthly basis, or
such other basis as the Contractor may determine (including on a cash or accrual basis), for (a)
all direct and indirect expenses it incurs or payments it makes on behalf of Northwest (including
salary, bonus, incentive compensation, benefits, and other amounts paid to any Person, including
Affiliates of Contractor) to perform the Services, including expenses allocated to Northwest by
Affiliates of Contractor, and (b) all other expenses allocable to the Business or otherwise
incurred by Contractor in connection with operating the Business (including expenses allocated to
Contractor by its Affiliates) (collectively, the “Payment Amount”). Contractor shall determine the
expenses that are allocable to Northwest. Reimbursements pursuant to this Section shall be in
addition to any reimbursement to Contractor as a result of indemnification pursuant to any other
Section in this Agreement. Any allocation of expenses to Northwest by Affiliates of Contractor in
a manner consistent with then-applicable accounting and allocation methodologies generally
permitted by FERC for rate-making purposes (or in the absence of then-applicable methodologies
permitted by FERC, consistent with the most-recently applicable methodologies) and past business
practices shall be deemed to be fair and reasonable to Northwest.

     5.2 Benefit Plans. Contractor, directly or through its Affiliates, may adopt and participate
in employee benefit plans, employee programs, and employee practices (including COBRA obligations,
paid time off payments, severance, retiree medical, retiree life, equity related awards, bonuses,
vesting of employee benefits, retirement plans, and other employee or retiree related payments,
obligations, liabilities or benefits) (collectively, “Plans and Practices”), in each case for the
benefit of employees, former employees, and directors of Contractor or any of its Affiliates, in
respect of Services performed, directly or indirectly, for the benefit of Northwest. Contractor,
directly or through its Affiliates, has adopted and participates in (or in the future may adopt and
participate in) Plans and Practices for the benefit of employees and former employees of Northwest
Pipeline Corporation, the predecessor of Northwest, and its Affiliates, in respect of services
previously performed, directly or indirectly, for the benefit of Northwest Pipeline Corporation.
Any and all expenses incurred or accrued by Contractor or its Affiliates in connection with any
such Plans and Practices shall be reimbursed by Northwest in accordance with the procedures
described in Section 5.1.

6. Confidential Information.

     6.1 Nondisclosure. Each of Contractor and Northwest shall (a) not disclose to any third party
or use any Confidential Information disclosed to it by the other except as necessary to carry out
its obligations under this Agreement, and (b) take all reasonable measures to maintain the
confidentiality of all Confidential Information of the other party in its possession or control,
which will in no event be less than the measures it uses to maintain the confidentiality of its own
information of similar type and importance.

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     6.2 Permitted Disclosure. Notwithstanding the foregoing, each party may disclose Confidential
Information (a) to the extent required by a court of competent jurisdiction or other governmental
authority or otherwise as required by law, including without limitation disclosure obligations
imposed under the federal securities laws, provided that such party has given the other party prior
notice of such requirement when legally permissible to permit the other party to take such legal
action to prevent the disclosure as it deems reasonable, appropriate or necessary, or (b) to its
and its Affiliates’ consultants, legal counsel, accountants, financing sources, and their advisors
including Persons performing duties pursuant to Section 3.2.

7. Term and Termination.

     7.1 Term. Unless terminated earlier as provided below, this Agreement shall remain in full
force and effect except that (a) Contractor may terminate this Agreement upon 60 days’ advance
written notice to the other party, and (b) Contractor or Northwest may terminate this Agreement
immediately upon notice at any time at which neither Contractor nor an Affiliate of Contractor is
the general partner of Williams Pipeline Partners L.P. or its successor in interest.

     7.2 Termination for Breach. If a party shall be in breach of any provision of this Agreement
(the “Breaching Party”), the non-breaching party (“Non-breaching Party”) shall give the Breaching
Party written notice of such breach (the “Notice”), and, subject to the terms of this Section, the
Breaching Party shall have 30 days after receipt of the Notice within which to cure the breach
except that no Notice shall be required if (a) the breach is an obligation to pay money, in which
case the Breaching Party shall have five business days to cure the breach; (b) the same breach
occurs in any six-month period; (c) the breach pertains to the Breaching Party’s obligations under
Section 6; or (d) a party files a petition in Bankruptcy (or is the subject of an involuntary
petition in Bankruptcy that is not dismissed within 60 days after the effective filing date
thereof). With respect to a breach of the obligations of a Breaching Party contained in Section 6,
there is no adequate remedy at law, and the Non-Breaching Party will suffer irreparable harm as a
result of such a breach. Therefore, if a breach or threatened breach by a Breaching Party of
Section 6 occurs, the Non-Breaching Party shall be entitled to injunctive relief restraining the
breaching party from doing any act in violation thereof without the obligation of posting a bond,
cash, or otherwise.

     7.3 Effect of Termination. If this Agreement is terminated in accordance with Section 7.1 or
7.2, all rights and obligations under this Agreement shall cease except for (a) obligations that
expressly survive termination of this Agreement; (b) liabilities and obligations that have accrued
prior to such termination, including the obligation to pay any amounts that have become due and
payable prior to such termination, (c) the obligation to pay any portion of the Payment Amount that
has accrued prior to such termination, even if such portion has not become due and payable at that
time, and (d) all liabilities and other obligations attributable, or in any way related to,
employees and former employees of Northwest, Contractor, and their respective Affiliates, and the
predecessors in interest (including Northwest Pipeline Corporation) of each and the estates, heirs,
personal representatives, successors, and assigns of each such employee and former employee (each,
a “Subject Employee”) including with respect to current and former Plans and Practices and any
benefit, equity, or incentive related plans, programs, policies, or practices of Northwest or its
predecessors, all of which shall be paid when due by Northwest, recognizing that the amount of some
of such liabilities and other

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obligations shall not be known at the time of termination of this Agreement and the obligation to pay shall continue
after such termination.

8. Release; Indemnification; and limitation of liability.

     8.1 Release. Northwest, for itself and on behalf of its Affiliates, and the predecessors in
interest, successors, and assigns of each, releases and forever discharges Contractor, Contractor’s
Affiliates, and the successors and assigns of each, and the officers, directors, shareholders,
members, partners, employees, contractors, and agents of each (as applicable, a “Releasee”) of and
from any and all causes of action, claims, demands, assessments, losses, liabilities, fines,
penalties, suits, damages, liabilities, liens, rights, compensation, costs, and expenses of
whatsoever kind or nature including reasonable legal and expert fees and expenses (each, a
“Damage”), whether now known or unknown, and whether they exist now or in the future, arising from
or relating to performance of, error or delay in performance, attempting to perform or failing to
perform, any responsibilities hereunder, or any Damages related thereto, including claims arising
as a result of the express negligence of the Releasee unless the Damage resulted from the gross
negligence or willful misconduct of the Releasee.

     8.2 Indemnification. Notwithstanding the definitions provided in Section1.1, as used in this
Subsection 8.2: (a) the term Affiliate, when used with reference to Contractor, shall not include
Northwest or any of its subsidiaries, and, when used with reference to Northwest, shall not include
Contractor and its Affiliates; (b) references to Contractor and Northwest, as applicable, as the
Indemnified Party, shall include their respective Affiliates, the successors and assigns of each,
and the officers, directors, shareholders, members, partners, employees, contractors, and agents of
each, and their respective successors, assigns, and, in the case of individuals, their estates,
heirs, and personal representatives; and (c) the “Subject Employees” are deemed to be third
parties.

          8.2.1 Indemnification Obligations. Northwest, for itself and on behalf of its Affiliates, and
the predecessors in interest, successors, and assigns of each (the “Northwest “Indemnifying Party”)
shall indemnify Contractor (the “Contractor Indemnified Party”) from and against all Damages
sustained or incurred as a result of or arising out of or by virtue of any claim made by a third
party against a Contractor Indemnified Party, which claim arises out of or is caused by (a) a
breach of this Agreement by a Northwest Indemnifying Party, or (b) any action or omission,
including negligence (but excluding gross negligence or willful misconduct) of a Contractor
Indemnifying Party (as defined below) or its employees or subcontractors in connection with
Contractor’s obligations hereunder.

     Contractor, for itself and on behalf of its Affiliates, and the predecessors in interest,
successors, and assigns of each (the “Contractor “Indemnifying Party”) shall indemnify Northwest
(the “Northwest Indemnified Party”) from and against all Damages sustained or incurred as a result
of or arising out of or by virtue of any claim made by a third party against a Northwest
Indemnified Party, which claim arises out of or is caused by the gross negligence or willful
misconduct of a Contractor Indemnifying Party or its employees or subcontractors.

     8.2.2 Procedure. Each of Contractor and Northwest shall give the other party prompt written
notice and information in such party’s possession concerning any claim that could result in a
Damage. In performing its indemnity obligation, the Northwest Indemnifying

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Party or the Contractor Indemnifying Party (as applicable, the “Indemnifying Party”) shall
have the right to assume the settlement in the defense of any suit or suits or other legal
proceedings brought to enforce all such Damages and shall pay all judgments entered in any such
suit or other legal proceedings. Except in the case where the Indemnifying Party refuses to assume
such defense in settlement, the Indemnifying Party shall have no liability for any settlement in or
compromise made without its written consent.

     8.3 Disclaimer; Limitation of Liability. Neither party shall be responsible for any
incidental, indirect, consequential, special, punitive, or exemplary damages. Regardless of the
basis on which Northwest makes a claim against Contractor for damages, Contractor shall not be
liable for any amount in excess of the lesser of (a) the amount of any actual and direct loss or
damage incurred, or (b) the amount paid to Contractor in excess of reimbursement for direct and
indirect costs in performance of the Services. All claims against Contractor shall be deemed
waived unless made by Northwest in writing and received by Contractor within one month after
completion of the Services with respect to which the claim is being made.

9. General Provisions.

     9.1 Force Majeure. A party’s obligation under this Agreement, other than an obligation to pay
money and the indemnification obligations hereunder, shall be excused when and to the extent its
performance of that obligation is prevented due to any cause beyond the reasonable control of a
party, including the following causes (unless they are within such party’s reasonable control):
acts of God, strikes, lockouts, acts of the public enemy, wars or warlike action (whether actual or
impending), arrests and other restraints of government (civil or military), blockades, embargoes,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, sabotage, tornadoes,
named tropical storms and hurricanes, floods, civil disturbances, terrorism, mechanical breakdown
of machinery or equipment, explosions, confiscation or seizure by any government or other public
authority and any order of any court of competent jurisdiction, regulatory agency or governmental
body having jurisdiction. The party that is prevented from performing its obligation by reason of
one or more of the foregoing events (the “Delayed Party”) shall promptly notify the other party of
that fact and shall exercise due diligence to end its inability to perform as promptly as
practicable. However, in no event shall a Delayed Party be required to settle any strike, lockout,
or other labor dispute in which it may be involved, but in the event of a strike, lockout, or other
labor dispute affecting Contractor, Contractor shall use reasonable efforts to continue to perform
the Services by utilizing its management personnel and that of its Affiliates.

     9.2 Assignments. Except as otherwise provided herein (including Contractor’s right to
delegate performance of the Services under Section 3.2), neither party shall sell, assign, or
transfer any of its rights, or delegate any of its obligations, under this Agreement to any Person
without the prior consent of the other party except that such prior consent shall not be required
if such sale, assignment, or transfer is to an Affiliate of a party or in connection with a merger,
consolidation, or the sale of substantially all of its assets.

     9.3 Notices. All notices and other communications that are required or permitted to be given
to a party under this Agreement shall be sufficient in all respects if given in writing and
delivered in person, by electronic mail, by facsimile, by overnight courier, or by certified mail,
postage prepaid, return receipt requested, to the receiving party at the following address:

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	 	 	if to Northwest:	 	Northwest Pipeline GP
	 	 	 	 	2800 Post Oak Blvd.
	 	 	 	 	Houston, TX 77056
	 

	 	 	 	Attention:
	 	General Counsel
	 

	 	 	 	Facsimile:
	 	713-215-2229
	 

	 	 	 	E-Mail:
	 	Randall.R.Conklin@Williams.com
	 
	 	 	 	 	 	 
	 	 	if to Contractor:	 	Northwest Pipeline Services Company LLC
	 	 	 	 	2800 Post Oak Blvd.
	 	 	 	 	Houston, TX 77056
	 

	 	 	 	Attention:
	 	Senior Vice President
	 

	 	 	 	Facsimile:
	 	713-215-4269
	 

	 	 	 	E-Mail:
	 	Phil.Wright@Williams.com

or to such other address as such party may have given to the other by notice pursuant to this
Section. Notice shall be deemed given on the date of delivery, in the case of personal delivery,
electronic mail, or facsimile, or on the delivery or refusal date, as specified on the return
receipt in the case of certified mail or on the tracking report in the case of overnight courier.

     9.4 Further Assurances. The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.

     9.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal representatives, and
permitted assigns.

     9.6 Invalidity of Provisions. If any provision of this Agreement is or becomes invalid,
illegal, or unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained herein shall not be affected thereby.

     9.7 Third Party Beneficiaries. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any Person not a party to this Agreement.

     9.8 Waiver. No failure by any party to insist upon the strict performance of any covenant,
duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon
a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement
or condition.

     9.9 Applicable Law. This Agreement shall be construed in accordance with and governed by the
laws of the State of Oklahoma, without regard to the principles of conflicts of law. The proper
venue for any lawsuit shall only exist in Tulsa, Oklahoma.

     9.10 Attorneys’ Fees. If a party shall commence any action or proceeding against another
party in order to enforce the provisions of this Agreement or to recover damages as a result of the
alleged breach of any of the provisions of this Agreement, the prevailing party shall be entitled
to recover from the other party all reasonable costs in connection therewith, including reasonable
attorneys’ fees.

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     9.11 Survival of Terms and Conditions. The terms and condition of this Agreement shall
survive the expiration or termination of this Agreement to the full extent necessary for their
enforcement and for the protection of the party in whose favor they operate, including the terms
and conditions contained in Sections 2.3, 5.1, 5.2, 6.1, 6.2, 7.3, 8.1 through 8.3, and 9.2 through
9.12.

     9.12 Integration; Amendments. This Agreement constitutes the entire Agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto. This Agreement may be amended or restated only by a written
instrument executed by both parties.

     9.13 Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same instrument. A
facsimile or electronic signature to this Agreement shall be deemed an original and binding upon
the party against whom enforcement is sought.

     The parties have executed this Administrative Services Agreement on, and effective as of, the
Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	NORTHWEST PIPELINE GP	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Williams Pipeline Partners Holdings LLC,

a general partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Williams Gas Pipeline Company, 
Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	WGPC Holdings LLC, a general 
partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Williams Gas Pipeline Company, 
Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

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	 	 	NORTHWEST PIPELINE SERVICES 
COMPANY LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Williams Pipeline GP LLC,

Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

11exv10w1

 

Exhibit 10.1

AIRPORT DEVELOPMENT AGREEMENT

     THIS AIRPORT DEVELOPMENT AGREEMENT (the “Agreement”) is made this 20th day of July, 2007 by
and between THE GROVE, INC., located at 3 Westbrook Corporate Center, Suite 500, Westchester,
Illinois 60154 (“Franchisee”), and ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., located at 265 Turner
Drive, Durango, Colorado 81303 (“Franchisor”).

RECITALS

     A. The Franchisor offers franchises for the establishment of retail stores, known as “ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores” or “Stores” offering gourmet chocolates and other premium
confections, featuring Rocky Mountain Chocolate Factory® brand boxed chocolates and also
confections made at the Stores. The Stores are operated under the Franchisor’s service mark “ROCKY
MOUNTAIN CHOCOLATE FACTORY” and other trademarks, service marks, logo types, architectural designs,
trade dress and other commercial symbols (collectively, “Marks”) and pursuant to the Franchisor’s
proprietary business format, systems, methods, procedures, designs, layouts and specifications
(“System”) for the establishment, operation and promotion of the Stores.

     B. The Franchisee operates numerous retail stores (“Grove Stores”) at airports throughout the
United States, selling packaged snack foods, beverages and frozen treats, under the trademark “THE
GROVE” and other marks (“Grove Marks”).

     C. The Franchisee would like to use the Franchisor’s Marks and System in connection with the
development of ROCKY MOUNTAIN CHOCOLATE FACTORY Stores at airports throughout the United States,
under the terms set forth herein. The Franchisor desires to grant the Franchisee the right to
establish and operate such Stores under the terms and conditions which are contained in this
Agreement.

     The parties therefore agree as follows:

1. GRANT OF DEVELOPMENT RIGHTS

     1.1. Development Area. The Franchisor grants to the Franchisee the right to develop
and establish Stores using the Franchisor’s Marks and System in those airports (“Airports”)
described in Exhibit A attached hereto (the “Development Area”). Except as set forth in
Section 1.2 below, the Franchisor shall not establish, nor shall it license any other party
to establish, Stores using the Marks and System within Airports in the Development Area for so long
as this Agreement is in effect.

     1.2. Franchisor’s Reservation of Rights. The Franchisee acknowledges that the
Franchisor reserves the rights, among others: (1) to use and license others to use, the Marks and
System for the operation of ROCKY MOUNTAIN CHOCOLATE FACTORY Stores, Kiosk Stores and Satellite
Stores at any location other than within Airports in the Development Area; (2) to use and license
the use of different marks and methods in connection with the sale of products or services similar
to those which the Franchisee will sell in its Stores, whether in alternative channels of
distribution or in connection with the operation of retail stores selling gourmet chocolates or
other premium confectionary products, at any location outside of the Development Area, which
businesses are the same as, or different from Stores, on any terms and conditions as the Franchisor
determines; and (3) to use the Marks to identify and sell any type of services, products,
promotional and marketing efforts or related items made available by the

 

 

Franchisor, in its sole discretion, and to identify products and services similar to those
which the Franchisee will sell, but made available through alternative channels of distribution
(other than Stores), at any location, excluding the Development Area.

     1.3. Franchise Agreement — First Store Developed. The parties acknowledge that the
ROCKY MOUNTAIN CHOCOLATE FACTORY Franchise Agreement dated May 11, 2007 between the parties (“First
Store Agreement”), attached hereto as Exhibit B and by this reference incorporated herein,
will govern the operation of the Franchisee’s first Store to be opened at the Dallas-Ft. Worth
International Airport. Unless otherwise defined herein, all defined terms in this Agreement will
be defined as set forth in the First Store Agreement, as amended. The parties acknowledge that the
First Store Agreement has been amended to include terms negotiated by the Franchisor and the
Franchisee and that these terms will be incorporated into all subsequent Franchise Agreements
signed by the parties, except for changes set forth in other addenda to those agreements. The
Franchisee agrees to comply with the terms and conditions of the First Store Agreement, as amended,
as a part of its obligations hereunder and acknowledges that failure to comply with such First
Store Agreement is a breach of this Agreement.

     1.4. Franchisor’s Products. The Franchisor agrees not to offer or license others to
offer Factory Candy for retail sale in the Development Area other than through the Franchisee under
the terms of this Agreement. In consideration therefor, the Franchisee agrees that RMCF Products
will, within 180 days from the date of this Agreement, be the exclusive branded candy sold through
Grove Stores. The Franchisee agrees to use point-of-sale marketing that has been approved in
advance by the Franchisor to identify the Factory Candy and other RMCF Products offered in Grove
Stores. The Franchisee will pay the Franchisor a monthly royalty of * of its Gross Retail Sales of
Factory Candy and other RMCF Products sold in Grove Stores.

2. FEES

     2.1. Initial Franchise Fees. Concurrently with the execution of the First Store
Agreement, the Franchisor acknowledges that the Franchisee has paid *, representing payment in full
of the initial franchise fee for the first Store to be developed hereunder. For each subsequent
Store developed under this Agreement, an initial franchise fee of * will be due and payable by the
Franchisee on the date the Franchisee signs a Franchise Agreement for a Store in the Development
Area.

     2.2. Commissions on Franchised Stores. If the Franchisee subleases or otherwise
obtains a site in an Airport in the Development Area and an approved third-party franchisee signs a
lease or sublease for such site and signs a Franchise Agreement for a Store at that site and pays
the Franchisor a * initial franchise fee, the Franchisor will pay the Franchisee a commission equal
to one-third of the initial franchise fee received by the Franchisor, within 30 days after the
following conditions have been met:

     a. The Franchisee provides written notice to the Franchisor 30 days’ prior to the
proposed effective date of the lease or sublease and Franchise Agreement, and includes
information reasonably detailed to enable the Franchisor to evaluate the terms and
conditions of the proposed lease or sublease;

     b. The proposed third-party franchisee provides information to the Franchisor
sufficient for the Franchisor to assess its business experience, aptitude and financial
qualification, including completing an application, and the Franchisor approves the proposed
third-party franchisee as qualified to operate a Store;

2

 

     c. The proposed third-party franchisee completely executes the Franchisor’s
then-current form of Franchise Agreement, which will not include the negotiated changes that
are set forth in the addenda to the First Store Agreement, and pays the initial franchise
fee in full;

     d. The proposed third-party franchisee agrees to complete the Franchisor’s initial
training program, which training must be completed to the Franchisor’s satisfaction prior to
the effectiveness of the lease or sublease and the Franchise Agreement; and

     e. All amounts due and owing by the Franchisee to the Franchisor are paid in full.

     If all of the conditions listed above are met to the Franchisor’s satisfaction, the Franchisee
will be entitled to receive a commission equal to one-third of the * monthly Royalty actually
received by the Franchisor from the Store operated by the third-party franchisee, within 15 days
after the Franchisor actually receives such Royalty payments. The Franchisee will be entitled to
this commission, provided all of the conditions listed above are met to the Franchisor’s
satisfaction, for the initial term of the third-party franchise agreement. The Franchisee will
also be entitled to this commission for any third-party franchise agreements that are in progress
at the expiration date of this Agreement, but executed after the expiration date of this Agreement,
provided all of the conditions listed above are met to the Franchisor’s satisfaction.

     2.3. Royalty Fees. The Franchisor agrees that it will charge a * Royalty fee to the
Franchisee for the Dallas-Ft. Worth Airport Store and for the next two ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores developed by the Franchisee under this Agreement, provided that the Franchisee
develops and operates such Stores itself. After three Franchise Agreements have been signed at a *
Royalty fee, the Franchisor will charge a * Royalty fee for each ROCKY MOUNTAIN CHOCOLATE FACTORY
Store developed and operated by the Franchisee thereafter. All of the discounted Royalty fee rates
discussed in this Section 2.3 will be effective for only the initial term of a Franchise
Agreement and will not apply to any renewal terms.

     2.4. Separate Franchise Agreements. The parties agree that a separate Franchise
Agreement shall be executed for each Store to be developed under this Agreement. The Franchisee’s
failure to execute any additional Franchise Agreements or its default in any term of such Franchise
Agreements may, at the option of the Franchisor, be deemed a default under this Agreement and shall
entitle the Franchisor to terminate this Agreement as further provided in Article 3 below.
Each Franchise Agreement to be executed by the Franchisee for each Store to be developed hereunder
shall be in a form substantially similar to the First Store Agreement, although the Franchisor
reserves the right to change the terms of a Franchise Agreement to conform with the then current
form of Franchise Agreement being offered to new franchisees of the Franchisor.

     2.5. Store Location. All Stores developed by the Franchisee under the terms of this
Agreement shall be developed in an Airport located in the Development Area.

     2.6. Training and Other Development Assistance. The Franchisee acknowledges that the
Franchisor shall have the right, in the Franchisor’s sole discretion, to waive the initial training
program, which is the same as the training provided under Section 6.1 of the First Store
Agreement, for the second and each subsequent Store developed and operated by the Franchisee under
the terms of this Agreement.

3

 

3. TERM AND TERMINATION

     3.1. Term. This Agreement shall commence as of the date of execution hereof and shall
end 24 months later, regardless of how many Stores have been developed during the term. After
expiration of the term, or earlier termination of this Agreement as provided below, the Franchisor
shall have the right to establish, or license any other party to establish, Stores anywhere within
the Development Area.

     3.2. Termination By Franchisor. This Agreement may be terminated by the Franchisor on
30 days prior written notice, such notice containing a right to cure such default, if applicable,
in the event of any of the following:

     a. If the Franchisee defaults on any term or condition of this Agreement; or

     b. In the event of any occurrence which would entitle the Franchisor to terminate any
Franchise Agreement executed in furtherance of this Agreement.

This Agreement shall automatically terminate at the end of such 30-day notice period, unless the
Franchisee cures the default set forth in such notice within said 30-day period.

     3.3. Post-Termination Obligations. In the event of termination of this Agreement for
any reason, the Franchisee shall remain subject to the provisions of Article 5 of this
Agreement regarding nondisclosure and covenants not to compete, in addition to the terms and
conditions of any and all Franchise Agreements executed in furtherance of this Agreement which have
not also been terminated.

4. ASSIGNMENT

     4.1. Assignment By Franchisor. The Franchisor may transfer or assign its rights under
this Agreement at any time upon notice to the Franchisee, provided that the Franchisor has
fulfilled its obligations hereunder or has made adequate provisions therefor.

     4.2. Assignment By Franchisee. The Franchisee may not sell, transfer or assign its
rights under this Agreement, unless the Franchisee obtains the Franchisor’s prior written consent,
which consent shall not be unreasonably withheld if the Franchisee is in compliance with the terms
and conditions of this Agreement and complies with the transfer provisions of the Franchise
Agreement most recently executed by the Franchisor and the Franchisee, which provisions shall be
deemed to be incorporated herein by reference.

     4.3. Franchisor’s Right of First Refusal. In the event of any proposed sale, gift,
transfer or assignment of its rights under this Agreement, the Franchisee agrees to grant the
Franchisor a 30-day right of first refusal to purchase such rights on the same terms and conditions
as are contained in the most recently executed Franchise Agreement.

5. RESTRICTIVE COVENANTS

     5.1. Restrictive Covenants. During the term and after the termination of this
Agreement or any Franchise Agreement signed in furtherance of this Agreement, the Franchisee and
its officers, partners, directors, agents or employees who have completed the Franchisor’s training
programs or had access to the Operations Manual, as described in the Franchise Agreement, and/or
the beneficial owners of a majority interest in the Franchisee and their respective immediate
families, shall be subject to all restrictive covenants as set forth in the First Store Agreement,
and in any Confidentiality and

4

 

Noncompetition Agreements executed in conjunction with any Franchise Agreement, which
covenants by this reference are incorporated herein.

6. BUSINESS RELATIONSHIPS

     6.1. Independent Contractor. During the term of this Agreement, the Franchisee shall
be an independent contractor and shall in no way be considered as an agent, partner or employee of
the Franchisor. It is understood and agreed that no agency or partnership is created by this
Agreement. As such, the Franchisee has no authority of any nature whatsoever to bind the
Franchisor or incur any liability for or on behalf of the Franchisor or to represent itself as
anything other than an independent contractor.

     6.2. Indemnification. The Franchisee shall indemnify and hold harmless the Franchisor
and its officers, directors, agents and representatives (the “Indemnified Parties”) from all fines,
suits, proceedings, claims, demands or actions of any kind or nature, including reasonable
attorneys’ fees, from anyone whomsoever, directly or indirectly arising or growing out of, or
otherwise connected with the Franchisee’s activities, actions or failure to act, under this
Agreement, or the Franchisee’s operation of its Store(s) developed under this Agreement. For
purposes of this indemnification, claims shall mean and include all obligations, actual and
consequential damages and costs reasonably incurred in the defense of any claim against the
Indemnified Parties, including, without limitation, reasonable accountants’, attorneys’ and expert
witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and
travel and living expenses. The Franchisor shall have the right to defend any such claim against
it. This indemnity shall continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement.

7. MISCELLANEOUS

     7.1. Disputes. The parties agree that any dispute between the parties arising out of
the terms of this Agreement shall be governed by the applicable provisions of the First Store
Agreement, which terms and conditions are by this reference incorporated herein, including without
limitation, all provisions relating to governing laws, venue and jurisdiction.

     7.2. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
each of the parties’ respective heirs, successors, assigns and personal representatives.

     7.3. Review. The Franchisee acknowledges that it had a copy of this Agreement in its
possession for a period of time not fewer than 10 full business days, during which time the
Franchisee has had the opportunity to submit the same for professional review and advice of the
Franchisee’s choosing prior to freely executing this Agreement.

     7.4. No Waiver. No waiver of any condition or covenant contained in this Agreement or
failure to exercise a right or remedy by any party hereto shall be considered to imply or
constitute a further waiver of the same or any other condition, covenant, right or remedy.

     7.5. Modification. This Agreement may be modified only upon execution of a written
agreement between the parties.

     7.6. Entire Agreement. This Agreement contains the entire agreement between the
parties and supersedes any and all prior agreements, both oral and written, concerning the subject
matter hereof, provided that the First Store Agreement, addenda thereto and any other Franchise
Agreements executed

5

 

by the parties hereto shall remain binding, except to the extent that this Agreement
specifically supersedes any term thereof.

     7.7. Invalidity. If any provision of this Agreement is held invalid by any court of
competent jurisdiction in a final decision from which no appeal is or can be taken, such provision
shall be deemed modified to eliminate the invalid element and, as so modified, such provision shall
be deemed a part of this Agreement as though originally included. The remaining provisions of this
Agreement shall not be affected by such modification.

     7.8. Notices. All notices required to be given under this Agreement shall be given in
writing, by certified mail, return receipt requested, or by an overnight delivery service providing
documentation of receipt, at the addresses first set forth above, or at such other address as
either party may designate from time to time by written notice as set forth herein. Notice shall
be deemed effective when deposited in the United States mail postage prepaid or when received by
overnight delivery, as may be applicable.

     7.9. Attorneys’ Fees and Costs. In the event of any default on the part of either
party to this Agreement, in addition to all other remedies, the party in default will pay the
aggrieved party all amounts due and all damages, costs and expenses, including reasonable
attorneys’ fees, incurred by the aggrieved party in any legal action or other proceeding as a
result of such default, plus interest at the highest rate allowable by law, accruing from the date
of such default.

     7.10. Injunctive Relief. Nothing herein shall prevent the Franchisor or the
Franchisee from seeking injunctive relief to prevent irreparable harm, in addition to all other
remedies.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed effective as
of the date first above written.

	 	 	 	 	 
	 	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 
	Date: July 20, 2007 	By:  	/s/ Bryan Merryman
 	 
	 	 	Bryan Merryman, Chief Operating Officer 	 
	 	 	 	 
	 
	 	THE GROVE, INC.

 	 
	 	By:  	/s/ Michelle Dukler
 	 
	Date: July 23, 2007 	 	Its: President 	 
	 

Legend:

 

			
	*	 	The material has been omitted pursuant to a request for confidential treatment and such
material has been filed separately with the Commission.

6

 

EXHIBIT A

TO AIRPORT DEVELOPMENT AGREEMENT

BETWEEN ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

AND

THE GROVE, INC.

     The Development Area, as referred to in Section 1.1 of the Area Development Agreement,
shall consist of the following airports:

All airports in the United States where there are no ROCKY MOUNTAIN CHOCOLATE
FACTORY Stores operating or under development pursuant to the terms of an executed
lease, as of the date of this Agreement. The parties acknowledge that ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores are currently located in the following airports
and therefore, these airports are excluded from the Development Area:

Excluded Airports:

	 	1.	 	Denver International Airport

	 
	 	2.	 	Minneapolis/St. Paul International Airport

	 
	 	3.	 	Charlotte, NC International Airport

	 
	 	4.	 	Salt Lake City, UT International Airport

	 
	 	5.	 	Phoenix, AZ International Airport

	 
	 	6.	 	Philadelphia, PA International Airport

 

 

EXHIBIT B

TO AIRPORT DEVELOPMENT AGREEMENT

BETWEEN ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

AND

THE GROVE, INC.

Franchise Agreement dated May 11, 2007 as amended, 

between Rocky Mountain Chocolate Factory, Inc. and The Grove, Inc.

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