Quarterly Report

Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2007

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number 1-12202

ONEOK PARTNERS, L.P.

(Exact name of registrant as specified in its charter)


Delaware		93-1120873
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 West Fifth Street, Tulsa, OK		74103-4298
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (918) 588-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer x		Accelerated filer ¨		Non-accelerated filer ¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding at April 30, 2007
Common units		46,397,214 units
Class B units		36,494,126 units

ONEOK PARTNERS, L.P.

QUARTERLY REPORT ON FORM 10-Q


Part I.	Financial Information	Page No.

Item 1.	Financial Statements (Unaudited)

	Consolidated Statements of Income - Three Months Ended March 31, 2007 and 2006	5

	Consolidated Balance Sheets - March 31, 2007 and December 31, 2006	6

	Consolidated Statements of Cash Flows - Three Months Ended March 31, 2007 and 2006	7

	Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income - Three Months Ended March 31, 2007	8-9

	Notes to Consolidated Financial Statements	10-18

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19-33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33-35

Item 4.	Controls and Procedures	35

Part II.	Other Information

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Submission of Matters to a Vote of Security Holders	36

Item 5.	Other Information	36

Item 6.	Exhibits	36

Signature		37

In this Quarterly Report, references to “we,” “us,” “our” or the “Partnership” refer to ONEOK Partners, L.P. and its subsidiary, ONEOK Partners Intermediate Limited Partnership and its subsidiaries.

The statements in this Quarterly Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that our goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part II, Item 1A, “Risk Factors,” in this Quarterly Report and under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2006.

Glossary

The abbreviations, acronyms, and industry terminology used in this Quarterly Report are defined as follows:


AFUDC		Allowance for funds used during construction
Bbl		Barrels, equivalent to 42 United States gallons
Bbl/d		Barrels per day
BBtu/d		Billion British thermal units per day
Bcf		Billion cubic feet
Bcf/d		Billion cubic feet per day
Btu		British thermal units
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN		FASB Interpretation
Fort Union Gas Gathering		Fort Union Gas Gathering, L.L.C.
GAAP		United States Generally Accepted Accounting Principles
Guardian Pipeline		Guardian Pipeline, L.L.C.
LIBOR		London Interbank Offered Rate
MBbl/d		Thousand barrels per day
Mcf		Thousand cubic feet
Midwestern Gas Transmission		Midwestern Gas Transmission Company
MMBtu		Million British thermal units
MMBtu/d		Million British thermal units per day
MMcf		Million cubic feet
MMcf/d		Million cubic feet per day
Moody’s		Moody’s Investor Service, Inc.
NBP Services		NBP Services, LLC, a subsidiary of ONEOK
NGL		Natural gas liquids
Northern Border Pipeline		Northern Border Pipeline Company
NYMEX		New York Mercantile Exchange
OBPI		ONEOK Bushton Processing Inc.
OkTex Pipeline		OkTex Pipeline Company
ONEOK		ONEOK, Inc.
ONEOK Partners		ONEOK Partners, L.P., formerly known as Northern Border Partners, L.P.
ONEOK NB		ONEOK NB Company, formerly known as Northwest Border Pipeline Company, a ONEOK subsidiary
ONEOK Partners GP		ONEOK Partners GP, L.L.C., formerly known as Northern Plains Natural Gas Company, LLC, a ONEOK subsidiary
Overland Pass Pipeline Company		Overland Pass Pipeline Company LLC
Partnership Agreement		Third Amended and Restated Agreement of Limited Partnership of ONEOK Partners, L.P.
POP		Percent of Proceeds
S&P		Standard & Poor’s Rating Group
SEC		Securities and Exchange Commission
Statement		Statement of Financial Accounting Standards
TC PipeLines		TC PipeLines Intermediate Limited Partnership, a subsidiary of TC PipeLines, LP
TransCanada		TransCanada Corporation

This page intentionally left blank.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ONEOK Partners, L.P. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME


		Three Months Ended March 31,
*(Unaudited)*		2007			2006
		(Thousands of dollars, except per unit amounts)
Revenues
Operating revenue	$	1,161,472		$	1,169,830
Cost of sales and fuel		956,325			968,135
Net Margin		205,147			201,695
Operating Expenses
Operations and maintenance		66,453			68,579
Depreciation and amortization		27,513			27,470
Taxes other than income		9,008			6,777
Total Operating Expenses		102,974			102,826
Gain on Sale of Assets		2,203			1,305
Operating Income		104,376			100,174
Interest expense, net		32,300			36,434
Other income (expense):
Equity earnings from investments (Note H)		24,055			31,641
Other income		2,800			1,086
Other expense		(213	)		(150	)
Total Other Income, net		26,642			32,577
Minority interests in income of consolidated subsidiaries		85			1,619
Income before income taxes		98,633			94,698
Income taxes		2,877			24,194
Net Income	$	95,756		$	70,504
Limited partners’ interest in net income:
Net income	$	95,756		$	70,504
General partners’ interest in net income		13,278			39,640
Limited Partners’ Interest in Net Income	$	82,478		$	30,864
Limited partners’ per unit net income:
Net income per unit (Note I)	$	1.00		$	0.67
Number of Units Used in Computation (Thousands)		82,891			46,397

See accompanying Notes to Consolidated Financial Statements.

ONEOK Partners, L.P. and Subsidiaries

CONSOLIDATED BALANCE SHEETS


(Unaudited)		March 31, 2007			December 31, 2006
Assets		(Thousands of dollars)

Current Assets
Cash and cash equivalents	$	93,020		$	21,102
Accounts receivable, net		312,299			298,602
Related party receivables		62,827			88,572
Gas and natural gas liquids in storage		182,549			198,141
Commodity exchanges and imbalances		67,514			53,433
Other		24,540			33,388
Total Current Assets		742,749			693,238

Property, Plant and Equipment
Property, plant and equipment		3,500,225			3,424,452
Accumulated depreciation and amortization		686,378			660,804
Net Property, Plant and Equipment (Note A)		2,813,847			2,763,648

Investments and Other Assets
Investment in unconsolidated affiliates (Note H)		746,383			748,879
Goodwill and intangible assets (Note D)		687,834			689,751
Other		27,185			26,201
Total Investments and Other Assets		1,461,402			1,464,831
Total Assets	$	5,017,998		$	4,921,717

Liabilities and Partners’ Equity

Current Liabilities
Current maturities of long-term debt	$	11,931		$	11,931
Notes payable		-			6,000
Accounts payable		447,106			361,967
Related party payables		7,368			25,737
Commodity exchanges and imbalances		182,904			175,927
Accrued interest		55,316			29,366
Other		63,735			60,105
Total Current Liabilities		768,360			671,033

Long-term Debt, net of current maturities		2,019,502			2,019,598

Minority Interests in Consolidated Subsidiaries		5,691			5,606

Deferred Credits and Other Liabilities		37,599			36,818

Commitments and Contingencies (Note F)

Partners’ Equity
General partner		55,209			54,373
Common units: 46,397,214 units issued and outstanding at March 31, 2007, and December 31, 2006		804,294			803,599
Class B units: 36,494,126 units issued and outstanding at March 31, 2007, and December 31, 2006		1,332,796			1,332,276
Accumulated other comprehensive loss		(5,453	)		(1,586	)
Total Partners’ Equity		2,186,846			2,188,662
Total Liabilities and Partners’ Equity	$	5,017,998		$	4,921,717

See accompanying Notes to Consolidated Financial Statements.

ONEOK Partners, L.P. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS


		Three Months Ended March 31,
(Unaudited)		2007			2006
		(Thousands of dollars)
Operating Activities
Net income	$	95,756		$	70,504
Depreciation and amortization		27,513			27,470
Minority interests in income of consolidated subsidiaries		85			1,619
Equity earnings from investments		(24,055	)		(31,641	)
Distributions received from unconsolidated affiliates		26,455			40,708
Gain on sale of assets		(2,203	)		(1,305	)
Changes in assets and liabilities (net of acquisition and disposition effects):
Accounts receivable		12,048			61,725
Inventories		14,460			41,469
Accounts payable and other current liabilities		66,770			55,598
Commodity exchanges and imbalances, net		(7,104	)		(26,070	)
Accrued taxes other than income		(2,645	)		(10,344	)
Accrued interest		25,950			1,431
Derivative financial instruments		1,410			(3,036	)
Other		11,474			7,038
Cash Provided by Operating Activities		245,914			235,166
Investing Activities
Change in investments in unconsolidated affiliates		(141	)		(5,713	)
Proceeds from sale of assets		3,707			316
Capital expenditures		(77,857	)		(17,657	)
Increase in cash and cash equivalents for previously unconsolidated subsidiaries		-			7,496
Decrease in cash and cash equivalents for previously consolidated subsidiaries		-			(22,039	)
Cash Used in Investing Activities		(74,291	)		(37,597	)
Financing Activities
Cash distributions:
General and limited partners		(93,675	)		(39,906	)
Minority interests		-			(147	)
Cash flow retained by ONEOK (Note B)		-			(176,940	)
Short-term financing borrowings		-			237,000
Short-term financing payments		(6,000	)		(211,000	)
Debt reacquisition costs		-			(3,628	)
Issuance of long-term debt		-			211,000
Retirement of long-term debt		-			(243,030	)
Other		(30	)		(179	)
Cash Used in Financing Activities		(99,705	)		(226,830	)
Change in Cash and Cash Equivalents		71,918			(29,261	)
Cash and Cash Equivalents at Beginning of Period		21,102			43,090
Cash and Cash Equivalents at End of Period	$	93,020		$	13,829
Supplemental Cash Flow Information:
Cash Paid for interest	$	8,710		$	9,220

See accompanying Notes to Consolidated Financial Statements.

ONEOK Partners, L.P. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ EQUITY AND COMPREHENSIVE INCOME


(Unaudited)	Common Units	Class B Units		General Partner			Common Units
	(Units)			(Thousands of dollars)
Partners’ equity at December 31, 2006	46,397,214	36,494,126	$	54,373		$	803,599
Net income	-	-		13,278			46,165
Other comprehensive income	-	-		-			-
Total comprehensive income	-	-		-			-
Other	-	-		(1	)		-
Distributions paid	-	-		(12,441	)		(45,470	)
Partners’ equity at March 31, 2007	46,397,214	36,494,126	$	55,209		$	804,294

See accompanying Notes to Consolidated Financial Statements.

ONEOK Partners, L.P. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ EQUITY AND COMPREHENSIVE INCOME

(Continued)


	Class B Units			Accumulated Other Comprehensive Income (Loss)			Total Partners’ Equity
	(Thousands of dollars)
Partners’ equity at December 31, 2006	$	1,332,276		$	(1,586	)	$	2,188,662
Net income		36,313			-			95,756
Other comprehensive income		-			(3,867	)		(3,867	)

Total comprehensive income		-						91,889

Other		(29	)		-			(30	)
Distributions paid		(35,764	)		-			(93,675	)
Partners’ equity at March 31, 2007	$	1,332,796		$	(5,453	)	$	2,186,846

ONEOK Partners, L.P. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A.	SUMMARY OF ACCOUNTING POLICIES

Our accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Due to the seasonal nature of our business, the results of operations for the three months ended March 31, 2007, are not necessarily indicative of the results that may be expected for a 12-month period. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2006.

Our accounting policies are consistent with those disclosed in Note A of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2006, except as described below.

Significant Accounting Policies

Property - The following table sets forth our property, by segment, for the periods presented.


	March 31, 2007		December 31, 2006
	(Thousands of dollars)
Non-Regulated
Gathering and Processing	$	1,149,254	$	1,133,614
Natural Gas Liquids		554,971		547,495
Pipelines and Storage		162,761		162,636
Other		50,789		50,784
Regulated
Pipelines and Storage		1,096,393		1,060,810
Interstate Natural Gas Pipelines		486,057		469,113
Property, plant and equipment		3,500,225		3,424,452
Accumulated depreciation, depletion and amortization		686,378		660,804
Net property, plant and equipment	$	2,813,847	$	2,763,648

Income Taxes - In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109,” which was effective for our year beginning January 1, 2007. This interpretation was issued to clarify the accounting for uncertainty in income taxes recognized in the financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires the recognition of penalties and interest on any unrecognized tax benefits. Our policy is to reflect penalties and interest as part of income tax expense as they become applicable. We have no tax positions that would require establishment of a reserve under FIN 48.

We file numerous consolidated and separate income tax returns in the United States federal jurisdiction and in many state jurisdictions. We also file returns in Canada. No returns are currently under audit and no extensions of statute of limitations have been granted.

Other

Fair Value Measurements - In September 2006, the FASB issued Statement 157, “Fair Value Measurements,” which establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. Statement 157 is effective for our year beginning January 1, 2008. We are currently reviewing the applicability of Statement 157 to our operations and its potential impact on our consolidated financial statements.

In February 2007, the FASB issued Statement 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which allows companies to elect to measure specified financial assets and liabilities, firm commitments, and nonfinancial warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings each reporting period. Statement 159 is effective for our year beginning January 1, 2008. We are currently reviewing the applicability of Statement 159 to our operations and its potential impact on our consolidated financial statements.

Reclassifications - In April 2006, we completed the acquisition and consolidated certain companies comprising ONEOK’s former gathering and processing, natural gas liquids, and pipelines and storage segments (collectively, the ONEOK Energy Assets) in a series of transactions (collectively, the ONEOK Transactions); consolidated Guardian Pipeline as a result of the acquisition of the 66-2/3 percent interest not previously owned by us; and deconsolidated Northern Border Pipeline as a result of the disposition of a 20 percent partnership interest. Each of these transactions was accounted for retroactive to January 1, 2006, and accordingly, the comparative financial statements for the quarter ended March 31, 2006 have been restated. See Note B for additional information.

Certain other amounts in our consolidated financial statements have been reclassified to conform to the 2007 presentation. These reclassifications did not impact previously reported net income or partners’ equity.

B.	ACQUISITIONS AND DIVESTITURES

Overland Pass Pipeline Company - In May 2006, we entered into an agreement with a subsidiary of The Williams Companies, Inc. (Williams) to form a joint venture called Overland Pass Pipeline Company. Overland Pass Pipeline Company will build a 750-mile natural gas liquids pipeline from Opal, Wyoming to the Mid-Continent natural gas liquids market center in Conway, Kansas. The pipeline will be designed to transport approximately 110,000 Bbl/d of NGLs, which can be increased to approximately 150,000 Bbl/d with additional pump facilities. As the 99 percent owner of the joint venture, we will manage the construction project, advance all costs associated with construction and operate the pipeline. Within two years of the pipeline becoming operational, Williams will have the option to increase its ownership up to 50 percent by reimbursing us for its proportionate share of all construction costs. If Williams exercises its option to increase its ownership to the full 50 percent, Williams would have the option to become operator. This project requires the approval of various state and federal regulatory authorities. Assuming Overland Pass Pipeline Company obtain the required regulatory approvals, we currently expect construction of the pipeline to begin in the fall of 2007, with start up scheduled for early 2008.

As part of a long-term agreement, Williams dedicated its NGL production from two of its gas processing plants in Wyoming to the joint-venture company. We will provide downstream fractionation, storage and transportation services to Williams. The pipeline project is currently estimated to cost approximately $433 million, excluding AFUDC. During 2006, we paid $11.6 million to Williams for acquisition of our interest in the joint venture and for reimbursement of initial capital expenditures. In addition, we plan to invest approximately $216 million, excluding AFUDC, to expand our existing fractionation capabilities and the capacity of our natural gas liquids distribution pipelines. Financing for the projects may include a combination of short- or long-term debt or equity.

The ONEOK Transactions - In April 2006, we completed the acquisition of the ONEOK Energy Assets from ONEOK, the parent company of our general partner. As part of the ONEOK Transactions, ONEOK acquired ONEOK NB, formerly known as Northwest Border Pipeline Company, an affiliate of TransCanada that held a 0.35 percent general partner interest in us, under a Purchase and Sale Agreement between an affiliate of ONEOK and an affiliate of TransCanada. As a result, ONEOK owns our entire 2 percent general partner interest and controls us.

We acquired the ONEOK Energy Assets for approximately $3 billion, including $1.35 billion in cash, before adjustments, and approximately 36.5 million Class B limited partner units. The Class B limited partner units and the related general partner interest contribution were valued at approximately $1.65 billion. ONEOK now owns approximately 37.0 million of our limited partner units, which, when combined with its general partner interest, increased its total interest in us to approximately 45.7 percent. We also used $1.05 billion drawn under our $1.1 billion, 364-day credit agreement (the Bridge Facility), coupled with the proceeds from the sale of a 20 percent partnership interest in Northern Border Pipeline, to finance the transaction.

The ONEOK Transactions were accounted for as a transaction between entities under common control and these transactions were excluded from the accounting prescribed by Statement 141, “Business Combinations.” Accordingly, ONEOK’s historical cost basis in the ONEOK Energy Assets was transferred to us in a manner similar to a pooling of interests. The difference between the historical cost basis of the net assets acquired of $2.7 billion and the cash paid has been assigned to the value of the Class B limited partner units issued to ONEOK and its general partner interest in us. These assets and their related operations are included in our consolidated financial statements retroactive to January 1, 2006. Since the ONEOK

Transactions were not completed until April 2006, the income and cash flow from the ONEOK Energy Assets for the first quarter of 2006 were retained by ONEOK. In our Consolidated Statements of Cash Flows, we reported cash flow retained by ONEOK of $176.9 million, which represents the cash flows generated from these companies while they were owned by ONEOK.

Prior to the acquisition, the ONEOK Energy Assets were included in the consolidated state and federal income tax returns of ONEOK and, accordingly, current taxes payable were allocated to the ONEOK Energy Assets based on ONEOK’s effective tax rate. Income tax liabilities and provisions for income tax expense for the ONEOK Energy Assets were calculated on a stand-alone basis. Our Consolidated Statements of Income for 2006 includes income tax expense recorded for the ONEOK Energy Assets of $22.2 million for the first quarter of 2006. In conjunction with the ONEOK Transactions, all income tax liabilities of the ONEOK Energy Assets at the time of the ONEOK Transactions were retained by ONEOK.

Income from the ONEOK Energy Assets for the first quarter of 2006 also reflects interest expense of $21.3 million, which represents interest charged on long-term debt owed to ONEOK. The interest rate on the debt was calculated periodically based upon ONEOK’s weighted average cost of debt. This debt was retained by ONEOK as part of the ONEOK Transactions.

The units issued to ONEOK were the newly created Class B limited partner units. As of April 7, 2007, the Class B limited partner units are no longer subordinated to distributions on our common units and generally have the same voting rights as our common units.

At a special meeting of the holders of common units on March 29, 2007, the unitholders approved a proposal to permit the conversion of the Class B limited partner units issued in the ONEOK Transactions into common units at the option of the Class B unitholder. The March 29, 2007 special meeting was adjourned to May 10, 2007, to allow unitholders additional time to vote on a proposal to approve certain amendments to our Partnership Agreement. The proposed amendments to our Partnership Agreement would grant voting rights for units held by our general partner and its affiliates if a vote is held to remove our general partner and require fair market value compensation for the general partner interest if the general partner is removed.

If the proposed amendments to our Partnership Agreement are approved by the common unitholders at the May 10, 2007, meeting, the Class B limited partner units will automatically convert into common units on a one-for-one basis and the Class B limited partner units will no longer be outstanding. Effective April 7, 2007, the Class B limited partner units are entitled to increased quarterly distributions and to distributions upon liquidation equal to 110 percent of the distributions paid with respect to common units. If our common unitholders approve the amendments on May 10, 2007, these increased distribution rights will be eliminated after that date. In addition, if our common unitholders do not approve the proposed amendments, and our common unitholders vote at any time prior to the approval of the proposed amendments to remove ONEOK or its affiliates as our general partner, quarterly distributions payable on Class B limited partner units would increase to 123.5 percent of the distributions payable with respect to the common units, and distributions payable upon liquidation of the Class B limited partner units would increase to 125 percent of the distributions payable with respect to the common units.

Disposition of 20 Percent Partnership Interest in Northern Border Pipeline - In April 2006, we completed the sale of a 20 percent partnership interest in Northern Border Pipeline to TC PipeLines for approximately $297 million to help finance the acquisition of the ONEOK Energy Assets. We recorded a gain on the sale of approximately $113.9 million in the second quarter of 2006. We and TC PipeLines each now own a 50 percent interest in Northern Border Pipeline, and an affiliate of TransCanada became the operator of the pipeline in April 2007. Under Statement 94, “Consolidation of All Majority Owned Subsidiaries,” a majority-owned subsidiary is not consolidated if control is likely to be temporary or if it does not rest with the majority owner. Neither we nor TC PipeLines has control of Northern Border Pipeline, as control is shared equally through Northern Border Pipeline’s Management Committee. Our interest in Northern Border Pipeline has been accounted for as an investment under the equity method on a retroactive basis to January 1, 2006.

Acquisition of Guardian Pipeline Interests - In April 2006, we acquired the 66-2/3 percent interest in Guardian Pipeline not previously owned by us for approximately $77 million, increasing our ownership to 100 percent. We used borrowings from our credit facility to fund the acquisition of the additional interest in Guardian Pipeline. Following the completion of the transaction, we included Guardian Pipeline in our consolidated financial statements. This change was accounted for retroactive to January 1, 2006.

C.	DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

We utilize financial instruments to reduce our market risk exposure to interest rate and commodity price fluctuations and achieve more predictable cash flows. We follow established policies and procedures to assess risk and approve, monitor and report our financial instrument activities. We do not use these instruments for trading purposes.

Cash Flow Hedges - Our Gathering and Processing segment periodically enters into commodity derivative contracts and fixed-price physical contracts. Our Gathering and Processing segment primarily utilizes NYMEX-based futures, collars and over-the-counter swaps, which are designated as cash flow hedges, to hedge its exposure to volatility in the gross processing spread and the price of natural gas, NGLs and condensate. At March 31, 2007, the accompanying Consolidated Balance Sheet reflected an unrealized loss of $5.6 million in accumulated other comprehensive income (loss), with a corresponding offset in derivative financial instrument assets and liabilities, all of which will be recognized over the next 12 months. Net gains and losses related to the ineffective portion of our hedges are reclassified out of accumulated other comprehensive income (loss) to operating revenues in the period the ineffectiveness occurs. Ineffectiveness related to these cash flow hedges was not material for the three months ended March 31, 2007. There were no material gains or losses during the three months ended March 31, 2007, and 2006, due to the discontinuance of cash flow hedge treatment.

Fair Value Hedges - In prior years, we terminated various interest rate swap agreements. The net savings from the termination of these swaps is being recognized in interest expense over the terms of the debt instruments originally hedged. Net interest expense savings for the three months ended March 31, 2007, for all terminated swaps was $0.9 million, and the remaining net savings for all terminated swaps will be recognized over the following periods.


	(Millions of dollars)
Remainder of 2007	$	2.7
2008		3.7
2009		3.7
2010		3.7
2011		0.9
Thereafter		-

Currently, the interest on $150 million of fixed rate debt is swapped to floating using interest rate swaps. The floating rate is based on six-month LIBOR. Based on the actual performance through March 31, 2007, the weighted average interest rate increased from 7.10 percent to 7.28 percent. At March 31, 2007, we recorded a net liability of $2.3 million to recognize the interest rate swaps at fair value. Long-term debt was decreased by $2.3 million to recognize the change in the fair value of the related hedged liability.

D.	GOODWILL AND INTANGIBLE ASSETS

Goodwill

Carrying Amounts - The amount of goodwill recorded on our Consolidated Balance Sheets as of March 31, 2007, and December 31, 2006, was $394.6 million.

Equity Method Goodwill - For the investments we account for under the equity method, the premium or excess cost over underlying fair value of net assets is referred to as equity method goodwill. Investment in unconsolidated affiliates on our accompanying Consolidated Balance Sheets includes equity method goodwill of $185.6 million as of March 31, 2007, and December 31, 2006.

Intangible Assets

Our intangible assets primarily relate to contracts acquired through the acquisition of the natural gas liquids businesses from ONEOK and are being amortized over an aggregate weighted-average period of 40 years. The aggregate amortization expense for each of the next five years is estimated to be approximately $7.7 million. Amortization expense for intangible assets for the three months ended March 31, 2007 and 2006 was $1.9 million.

The following tables reflect the gross carrying amount and accumulated amortization of intangible assets at March 31, 2007, and December 31, 2006.


	March 31, 2007
	Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
	(Thousands of dollars)
Natural Gas Liquids	$	292,000	$	(12,774	)	$	279,226
Pipelines and Storage		14,650		(642	)		14,008
Intangible Assets	$	306,650	$	(13,416	)	$	293,234

	December 31, 2006
	Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
	(Thousands of dollars)
Natural Gas Liquids	$	292,000	$	(10,949	)	$	281,051
Pipelines and Storage		14,650		(550	)		14,100
Intangible Assets	$	306,650	$	(11,499	)	$	295,151

E.	CREDIT FACILITIES

General - On March 30, 2007, we entered into an amended and restated five-year revolving credit facility agreement (2007 Partnership Credit Agreement), with several banks and other financial institutions and lenders, which amended and restated our $750 million five-year credit agreement in the following principal ways: (i) revised the pricing, (ii) extended the maturity by one year to March 2012, (iii) eliminated the interest coverage ratio covenant, (iv) increased the permitted ratio of indebtedness to EBITDA to 5 to 1 (from 4.75 to 1), (v) increased the swingline sub-facility commitments from $15 million to $50 million and (vi) changed the permitted amount of subsidiary indebtedness from $35 million to 10 percent of our consolidated indebtedness.

Except as discussed above, our 2007 Partnership Credit Agreement and Guardian Pipeline’s revolving note agreement contain typical covenants as discussed in Note E of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2006. At March 31, 2007, we were in compliance with all covenants.

At March 31, 2007, we had $10 million in letters of credit issued and no borrowings outstanding under our 2007 Partnership Credit Agreement. At March 31, 2007, Guardian Pipeline had no borrowings outstanding under its $10 million revolving note agreement, which terminates in November 2007.

F.	COMMITMENTS AND CONTINGENCIES

Legal Proceedings - Our ONEOK Field Services Company subsidiary is a defendant in litigation brought by Praxair, Inc. (Praxair), in which Praxair alleges that ONEOK Field Services Company wrongfully declared force majeure under an agreement with Praxair for delivery of helium. Praxair is claiming damages of $41.5 million for breach of contract. Trial in this case had been scheduled for March 2007 but has been continued and a new trial date has not yet been set. We intend to vigorously defend this case.

In addition, we are a party to other litigation matters and claims that are in the normal course of our operations. While the results of litigation and claims cannot be predicted with certainty, we believe the final outcome of such matters will not have a material adverse effect on our consolidated results of operations, financial position or liquidity.

G.	SEGMENTS

Segment Descriptions - We have divided our operations into four reportable segments based on similarities in economic characteristics, products and services, types of customers, methods of distribution and regulatory environment. These segments are as follows: (1) our Gathering and Processing segment, which primarily gathers and processes raw natural gas; (2) our Natural Gas Liquids segment, which primarily gathers, treats and fractionates raw NGLs and stores and markets purity NGL products; (3) our Pipelines and Storage segment, which primarily operates regulated intrastate natural gas transmission pipelines, natural gas storage facilities and regulated natural gas liquids gathering and distribution pipelines; and (4) our Interstate Natural Gas Pipelines segment, which primarily operates our interstate natural gas transmission pipelines that are regulated by the FERC. Certain assets of the Pipelines and Storage segment are regulated by the FERC and by the Oklahoma Corporation Commission, Kansas Corporation Commission and the Texas Railroad Commission.

Accounting Policies - The accounting policies of the segments are the same as those described in Note A and Note M in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2006. Intersegment gross sales are recorded on the same basis as sales to unaffiliated customers. Our Gathering and Processing segment sells natural gas to ONEOK and its subsidiaries. A significant portion of our Pipelines and Storage segment’s revenues are from ONEOK and its subsidiaries, which utilize both transportation and storage services. Our Interstate Natural Gas Pipelines segment provides transportation services to ONEOK and its subsidiaries. Corporate overhead costs relating to a reportable segment have been allocated for the purpose of calculating operating income. Our equity method investments do not represent operating segments.

Customers - We had no single external customer from which we received 10 percent or more of our consolidated gross revenues.

Operating Segment Information - The following tables set forth certain operating segment financial data for the periods indicated.


Three Months Ended March 31, 2007	Gathering and Processing		Natural Gas Liquids		Pipelines and Storage (a)		Interstate Natural Gas Pipelines (b)		Other and Eliminations			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	103,575	$	857,963	$	20,118	$	23,470	$	10		$	1,005,136
Sales to affiliated customers		130,428		-		25,797		111		-			156,336
Intersegment sales		88,878		2,969		17,973		-		(109,820	)		-
Operating revenue	$	322,881	$	860,932	$	63,888	$	23,581	$	(109,810	)	$	1,161,472
Gain on sale of assets	$	2,197	$	1	$	5	$	-	$	-		$	2,203
Operating income	$	30,452	$	31,998	$	28,063	$	12,934	$	929		$	104,376
Equity earnings from investments	$	5,608	$	279	$	128	$	18,040	$	-		$	24,055
EBITDA	$	47,425	$	37,650	$	36,172	$	34,290	$	1,657		$	157,194
Investment in unconsolidated affiliates	$	295,891	$	9,511	$	7,877	$	433,104	$	-		$	746,383
Total assets	$	1,677,969	$	1,589,580	$	1,158,459	$	649,584	$	(57,594	)	$	5,017,998
Capital expenditures	$	17,858	$	7,476	$	35,778	$	16,739	$	6		$	77,857

(a) - Our Pipelines and Storage segment has regulated and non-regulated operations. Our Pipelines and Storage segment’s regulated operations had revenues of $52.6 million and operating income of $21.1 million for the quarter ended March 31, 2007.

(b) - All of our Interstate Natural Gas Pipelines segment’s operations are regulated.


Three Months Ended March 31, 2006	Gathering and Processing			Natural Gas Liquids			Pipelines and Storage (a)			Interstate Natural Gas Pipelines (b)			Other and Eliminations			Total
	(Thousands of dollars)

Sales to unaffiliated customers	$	203,590		$	811,624		$	18,429		$	25,554		$	(40,294	)	$	1,018,903
Sales to affiliated customers		122,503			-			28,424						-			150,927
Intersegment sales		74,648			7,799			16,059			-			(98,506	)		-
Operating revenue	$	400,741		$	819,423		$	62,912		$	25,554		$	(138,800	)	$	1,169,830
Gain on sale of assets	$	306		$	6		$	993		$	-		$	-		$	1,305
Operating income	$	46,852		$	17,125		$	28,741		$	13,067		$	(5,611	)	$	100,174
Equity earnings (loss) from investments	$	5,422		$	(172	)	$	244		$	26,147		$	-		$	31,641
EBITDA	$	63,115		$	22,387		$	36,890		$	43,010		$	(5,309	)	$	160,093
Investment in unconsolidated affiliates	$	290,559		$	9,078		$	8,422		$	642,090		$	-		$	950,149
Total assets	$	1,510,222		$	1,366,233		$	1,001,269		$	1,158,522		$	(109,790	)	$	4,926,456
Capital expenditures	$	7,817		$	2,954		$	3,576		$	3,004		$	306		$	17,657
(a) - Our Pipelines and Storage segment has regulated and non-regulated operations. Our Pipelines and Storage segment’s regulated operations had revenues of $51.2 million and operating income of $21.1 million for the quarter ended March 31, 2006.
(b) - All of our Interstate Natural Gas Pipelines segment’s operations are regulated.

We evaluate our performance based on EBITDA, earnings before interest, income taxes, depreciation and amortization less the cost of the equity component of AFUDC (Equity AFUDC). Management uses EBITDA to compare the financial performance of its segments and to internally manage those business segments. Management believes that EBITDA provides useful information to investors as a measure of comparison with peer companies. EBITDA should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with GAAP. EBITDA calculations may vary from company to company, so our computation of EBITDA may not be comparable with a similarly titled measure of another company.

The following tables set forth the reconciliation of net income to EBITDA by operating segment for the periods indicated.

Three Months Ended March 31, 2007	Gathering and Processing			Natural Gas Liquids			Pipelines and Storage			Interstate Natural Gas Pipelines			Other and Eliminations			Total
		(Thousands of dollars)

Net income	$	38,461		$	33,587		$	31,110		$	26,654		$	(34,056	)	$	95,756
Minority interests		-			-			85			-			-			85
Interest expense, net		(2,158	)		(1,269	)		(1,933	)		2,692			34,968			32,300
Depreciation and amortization		11,122			5,332			7,777			3,255			27			27,513
Income taxes		-			-			37			2,122			718			2,877
Equity AFUDC		-			-			(904	)		(433	)		-			(1,337	)
EBITDA	$	47,425		$	37,650		$	36,172		$	34,290		$	1,657		$	157,194

Three Months Ended March 31, 2006	Gathering and Processing			Natural Gas Liquids			Pipelines and Storage			Interstate Natural Gas Pipelines			Other and Eliminations			Total
	(Thousands of dollars)

Net income	$	37,165		$	5,036		$	13,129		$	31,974		$	(16,800	)	$	70,504
Minority interests		-			-			138			1,481			-			1,619
Interest expense, net		4,589			8,866			7,780			3,743			11,456			36,434
Depreciation and amortization		10,567			5,399			7,583			3,749			172			27,470
Income taxes		10,794			3,086			8,260			2,191			(137	)		24,194
Equity AFUDC		-			-			-			(128	)		-			(128	)
EBITDA	$	63,115		$	22,387		$	36,890		$	43,010		$	(5,309	)	$	160,093

H.	UNCONSOLIDATED AFFILIATES

Equity Earnings from Investments - The following table sets forth our equity earnings from investments for the periods indicated.


	Three Months Ended March 31,
	2007		2006
	(Thousands of dollars)

Northern Border Pipeline	$	18,040	$	26,147
Bighorn Gas Gathering, L.L.C.		1,691		2,033
Fort Union Gas Gathering		2,587		1,948
Lost Creek Gathering Company, L.L.C.		1,329		1,441
Other		408		72
Equity earnings from investments	$	24,055	$	31,641

Unconsolidated Affiliates Financial Information - Summarized combined financial information of our unconsolidated affiliates is presented below.


	Three Months Ended March 31,
	2007		2006
	(Thousands of dollars)

Income Statement
Operating revenue	$	98,713	$	97,886
Operating expenses		38,357		36,601
Net income		49,157		50,141

Distributions paid to us	$	26,455	$	40,708

I.	NET INCOME PER UNIT

Net income per unit is computed by dividing net income, after deducting the general partner’s allocation, by the weighted average number of outstanding limited partner units. The general partner owns a 2 percent interest in us and also owns incentive distribution rights that provide for an increasing proportion of cash distributions from the partnership as the distributions made to limited partners increase above specified levels. For purposes of our calculation of net income per unit, net income is generally allocated to the general partner as follows: 1) an amount based upon the 2 percent general partner interest in net income; and 2) the amount of the general partner’s incentive distribution rights based on the total cash distributions declared during the period. The amount of incentive distribution allocated to our general partner totaled $11.4 million for the three months ended March 31, 2007. The $12.4 million distribution paid to our general partner shown on the accompanying Consolidated Statements of Changes in Partners’ Equity and Comprehensive Income included $10.6 million in incentive distributions paid to our general partner during the first three months of 2007. Gains resulting from interim capital transactions, as defined in our Partnership Agreement, are generally not subject to distribution; however, the Partnership Agreement provides that if such distributions were made, the incentive distribution rights would not apply. Accordingly, the gain on sale of assets for the three months ended March 31, 2007 and 2006 had no impact on the incentive distribution rights.

As discussed in Note B, we completed the ONEOK Transactions during the second quarter of 2006; however, for accounting purposes, the transactions were accounted for retroactive to January 1, 2006. Net income from the ONEOK Energy Assets prior to the April 2006 acquisition was approximately $35.8 million and has been reflected in our year-to-date earnings for 2006. For purposes of our calculation of income per unit for the three months ended March 31, 2006, these pre-acquisition earnings were allocated to the general partner as they retained the related cash flow for that period.

On April 17, 2007, we declared a cash distribution of $0.99 per unit ($3.96 per unit on an annualized basis) for the first quarter of 2007. The distribution is payable May 14, 2007, to unitholders of record as of April 30, 2007.

J.	RELATED-PARTY TRANSACTIONS

Intersegment and affiliate sales are recorded on the same basis as sales to unaffiliated customers. Our Gathering and Processing segment sells natural gas to ONEOK and its subsidiaries. A significant portion of our Pipelines and Storage segment’s revenues are from ONEOK and its subsidiaries, which utilize both transportation and storage services. Our Interstate Natural Gas Pipelines segment provides transportation services to ONEOK and its subsidiaries.

As part of the ONEOK Transactions, we acquired certain contractual rights to the Bushton Gas Processing Plant (the Bushton Plant) that is leased by OBPI. Our Processing and Services Agreement with ONEOK and OBPI sets out the terms by which OBPI provides processing and related services at the Bushton Plant through 2012. In exchange, we pay OBPI for all direct costs and expenses of the Bushton Plant, including reimbursement of a portion of OBPI’s obligations under equipment leases covering the Bushton Plant. Volumes available for processing at this straddle plant have declined due to contract terminations and natural field declines, which made it more efficient to process the remaining gas at other facilities. As a result, on January 1, 2007, the Bushton Plant was temporarily idled. We have contracted for all of the capacity of the Bushton Plant from OBPI. We are in the process of adding new facilities as part of our construction projects and associated expansions.

In April 2006, we entered into a Services Agreement with ONEOK, ONEOK Partners GP and NBP Services (the Services Agreement) that replaced the Administrative Services Agreement between us and NBP Services. Under the Services Agreement, our operations and the operations of ONEOK and its affiliates can combine or share certain common services in order to operate more efficiently and cost effectively. Under the Services Agreement, ONEOK will provide to us at least the type and amount of services that it provides to its affiliates, including those services required to be provided pursuant to our Partnership Agreement. ONEOK Partners GP will continue to operate our interstate natural gas pipeline assets according to each pipeline’s operating agreement, except for the operating agreement between ONEOK Partners GP and Northern Border Pipeline, which terminated effective April 1, 2007. ONEOK Partners GP may purchase services from ONEOK and its affiliates pursuant to the terms of the Services Agreement. ONEOK Partners GP has no employees and utilizes the services of ONEOK and ONEOK Services Company to fulfill its responsibilities.

ONEOK and its affiliates provide a variety of services to us under the Services Agreement, including cash management and financing services, employee benefits provided through ONEOK’s benefit plans, administrative services, insurance and office space leased in ONEOK’s headquarters building and other field locations. Where costs are specifically incurred on behalf of one of our affiliates, the costs are billed directly to us by ONEOK. In other situations, the costs may be allocated to us through a variety of methods, depending upon the nature of the expense and activities. For example, a service that applies equally to all employees is allocated based upon the number of employees. However, an expense benefiting the consolidated company but having no direct basis for allocation is allocated by the modified Distrigas method, a method using a combination of ratios that include gross plant and investment, operating income and wages. All costs directly charged or allocated to us are included in our Consolidated Statements of Income.

An affiliate of ONEOK enters into some of the commodity derivative contracts at the direction of and on behalf of our Gathering and Processing segment. See Note C for a discussion of our derivative instruments and hedging activities.

The following table sets forth the transactions with related parties for the periods indicated.


	Three Months Ended March 31,
	2007		2006
	(Thousands of dollars)

Revenues	$	156,336	$	150,927
Expenses
Administrative and general expenses	$	39,803	$	29,853
Interest expense		-		21,281
Total expenses	$	39,803	$	51,134

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

EXECUTIVE SUMMARY

The following discussion highlights some of our achievements and significant issues affecting us this past quarter. Please refer to the Financial and Operating Results section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Financial Statements for a complete explanation of the following items. In April 2006, we completed the acquisition and consolidated certain companies comprising ONEOK’s former gathering and processing, natural gas liquids, and pipelines and storage segments (collectively, the ONEOK Energy Assets) in a series of transactions (collectively, the ONEOK Transactions); consolidated Guardian Pipeline as a result of the acquisition of the 66-2/3 percent interest in Guardian Pipeline not previously owned by us; and deconsolidated Northern Border Pipeline as a result of the disposition of a 20 percent partnership interest. Each of these transactions was accounted for retroactive to January 1, 2006, and accordingly, the comparative financial statements for the quarter ended March 31, 2006 have been restated.

We declared an increase in our cash distribution to $0.98 per unit in January 2007, an increase of approximately 23 percent over the $0.80 paid in the first quarter of 2006. In April 2007, we declared an increase in our cash distribution to $0.99 per unit ($3.96 per unit on an annualized basis), an increase of approximately 13 percent over the $0.88 paid in the second quarter of 2006.

Net income per unit increased to $1.00 for the three months ended March 31, 2007, compared with $0.67 in 2006.

Operating income for the first quarter of 2007 was $104.4 million, an increase of $4.2 million, or 4 percent, from the same period in 2006 primarily due to our Natural Gas Liquids segment benefiting from higher product price spreads between Mont Belvieu, Texas, and Conway, Kansas; higher isomerization price spreads; wider price spreads between ethane and propane; and increased natural gasoline sales used in the production of ethanol fuel. These increases were partially offset by decreased operating income in our Gathering and Processing segment primarily due to lower realized commodity prices on our percentage of proceeds (POP) contracts and lower volumes processed due to the anticipated contract terminations at certain processing facilities.

SIGNIFICANT ACQUISITIONS AND DIVESTITURES

ONEOK Transactions - In April 2006, we completed the acquisition of the ONEOK Energy Assets, from ONEOK, the parent company of our general partner, as described below.

Acquisition of ONEOK Energy Assets - We acquired the ONEOK Energy Assets for approximately $3 billion, including $1.35 billion in cash, before adjustments, and approximately 36.5 million Class B limited partner units. The Class B limited partner units and the related general partner interest contribution were valued at approximately $1.65 billion. ONEOK now owns approximately 37.0 million of our limited partner units which, when combined with its general partner interest, increased its total interest in us to approximately 45.7 percent. We also used $1.05 billion drawn under our $1.1 billion, 364-day credit agreement (the Bridge Facility), coupled with the proceeds from the sale of a 20 percent partnership interest in Northern Border Pipeline, to finance the transaction. The assets were recorded at historical cost rather than at fair value since these transactions were between affiliates under common control. These assets and their related operations are included in our consolidated financial statements retroactive to January 1, 2006.

Equity Issuance - In connection with the ONEOK Transactions, we amended our Partnership Agreement to provide for the issuance of Class B limited partner units and issued approximately 36.5 million Class B limited partner units to ONEOK. The Class B limited partner units were issued on April 6, 2006. As of April 7, 2007, the Class B limited partner units are no longer subordinated to distributions on our common units and generally have the same voting rights as our common units.

If the proposed amendments to our Partnership Agreement are approved by the common unitholders at the May 10, 2007, meeting, the Class B limited partner units will automatically convert into common units on a one-for-one basis and the Class B limited partner units will no longer be outstanding. Effective as of April 7, 2007, the Class B limited partner units are entitled to increased quarterly distributions and to distributions upon liquidation equal to 110 percent of the distributions paid with respect to common units. If our common unitholders approve the amendments on May 10, 2007, these increased distribution rights will be eliminated after that date. In addition, if our common unitholders do not approve the proposed amendments, and our common unitholders vote at any time prior to the approval of the proposed amendments to remove ONEOK or its affiliates as our general partner, quarterly distributions payable on Class B limited partner units would increase to 123.5 percent of the distributions payable with respect to the common units, and distributions payable upon liquidation of the Class B limited partner units would increase to 125 percent of the distributions payable with respect to the common units.

Purchase and Sale of General Partner Interest - In April 2006, ONEOK acquired ONEOK NB, formerly known as Northwest Border Pipeline Company, an affiliate of TransCanada that held a 0.35 percent general partner interest in us. As a result, ONEOK now owns our entire 2 percent general partner interest and controls us.

Disposition of 20 Percent Partnership Interest in Northern Border Pipeline - In April 2006, we completed the sale of a 20 percent partnership interest in Northern Border Pipeline to TC PipeLines for approximately $297 million to help finance the acquisition of the ONEOK Energy Assets. We recorded a gain on the sale of approximately $113.9 million in the second quarter of 2006. We and TC PipeLines each now own a 50 percent interest in Northern Border Pipeline and an affiliate of TransCanada became the operator of the pipeline in April 2007. Effective January 1, 2006, our interest in Northern Border Pipeline is accounted for as an investment under the equity method.

Acquisition of Guardian Pipeline Interests - In April 2006, we acquired the 66-2/3 percent interest in Guardian Pipeline not previously owned by us for approximately $77 million, increasing our ownership to 100 percent. We used borrowings from our credit facility to fund the acquisition of the additional interest in Guardian Pipeline. Guardian Pipeline is consolidated in our consolidated financial statements and reported in our Interstate Natural Gas Pipelines segment as of January 1, 2006.

CAPITAL PROJECTS

Overland Pass Pipeline - In May 2006, we entered into an agreement with a subsidiary of The Williams Companies, Inc. (Williams) to form a joint venture called Overland Pass Pipeline Company. Overland Pass Pipeline Company will build a 750-mile natural gas liquids pipeline from Opal, Wyoming, to the Mid-Continent natural gas liquids market center in Conway, Kansas. The pipeline will be designed to transport approximately 110,000 Bbl/d of NGLs, which can be increased to approximately 150,000 Bbl/d with additional pump facilities. As the 99 percent owner of the joint venture, we will manage the construction project, advance all costs associated with construction and operate the pipeline. Within two years of the pipeline becoming operational, Williams will have the option to increase its ownership up to 50 percent by reimbursing us for its proportionate share of all construction costs. If Williams exercises its option to increase its ownership to the full 50 percent, Williams would have the option to become operator. This project requires the approval of various state and federal regulatory authorities. Assuming Overland Pass Pipeline Company obtains the required regulatory approvals, we currently expect construction of the pipeline to begin in the fall of 2007, with start up scheduled for early 2008.

Piceance Lateral Pipeline - In March 2007, we announced that Overland Pass Pipeline Company plans to construct a 150-mile lateral pipeline to transport as much as 100,000 Bbl/d of NGLs from the Piceance Basin in Colorado to the Overland Pass Pipeline. Williams announced that it intends to construct a new natural gas processing plant in the Piceance Basin and will dedicate its NGL production from that plant and an existing plant to be delivered into the lateral pipeline. This project requires the approval of various state and federal regulatory authorities. Assuming we obtain the required regulatory approval, we currently expect construction of this lateral pipeline to begin in the summer of 2008 and be completed in early 2009, at a current cost estimate of approximately $120 million, excluding AFUDC.

Arbuckle Pipeline Natural Gas Liquids Pipeline Project - In March 2007, we announced plans to build the 440-mile Arbuckle Pipeline, a natural gas liquids pipeline from southern Oklahoma through northern Texas and continuing on to the Texas Gulf Coast, at a cost of $260 million, excluding AFUDC. The Arbuckle Pipeline will have the capacity to transport 160,000 Bbl/d of raw natural gas liquids and will interconnect with our existing Mid-Continent infrastructure and our fractionation facility in Mont Belvieu, Texas, and other Gulf Coast-area fractionators. The expansion project is expected to be complete by early 2009.

Williston Basin Gas Processing Plant Expansion - In March 2007, we announced the expansion of our Grasslands natural gas processing facility in North Dakota at a cost of $30 million, excluding AFUDC. The Grasslands facility is our largest natural gas processing plant in the Williston Basin. The expansion will increase processing capacity to approximately 100 MMcf/d from its current capacity of 63 MMcf/d as well as increasing fractionation capacity to approximately 10,000 Bbl/d. The expansion project will come on line in phases starting in the summer of 2007 through the first quarter of 2008.

Fort Union Gas Gathering Expansion Project - In January 2007, our Crestone Powder River, L.L.C. subsidiary announced that Fort Union Gas Gathering will double its existing gathering pipeline capacity by adding 148 miles of new gathering lines and 649 MMcf/d of additional capacity in the Powder River basin. The expansion is expected to cost approximately $110 million, excluding AFUDC, which will be project financed within the Fort Union Gas Gathering partnership and will occur in two phases, with 240 MMcf/d expected to be in service by the fourth quarter of 2007 and 409 MMcf/d by the first quarter of 2008. The additional capacity has been fully subscribed for 10 years beginning with the in-service date of the expansion. Crestone Powder River, L.L.C. owns approximately 37 percent of Fort Union Gas Gathering.

Guardian Pipeline Expansion and Extension Project - In October 2006, Guardian Pipeline filed its application for a certificate of public convenience and necessity with the FERC for authorization to construct and operate approximately 110 miles of new mainline pipe, two compressor stations, seven meter stations and other associated facilities. The pipeline expansion will extend Guardian Pipeline from the Milwaukee, Wisconsin, area to the Green Bay, Wisconsin, area. The project is supported by long-term shipper commitments. The cost of the project is estimated to be $250 million, excluding AFUDC, with a targeted in-service date of November 2008.

Midwestern Gas Transmission Eastern Extension Project - In March 2006, Midwestern Gas Transmission accepted the certificate of public convenience and necessity issued by the FERC for its Eastern Extension Project. An organization which is opposed to, and includes landowners affected by, the project filed a request for rehearing and for a stay of the March 2006 Order. In August 2006, the FERC denied those requests. The Eastern Extension Project will add 31 miles of pipeline with 120 MDth/d (approximately 120 MMcf/d) of transportation capacity with total capital expenditures estimated to be $41 million, excluding AFUDC. The proposed in-service date is the fourth quarter of 2007.

IMPACT OF NEW ACCOUNTING STANDARDS

Income Taxes - In June 2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109,” which was effective for our year beginning January 1, 2007. This interpretation was issued to clarify the accounting for uncertainty in income taxes recognized in the financial statements by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 requires the recognition of penalties and interest on any unrecognized tax benefits. Our policy is to reflect penalties and interest as part of income tax expense as they become applicable. We have no tax positions that would require establishment of a reserve under FIN 48.

We file numerous consolidated and separate income tax returns in the United States Federal jurisdiction and in many state jurisdictions. We also file returns in Canada. No returns are currently under audit and no extensions of statute of limitations have been granted.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amount of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Although we believe these estimates are reasonable, actual results could differ from our estimates.

Impairment of Long-Lived Assets, Goodwill and Intangible Assets - We assess our long-lived assets for impairment based on Statement 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” A long-lived asset is tested for impairment whenever events or changes in circumstances indicate that its carrying amount may exceed its fair value. Fair values are based on the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the assets.

We assess our goodwill and non-amortizing intangible assets for impairment at least annually, based on Statement 142, “Goodwill and Other Intangible Assets.” An initial assessment is made by comparing the fair value of the operations with goodwill, as determined in accordance with Statement 142, to the book value of each reporting unit. If the fair value is less than the book value, an impairment is indicated, and we must perform a second test to measure the amount of the impairment. In the second test, we would calculate the implied fair value of the goodwill by deducting the fair value of all tangible and intangible net assets of the operations with goodwill from the fair value determined in step one of the assessment. If the carrying value of the goodwill exceeds this calculated implied fair value of the goodwill, we would record an impairment charge. The amount of goodwill recorded on our Consolidated Balance Sheets as of March 31, 2007, and December 31, 2006, was $394.6 million.

Intangible assets with a finite useful life are amortized over their estimated useful life, while intangible assets with an indefinite useful life are not amortized. For intangible assets subject to amortization, we evaluate the remaining useful life of the assets annually to determine whether events and circumstances warrant a revision to the remaining period of amortization. The amount of intangible assets recorded on our Consolidated Balance Sheet as of March 31, 2007 is shown below.



	(Thousands of dollars)
Natural Gas Liquids	$	279,226
Pipelines and Storage		14,008
Total intangible assets	$	293,234

Our total unamortized excess cost over underlying fair value of net assets accounted for under the equity method was $185.6 million as of March 31, 2007, and December 31, 2006. Based on Statement 142, this amount, referred to as equity method goodwill, should continue to be recognized in accordance with APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Accordingly, we included this amount in investment in unconsolidated affiliates on our accompanying Consolidated Balance Sheets. Our equity method goodwill is not subject to amortization but rather to impairment testing pursuant to APB No. 18. The impairment test under APB No. 18 considers whether the fair value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. Therefore, we periodically reevaluate the amount at which we carry the excess of cost over fair value of net assets accounted for under the equity method to determine whether current events or circumstances warrant adjustments to our carrying value in accordance with APB Opinion No. 18.

We do not anticipate any goodwill or asset impairments to occur within the next year, but if such events were to occur over the long term, the impact could be significant to our financial condition and results of operations.

Contingencies - Our accounting for contingencies covers a variety of business activities, including contingencies for legal and environmental exposures. We accrue these contingencies when our assessments indicate that it is probable that a liability has been incurred or an asset will not be recovered and an amount can be reasonably estimated in accordance with Statement 5. We base our estimates on currently available facts and our estimates of the ultimate outcome or resolution. Actual results may differ from our estimates resulting in an impact, positive or negative, on earnings.

Additional information about our critical accounting estimates is included under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates,” in our Annual Report on Form 10-K for the year ended December 31, 2006.

FINANCIAL AND OPERATING RESULTS

Consolidated Operations

Selected Financial Information - The following table sets forth certain selected consolidated financial information for the periods indicated.


		Three Months Ended March 31,
Financial Results		2007		2006
		(Thousands of dollars)
Operating revenue	$	1,161,472	$	1,169,830
Cost of sales and fuel		956,325		968,135
Net margin		205,147		201,695
Operating costs		75,461		75,356
Depreciation and amortization		27,513		27,470
Gain on sale of assets		2,203		1,305
Operating income	$	104,376	$	100,174
Equity earnings from investments	$	24,055	$	31,641
Minority interests in income of consolidated subsidiaries	$	85	$	1,619

Operating Results - Consolidated operating income was $104.4 million for the three months ended March 31, 2007, respectively, compared with $100.2 million for the same period last year. Operating income increased primarily due to our Natural Gas Liquids segment benefiting from higher product price spreads between Mont Belvieu, Texas, and Conway, Kansas; higher isomerization price spreads; wider price spreads between ethane and propane; and increased natural gasoline sales used in the production of ethanol. These increases were partially offset by decreased operating income in our Gathering and Processing segment primarily due to lower realized pricing on our POP contracts and lower volumes due to the anticipated contract terminations at certain processing facilities.

Equity earnings from investments for the three months ended March 31, 2007 and 2006 primarily include earnings from our interest in Northern Border Pipeline. The decrease in equity earnings is primarily due to the decrease in our share of Northern Border Pipeline’s earnings from 70 percent in the first quarter of 2006 to 50 percent in the first quarter of 2007. See page 20 for discussion of the disposition of the 20 percent partnership interest in Northern Border Pipeline.

Minority interest in income of consolidated subsidiaries decreased for the three months ended March 31, 2007, compared with the same period in 2006, primarily due to Guardian Pipeline. Minority interest in income of consolidated subsidiaries for the three months ended March 31, 2006, included the 66-2/3 percent interest in Guardian Pipeline that we did not own until April 2006. We owned 100 percent of Guardian Pipeline beginning in April 2006, resulting in no minority interest in income of consolidated subsidiaries related to Guardian Pipeline for the three months ended March 31, 2007.

More information regarding our results of operations is provided in the following discussion of operating results for each of our segments.

Gathering and Processing

Overview - Our operations include gathering of natural gas production from crude oil and natural gas wells. We gather natural gas in the Mid-Continent region, which includes the Anadarko Basin of Oklahoma and the Hugoton and Central Kansas Uplift Basins of Kansas. We also gather natural gas in three producing basins in the Rocky Mountain region: (1) the Williston Basin, which spans portions of Montana, North Dakota and the Canadian province of Saskatchewan, (2) the Powder River Basin of Wyoming and (3) the Wind River Basin of Wyoming.

Through gathering systems, volumes are aggregated for removal of water vapor, solids and other contaminants and to extract NGLs in order to provide marketable natural gas, commonly referred to as residue gas. When the liquids are separated from the raw natural gas at the processing plants, the liquids are in the form of a mixed NGL stream. This mixed NGL stream is generally shipped to fractionators, where by applying heat and pressure, the raw NGL stream is separated into marketable products, such as ethane/propane mix, propane, iso-butane, normal butane and natural gasoline (collectively, NGL products). These NGL products can then be stored, transported and marketed to a diverse customer base.

Selected Financial and Operating Information - The following tables set forth certain selected financial and operating results for our Gathering and Processing segment for the periods indicated.


		Three Months Ended March 31,
Financial Results		2007		2006
		(Thousands of dollars)
Natural gas liquids and condensate sales	$	130,076	$	149,617
Gas sales		158,700		221,542
Gathering, compression, dehydration and processing fees and other revenue		34,105		29,582
Cost of sales and fuel		249,514		312,125
Net margin		73,367		88,616
Operating costs		33,990		31,503
Depreciation and amortization		11,122		10,567
Gain on sale of assets		2,197		306
Operating income	$	30,452	$	46,852
Equity earnings from investments	$	5,608	$	5,422

		Three Months Ended March 31,
Operating Information		2007		2006
Total gas gathered (BBtu/d)		1,168		1,145
Total gas processed (BBtu/d)		609		931
Natural gas liquids sales (MBbl/d)		37		41
Natural gas liquids produced (MBbl/d)		39		51
Natural gas sales (BBtu/d)		268		308
Capital expenditures (Thousands of dollars)	$	17,858	$	7,817
Realized composite NGL sales price ($/gallon)	$	0.82	$	0.87
Realized condensate sales price ($/Bbl)	$	56.53	$	57.67
Realized natural gas sales price ($/MMBtu)	$	6.58	$	7.99
Realized gross processing spread ($/MMBtu)	$	3.59	$	3.43


		Three Months Ended March 31,
		2007			2006
Keep-whole
NGL shrink (MMBtu/d)		22,018			40,968
Plant fuel (MMBtu/d)		2,689			5,144
Condensate shrink (MMBtu/d)		2,215			3,403
Condensate sales (Bbl/d)		448			699
Percentage of total net margin		6	%		11	%
Percent of proceeds
Wellhead purchases (MMBtu/d)		90,636			129,813
NGL sales (Bbl/d)		6,095			6,932
Residue sales (MMBtu/d)		30,294			28,334
Condensate sales (Bbl/d)		1,122			1,093
Percentage of total net margin		61	%		62	%
Fee-based
Wellhead volumes (MMBtu/d)		1,167,714			1,144,677
Average rate ($/MMBtu)	$	0.24		$	0.23
Percentage of total net margin		33	%		27	%

Operating Results - Our Gathering and Processing segment reported operating income of $30.5 million for the three months ended March 31, 2007, compared with $46.9 million for the same period last year primarily due to decreases in net margin.

Net margin decreased $15.2 million for the three months ended March 31, 2007, compared with the same period last year, primarily due to:

•

a decrease of $11.2 million in lower realized commodity prices on our POP contracts,

•

a decrease of $7.0 million from lower volumes processed primarily due to the anticipated contract terminations at certain processing facilities, and

•

a decrease of $1.0 million in weather-related outages caused by winter storms in the Mid-Continent region, partially offset by

•

an increase of $4.1 million in improved contractual terms in our gathering business.

Operating costs increased primarily due to increased employee-related expenses in the first quarter of 2007.

The increase in capital expenditures for 2007, compared with 2006 is driven primarily by our capital projects which are discussed beginning on page 20.

The first-quarter 2007 realized gross processing spread was $3.59 per MMBtu for 2007, compared with $3.43 per MMBtu for the same period in 2006. Based on current market conditions, the gross processing spread for the remainder of 2007 is expected to be above the five-year average, which is $2.55 per MMBtu. We currently have 6,391 MMBtu/d of our gross processing spread hedged for the remainder of 2007 at $2.98 per MMBtu. See further discussion beginning on page 34 under “Commodity Price Risk” in Item 3, Quantitative and Qualitative Disclosures about Market Risk.

Natural Gas Liquids

Overview - Our Natural Gas Liquids segment gathers, stores, fractionates and treats raw NGLs produced by natural gas processing plants located in Oklahoma, Kansas and the Texas panhandle. We connect the NGL production basins in Oklahoma, Kansas and the Texas panhandle with the key NGL market centers in Conway, Kansas and Mont Belvieu, Texas.

Most natural gas produced at the wellhead contains a mixture of NGL components such as ethane, propane, iso-butane, normal butane and natural gasoline. Natural gas processing plants remove the NGLs from the natural gas stream to realize the higher economic value of the NGLs and to meet natural gas pipeline quality specifications, which limit NGLs in the natural gas stream due to liquid and Btu content. The NGLs that are separated from the natural gas stream at the natural gas processing plants remain in a mixed, raw form until they are gathered, primarily by pipeline, and delivered to our fractionators. A fractionator, by applying heat and pressure, separates the raw NGL stream into marketable products, such as ethane/propane mix, propane, iso-butane, normal butane and natural gasoline (collectively, NGL products). These NGL products are then stored and/or distributed to our customers, such as petrochemical plants, heating fuel users and motor gasoline manufacturers.

Selected Financial and Operating Information - The following tables set forth certain selected financial and operating results for our Natural Gas Liquids segment for the periods indicated.


		Three Months Ended March 31,
Financial Results		2007		2006
		(Thousands of dollars)
Natural gas liquids and condensate sales	$	798,998	$	779,828
Storage and fractionation revenue		61,934		39,595
Cost of sales and fuel		808,877		785,681
Net margin		52,055		33,742
Operating costs		14,726		11,224
Depreciation and amortization		5,332		5,399
Gain on sale of assets		1		6
Operating income	$	31,998	$	17,125
Equity earnings from investments	$	279	$	(172	)

		Three Months Ended March 31,
Operating Information		2007		2006
Natural gas liquids gathered (MBbl/d)		210		193
Natural gas liquids sales (MBbl/d)		220		208
Natural gas liquids fractionated (MBbl/d)		319		281
Capital expenditures (Thousands of dollars)	$	7,476	$	2,954

Operating Results - Our Natural Gas Liquids segment reported operating income of $32.0 million for the three months ended March 31, 2007, compared with $17.1 million for the same period last year primarily due to an increase in exchange volumes and higher optimization net margin as a result of improved price spreads and higher volumes.

Net margin increased $18.3 million for the three months ended March 31, 2007, compared with the same period last year due to the following:

•

$11.3 million due to higher product price spreads between Mont Belvieu, Texas, and Conway, Kansas; higher isomerization price spreads; wider price spreads between ethane and propane; and increased natural gasoline sales used in the production of ethanol fuel,

•

$4.7 million due to higher exchange net margin primarily driven by increased volumes due to new supply connections and improved natural gas processing economics, and

•

$2.3 million due to new storage contracts entered into in the second quarter of 2006 and our acquisition of the Mont Belvieu storage business in the fourth quarter of 2006, which both positively impacted first quarter 2007.

The Conway-to-Mont Belvieu OPIS average spread for the first quarter of 2007 for ethane/propane mix was $0.0567 per gallon, compared with $0.0346 per gallon during the same period in 2006.

Operating costs increased primarily due to employee-related costs and general taxes as well as the acquisition of the Mont Belvieu storage business in the fourth quarter of 2006.

The increase in capital expenditures for 2007, compared with 2006, is driven primarily by our growth activities for new supply connections. See discussion of our growth activities beginning on page 20.

Pipelines and Storage

Overview - Our Pipelines and Storage segment operates intrastate natural gas transmission pipelines, natural gas storage facilities, regulated natural gas liquids gathering and distribution pipelines, and non-processable natural gas gathering facilities. We also provide interstate natural gas transportation and storage service in accordance with Section 311(a) of the Natural Gas Policy Act.

In Oklahoma, we have access to the major natural gas producing areas and transport natural gas and NGLs throughout the state. We also have access to the major natural gas producing area in south central Kansas. In Texas, we are connected to the major natural gas producing areas in the Texas panhandle and the Permian Basin, and transport natural gas to the Waha Hub,

where other pipelines may be accessed for transportation east to the Houston Ship Channel market, north into the Mid-Continent market and west to the California market. Our natural gas liquids gathering connections deliver raw NGLs gathered in Oklahoma, Kansas and the Texas panhandle to our fractionation facilities and to our natural gas liquids distribution pipelines, which provide access to two of the main NGL market centers in Conway, Kansas and Mont Belvieu, Texas.

Selected Financial and Operating Information - The following tables set forth certain selected financial and operating results for our Pipelines and Storage segment for the periods indicated.


		Three Months Ended March 31,
Financial Results		2007		2006
		(Thousands of dollars)
Transportation and gathering revenue	$	48,787	$	45,815
Storage revenue		12,493		12,144
Gas sales and other revenue		2,608		4,953
Cost of sales and fuel		9,193		10,791
Net margin		54,695		52,121
Operating costs		18,860		16,790
Depreciation and amortization		7,777		7,583
Gain on sale of assets		5		993
Operating income	$	28,063	$	28,741
Equity earnings from investments	$	128	$	244
Minority interest in income of consolidated subsidiaries	$	85	$	138

		Three Months Ended March 31,
Operating Information		2007		2006
Natural gas transported (MMcf/d)		1,571		1,473
Natural gas liquids transported (MBbl/d)		205		193
Natural gas liquids gathered (MBbl/d)		71		55
Capital expenditures (Thousands of dollars)	$	35,778	$	3,576
Average natural gas price
Mid-Continent region ( $/MMBtu )	$	6.29	$	7.23

Operating Results - Our Pipelines and Storage segment reported operating income of $28.1 million for the three months ended March 31, 2007, compared with $28.7 million for the same period last year. Net margin increased $2.6 million for the three months ended March 31, 2007, compared with the same period last year. Our natural gas liquids gathering and distribution pipelines contributed $2.9 million of the net margin increase as a result of increased throughput from new connections and increased volume transported between Conway, Kansas, and Mont Belvieu, Texas, net with related costs.

Operating costs increased primarily related to increased employee-related costs and general taxes.

The increase in capital expenditures for 2007, compared with 2006 is driven primarily by our capital projects, which are discussed beginning on page 20.

Interstate Natural Gas Pipelines

Overview - Our Interstate Natural Gas Pipelines segment, which transports natural gas primarily from the western Canada Sedimentary Basin to the Midwestern United States along approximately 1,270 miles of pipelines with a design capacity of approximately 2.0 Bcf/d, consists of our regulated interstate natural gas transmission pipelines, which are:

•

Guardian Pipeline,

•

Midwestern Gas Transmission,

•

Viking Gas Transmission,

•

OkTex Pipeline, and

•

a 50 percent interest in Northern Border Pipeline.

Operating revenue for this segment is derived from transportation contracts at rates that are stated in our FERC-regulated tariffs. Tariffs specify the maximum rates we can charge our customers and the general terms and conditions for natural gas transportation service on our pipelines. Our pipelines’ tariffs also allow for services to be provided under negotiated and discounted rates. Transportation rates are established periodically in FERC proceedings known as a rate case. Our transportation contracts include specifications regarding the receipt and delivery of natural gas at points along the pipeline systems. The type of transportation contract, either firm or interruptible service, determines the basis by which each customer is charged.

Selected Financial and Operating Information - The following tables set forth certain selected financial and operating results for our Interstate Natural Gas Pipelines segment for the periods indicated.


		Three Months Ended March 31,
Financial Results		2007		2006
		(Thousands of dollars)
Transportation revenue	$	23,581	$	25,554
Cost of sales		-		-
Net margin		23,581		25,554
Operating costs		7,392		8,738
Depreciation and amortization		3,255		3,749
Operating income	$	12,934	$	13,067
Equity earnings from investments	$	18,040	$	26,147
Minority interest in income of consolidated subsidiaries	$	-	$	1,481

		Three Months Ended March 31,
Operating Information (a)		2007		2006
Natural gas transported (MMcf/d)		1,028		1,051
Natural gas average throughput (MMcf/d)		1,040		1,065
Capital expenditures (Thousands of dollars)	$	16,739	$	3,004

(a)	Includes volumes for consolidated entities only.

Operating Results - Our Interstate Natural Gas Pipelines segment reported operating income of $12.9 million for the three months ended March 31, 2007, compared with $13.1 million for the same period last year.

Transportation revenue decreased $2.0 million for the three months ended March 31, 2007, compared with the same period last year primarily due to lower throughput on Midwestern Gas Transmission.

Equity earnings from investments for the three months ended March 31, 2007 and 2006 primarily include earnings from our interest in Northern Border Pipeline. The decrease in equity earnings of $8.1 million is primarily due to the decrease in our share of Northern Border Pipeline’s earnings from 70 percent in the first quarter of 2006 to 50 percent in the first quarter of 2007. See page 20 for discussion of the disposition of the 20 percent partnership interest in Northern Border Pipeline.

The increase in capital expenditures for 2007, compared with 2006 is driven primarily by our capital projects, which are discussed beginning on page 20.

LIQUIDITY AND CAPITAL RESOURCES

General - Our principal sources of liquidity include cash generated from operating activities, bank credit facilities, debt issuances and the sale of limited partner units. We fund our operating expenses, debt service and cash distributions to our limited partners and general partner primarily with operating cash flow.

Part of our growth strategy is to expand our existing businesses and strategically acquire related businesses that strengthen and complement our existing assets. Capital resources for acquisitions and maintenance and growth expenditures may be funded by a variety of sources, including those listed above as our principal sources of liquidity. Our ability to access capital markets for debt and equity financing under reasonable terms depends on our financial condition, credit ratings and market conditions. During the three months ended March 31, 2007 and 2006, our capital expenditures were financed through operating cash flows and short- and long-term debt. Capital expenditures for the first three months of 2007 were $77.9 million, compared with $17.7 million for the same period in 2006, exclusive of acquisitions. The increase in capital expenditures for 2007 compared with 2006 is driven primarily by our capital projects, which are discussed beginning on page 20.

We believe that our ability to obtain financing and our history of consistent cash flow from operating activities provide a solid foundation to meet our future liquidity and capital resource requirements.

Financing - Financing is provided through available cash, our amended and restated five-year revolving credit agreement (2007 Partnership Credit Agreement) and long-term debt. Other options to obtain financing include, but are not limited to, issuance of limited partner units, issuance of hybrid securities such as any trust preferred security or deferrable interest subordinated debt issued by us or any business trusts and sale/leaseback of facilities.

The total amount of short-term borrowings authorized by our general partner’s Board of Directors is $1.5 billion. At March 31, 2007, we had $10 million in letters of credit issued, no borrowings outstanding under the 2007 Partnership Credit Agreement and available cash and short-term investments of approximately $95.7 million. Additionally, we had no borrowings drawn under the $10 million Guardian Pipeline revolving credit agreement. The Guardian Pipeline revolving credit agreement terminates in November 2007. As of March 31, 2007, we could have issued $1.7 billion of additional debt under the most restrictive provisions contained in our various borrowing agreements.

Our 2007 Partnership Credit Agreement and Guardian Pipeline’s revolving note agreement contain typical covenants as discussed in Note E of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Note E of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2006. At March 31, 2007, we were in compliance with all covenants.

Equity Issuance - In connection with the ONEOK Transactions, we amended our Partnership Agreement to provide for the issuance of Class B limited partner units and issued approximately 36.5 million Class B limited partner units to ONEOK. The Class B limited partner units were issued on April 6, 2006.

At a special meeting of the holders of common units on March 29, 2007, the unitholders approved a proposal to permit the conversion of the Class B limited partner units issued in the ONEOK Transactions into common units at the option of the Class B unitholder. The March 29, 2007 special meeting was adjourned to May 10, 2007 to allow unitholders additional time to vote on a proposal to approve certain amendments to our Partnership Agreement. The proposed amendments to our Partnership Agreement would grant voting rights for units held by our general partner and its affiliates if a vote is held to remove our general partner and require fair market value compensation for the general partner interest if the general partner is removed.

If the proposed amendments to our Partnership Agreement are approved by the common unitholders at the May 10, 2007 meeting, the Class B limited partner units will automatically convert into common units on a one-for-one basis and the Class B limited partner units will no longer be outstanding. Effective April 7, 2007, the Class B limited partner units are entitled to increased quarterly distributions and to distributions upon liquidation equal to 110 percent of the distributions paid with respect to common units. If our common unitholders approve the amendments on May 10, 2007, these increased distribution rights will be eliminated after that date. In addition, if our common unitholders do not approve the proposed amendments, and our common unitholders vote at any time prior to the approval of the proposed amendments to remove ONEOK or its affiliates as our general partner, quarterly distributions payable on Class B limited partner units would increase to 123.5 percent of the distributions payable with respect to the common units, and distributions payable upon liquidation of the Class B limited partner units would increase to 125 percent of the distributions payable with respect to the common units.

Capitalization Structure - The following table sets forth our capitalization structure for the periods indicated.

Credit Ratings - Our credit ratings as of March 31, 2007, are shown in the table below.


Rating Agency	Rating	Outlook
Moody’s	Baa2	Stable
S&P	BBB	Stable

Our credit ratings may be affected by a material change in our financial ratios or a material event affecting our business. The most common criteria for assessment of our credit ratings are the debt to EBITDA ratio, interest coverage, business risk profile and liquidity. If our credit ratings were downgraded, the interest rates on the 2007 Partnership Credit Agreement borrowings would increase, resulting in an increase in our cost to borrow funds.

Our $250 million and $225 million long-term notes payable, due 2010 and 2011, respectively, contain provisions that require us to offer to repurchase the senior notes at par value if either our Moody’s or S&P credit ratings falls below investment grade (Baa3 for Moody’s and BBB- for S&P) and the investment grade ratings are not reinstated within a period of 40 days. Further, the indentures governing our senior notes due 2010 and 2011 include an event of default upon acceleration of other indebtedness of $25 million or more and the indentures governing our senior notes due 2012, 2016 and 2036 include an event of default upon the acceleration of other indebtedness of $100 million or more that would be triggered by such an offer to repurchase. Such an event of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding senior notes due 2010, 2011, 2012, 2016 and 2036 to declare those notes immediately due and payable in full. We may not have sufficient cash on hand to repurchase and repay any accelerated senior notes, which may cause us to borrow money under our credit facilities or seek alternative financing sources to finance the repurchases and repayment. We could also face difficulties accessing capital or our borrowing costs could increase, impacting our ability to obtain financing for acquisitions or capital expenditures, to refinance indebtedness and to fulfill our debt obligations. A decline in our credit rating below investment grade may also require us to provide security to our counterparties in the form of cash, letters of credit or other negotiable instruments.

Other than the note repurchase obligations described above, we have determined that we do not have significant exposure to rating triggers in various other contracts and equipment leases. Rating triggers are defined as provisions that would create an automatic default or acceleration of indebtedness based on a change in our credit rating. Our credit agreements contain provisions that would cause the cost to borrow funds to increase if our credit rating is negatively adjusted. An adverse rating change is not defined as a default of our credit agreements.

Capital Expenditures - We classify expenditures that are expected to generate additional revenue or significant operating efficiencies as growth capital expenditures. Any remaining capital expenditures are classified as maintenance capital expenditures. The following table summarizes our 2007 projected growth and maintenance capital expenditures excluding AFUDC.


2007 Projected Capital Expenditures	Growth		Maintenance		Total
	(Millions of dollars)
Gathering and Processing	$	91	$	22	$	113
Natural Gas Liquids		134		17		151
Pipelines and Storage		421		16		437
Interstate Natural Gas Pipelines		113		10		123
Total projected capital expenditures	$	759	$	65	$	824

Additional information about these projects is included under “Capital Projects” beginning on page 20. Financing for these projects may include borrowing under the 2007 Partnership Credit Agreement.

Cash Distributions - We distribute 100 percent of our available cash, which generally consists of all cash receipts less adjustments for cash disbursements and net change to reserves, to our general and limited partners. Our income is allocated

to our general partner and limited partners according to their partnership percentages of 2 percent and 98 percent, respectively, after the effect of any incremental income allocations for incentive distributions to our general partner.

For the three months ended March 31, 2007 and 2006, we paid $81.2 million and $37.1 million to our common and Class B unitholders, respectively. We also paid our general partner $12.4 million and $2.8 million for its general partner and incentive distribution interests, respectively.

In January 2007, we increased our cash distribution to $0.98 per unit for the fourth quarter of 2006, which was paid on February 14, 2007 to unitholders of record on January 31, 2007. In April 2007, we increased our cash distribution to $0.99 per unit for the first quarter of 2007. The distribution is payable May 14, 2007, to unitholders of record as of April 30, 2007.

ENVIRONMENTAL LIABILITIES

We are subject to multiple environmental laws and regulations affecting many aspects of our present and future operations, including air emissions, water quality, wastewater discharges, solid wastes and hazardous material and substance management. These laws and regulations generally require us to obtain and comply with a wide variety of environmental registrations, licenses, permits, inspections and other approvals. Failure to comply with these laws, regulations, permits and licenses may expose us to fines, penalties and/or interruptions in our operations that could be material to our results of operations. If an accidental leak or spill of hazardous materials occurs from our lines or facilities, in the process of transporting natural gas or NGLs, or at any facility that we own, operate or otherwise use, we could be held jointly and severally liable for all resulting liabilities, including investigation and clean-up costs, which could materially affect our results of operations and cash flows. In addition, emission controls required under the federal Clean Air Act and other similar federal and state laws could require unexpected capital expenditures at our facilities. We cannot assure that existing environmental regulations will not be revised or that new regulations will not be adopted or become applicable to us. Revised or additional regulations that result in increased compliance costs or additional operating restrictions, particularly if those costs are not fully recoverable from customers, could have a material adverse effect on our business, financial condition and results of operations.

Our expenditures for environmental evaluation and remediation to date have not been significant in relation to our results of operations, and there were no material effects upon earnings during the three months ended March 31, 2007 or 2006 related to compliance with environmental regulations.

CASH FLOW ANALYSIS

Operating Cash Flows - Operating cash flows increased by $10.7 million for the three months ended March 31, 2007, compared with the same period in 2006. This increase was primarily due to a decrease in income taxes as a result of our consolidation of the ONEOK Energy Assets, as of January 1, 2006, which were previously owned by a taxable entity. This increase in cash flows was partially offset by a $14.3 million decrease in distributions received from unconsolidated affiliates.

Investing Cash Flows - Cash used in investing activities was $74.3 million for 2007, compared with $37.6 million for 2006. The increased use of cash was primarily related to higher capital expenditures due to our ongoing capital projects.

Investing cash flows for 2006 also include the impact of the deconsolidation of Northern Border Pipeline and the consolidation of the ONEOK Energy Assets and Guardian Pipeline.

Financing Cash Flows - Cash used in financing activities was $99.7 million in 2007, compared with $226.8 million in 2006.

Cash distributions to our general and limited partners for the first quarter of 2007 were $93.7 million compared with $39.9 million in the same period in 2006, an increase of $53.8 million, due to the increased available cash following the ONEOK Transactions described in this section under “Significant Acquisitions and Developments.” We paid a cash distribution of $0.98 per unit during the first quarter of 2007, compared with the $0.80 per unit paid in the first quarter of 2006.

We reported cash flow retained by ONEOK of $176.9 million in 2006, which represented the cash flows generated during the first quarter of 2006 by the ONEOK Energy Assets prior to the ONEOK Transactions.

In March 2006, we borrowed $33 million under our 2006 Partnership Credit Agreement to redeem all of the outstanding Viking Gas Transmission Series A, B, C and D senior notes and paid a redemption premium of $3.6 million.

FORWARD-LOOKING STATEMENTS

Some of the statements contained and incorporated in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements relate to our anticipated financial performance, management’s plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this Quarterly Report on Form 10-Q identified by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast” or other similar phrases.

You should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

•

the effects of weather and other natural phenomena on our operations, demand for our services and energy prices;

•

competition from other United States and Canadian energy suppliers and transporters as well as alternative forms of energy;

•

the timing and extent of changes in commodity prices for natural gas, NGLs, electricity and crude oil;

•

impact on drilling and production by factors beyond our control, including the demand for natural gas and refinery-grade crude oil; producers’ desire and ability to obtain necessary permits; reserve performance; and capacity constraints on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities;

•

risks of trading and hedging activities as a result of changes in energy prices or the financial condition of our counterparties;

•

the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances;

•

our ability to acquire all necessary rights-of-way permits and consents in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct pipelines without labor or contractor problems;

•

our ability to control construction costs and completion schedules of our pipeline projects and other projects;

•

the ability to market pipeline capacity on favorable terms;

•

risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines which outpace new drilling;

•

the mechanical integrity of facilities operated;

•

the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, environmental compliance, authorized rates or recovery of gas costs;

•

the results of administrative proceedings and litigation, regulatory actions and receipt of expected clearances involving regulatory authorities or any other local, state or federal regulatory body, including the FERC;

•

actions by rating agencies concerning our credit ratings;

•

the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have no control;

•

our ability to access capital at competitive rates or on terms acceptable to us;

•

demand for our services in the proximity of our facilities;

•

the profitability of assets or businesses acquired by us;

•

the risk that material weaknesses or significant deficiencies in our internal control over financial reporting could emerge or that minor problems could become significant;

•

the impact and outcome of pending and future litigation;

•

our ability to successfully integrate the operations of the assets acquired from ONEOK with our current operations;

•

our ability to successfully transfer administrative functions of our interstate pipelines segment from Omaha to Tulsa;

•

performance of contractual obligations by our customers;

•

the uncertainty of estimates, including accruals;

•

our ability to control operating costs; and

•

acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’ or shippers’ facilities.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2006. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our quantitative and qualitative disclosures about market risk are consistent with those discussed in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2006.

INTEREST RATE RISK

General - We are subject to the risk of interest rate fluctuation in the normal course of business. We manage interest rate risk through the use of fixed rate debt, floating rate debt and, at times, interest rate swaps. Fixed rate swaps are used to reduce our risk of increased interest costs during periods of rising interest rates. Floating rate swaps are used to convert the fixed rates of long-term borrowings into short-term variable rates. At March 31, 2007, the interest rate on 92.6 percent of our long-term debt was fixed after considering the impact of interest rate swaps.

At March 31, 2007, a 100 basis point move in the annual interest rate on our variable-rate long-term debt would change our annual interest expense by $1.5 million before taxes. This 100 basis point change assumes a parallel shift in the yield curve. If interest rates changed significantly, we would take actions to manage our exposure to the change. Since a specific action and the possible effects are uncertain, no change has been assumed.


	(Millions of dollars)
Remainder of 2007	$	2.7
2008		3.7
2009		3.7
2010		3.7
2011		0.9
Thereafter		-

Total swap savings from the interest rate swaps and amortization of terminated swaps was $0.6 million for the three months ended March 31, 2007. The swaps are expected to net the following savings for the remainder of the year:

•

interest expense savings of $2.7 million related to the amortization of the swap value at termination, and

•

approximately $0.5 million in interest expense from the existing $150 million of swapped debt, based on LIBOR rates at March 31, 2007.

Total net swap savings for 2007 are expected to be $2.8 million, compared with the savings of $2.0 million in 2006.

COMMODITY PRICE RISK

Our Pipelines and Storage and Interstate Natural Gas Pipelines segments are exposed to commodity price risk because our intrastate and interstate pipelines collect natural gas from their customers for operations or as part of their fee for services provided. When the amount of natural gas consumed in operations by these pipelines differs from the amount provided by their customers, the pipelines must buy or sell natural gas, store or use natural gas from inventory, and are exposed to commodity price risk. At March 31, 2007, there were no hedges in place with respect to natural gas price risk from our intrastate and interstate pipeline operations.

Our Natural Gas Liquids segment is exposed to commodity price risk primarily as a result of NGLs in storage, spread risk associated with the relative values of the various components of the NGL stream and the relative value of NGL purchases at one location and sales at another location, known as basis risk. We have not entered into any hedges with respect to our NGL marketing activities.

Our Gathering and Processing segment is exposed to commodity price risk primarily as a result of receiving commodities in exchange for our services. Our primary exposures arise from the relative price differential between natural gas and NGLs with respect to our keep-whole processing contracts and the sale of natural gas, NGLs and condensate with respect to our POP contracts. To a lesser extent, we are exposed to the risk of price fluctuations and the cost of intervening transportation at various market locations. We use commodity fixed-price physical forwards and derivative contracts, including NYMEX-based futures and over-the-counter swaps to minimize earnings volatility related to natural gas, NGL and condensate price fluctuations.

We have reduced our gross processing spread exposure through a combination of physical and financial hedges. We utilize a portion of our POP equity natural gas as an offset, or natural hedge, to an equivalent portion of our keep-whole shrink requirements. We have effectively converted our spread risk to NGL commodity price risk, and we use financial instruments to hedge the sale of NGLs. Through this approach, we have reduced our gross processing spread exposure by 5,538 MMBtu/d (or 1,647 Bbl/d). The NGLs have been hedged at an average price of $0.79 per gallon in 2007. For 2008, we have converted the spread risk to NGLs commodity price risk on 1,796 MMBtu/d (or 559 Bbl/d). The NGLs have been hedged at an average price of $0.82 per gallon in 2008.

The following table sets forth our Gathering and Processing segment’s hedging information for the remainder of 2007 and for the year ending December 31, 2008.


	Nine Months Ending December 31, 2007
Product	Volumes Hedged			Average Price Per Unit		Volumes Hedged
Commodity Risk
Natural gas liquids (Bbl/d) (a)	2,692		$	0.85	($/gallon)	43	%
Spread Risk
Gross processing spread (MMBtu/d) (a)	6,391		$	2.98	($/MMBtu)	28	%
Natural gas liquids (Bbl/d) (a)	1,647	(b)	$	0.79	($/gallon)	24	%

(a) Hedged with fixed-priced swaps
(b) 5,538 MMBtu/d equivalent
	Year Ending December 31, 2008
Product	Volumes Hedged			Average Price Per Unit		Volumes Hedged
Commodity Risk
Natural gas liquids (Bbl/d) (a)	503		$	0.89	($/gallon)	8	%
Spread Risk
Natural gas liquids (Bbl/d) (a)	559	(b)	$	0.82	($/gallon)	9	%

(a) Hedged with fixed-price swaps

(b) 1,796 MMBtu/d equivalent

Our commodity price risk is estimated as a hypothetical change in the price of natural gas, NGLs and crude oil at March 31, 2007, excluding the effects of hedging. Our condensate sales are based on the price of crude oil. We estimate that a $1.00 per barrel increase in the price of crude oil would increase annual net margin by approximately $0.5 million. We estimate that a $0.01 per gallon increase in the composite price of NGLs would increase annual net margin by approximately $1.9 million. We estimate that a $0.10 per MMBtu increase in the price of natural gas would increase annual net margin by approximately $0.2 million. The above estimates of commodity price risk do not include any effects on demand for our services that might be caused by, or arise in conjunction with, price changes. For example, a change in the gross processing spread may cause ethane to be sold in the natural gas stream, impacting gathering and processing margins, NGL exchange margins, natural gas deliveries and NGL volumes shipped.

See Note C of the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information on our hedging activities.

ITEM 4.

CONTROLS AND PROCEDURES

Quarterly Evaluation of Disclosure Controls and Procedures - As of the end of the period covered by this report, our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) of ONEOK Partners GP, our general partner, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management of ONEOK Partners GP, including the officers of ONEOK Partners GP who are the equivalent of our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, they concluded that as of March 31, 2007, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting - We have not made any changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter ended March 31, 2007, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Additional information about our legal proceedings is included under Part I, Item 3, “Legal Proceedings,” in our Annual Report on Form 10-K for the year ended December 31, 2006.

Richard Manson v. Northern Plains Natural Gas Company, LLC, et. al. , Civil Action No. 1973-N, in the Court of Chancery of the State of Delaware in and for New Castle County. All payments under the settlement reached in this matter have been made by us and our insurer. This case has been formally concluded.

Praxair, Inc. v. ONEOK Field Services Company, et al. , District Court of Ellsworth County, Kansas, Case No. 04-C-17. The trial that had been scheduled for March 2007 has been continued and a new trial date has not yet been set.

ITEM 1A.

RISK FACTORS

Our investors should consider the risks set forth in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2006, that could affect us and our business. Although we have tried to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Investors should carefully consider the discussion of risks and the other information included or incorporated by reference in this Quarterly Report on Form 10-Q, including Forward-Looking Information, which is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not Applicable.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held a special annual meeting of unitholders on March 29, 2007 at which our unitholders approved a proposal to approve a change in the terms of our Class B limited partner units to permit the conversion of all outstanding Class B limited partner units into the same number of our common units and the issuance of additional common units in such amount upon such conversion (the “Conversion Proposal”), as follows:


	Votes For	Votes Against	Abstained
Conversion Proposal	25,229,937	2,066,969	557,811

In addition, at this meeting our unitholders approved a proposal to adjourn (“Adjournment Proposal”) the special meeting to 10:00 a.m. Central Daylight Time on Thursday, May 10, 2007 at ONEOK Plaza, 100 West Fifth Street, Tulsa, Oklahoma, as follows:


	Votes For	Votes Against	Abstained
Adjournment Proposal	23,782,695	3,523,511	548,607

The purpose of the adjournment is to allow for the solicitation of additional proxies in favor of a proposal to amend our existing Partnership Agreement to (a) permit our general partner and its affiliates to vote the limited partnership interests held by them in connection with any future proposal to remove the general partner, and (b) to provide for the payment of fair market value to the general partner for the general partner interest in all cases where the general partner is removed.

ITEM 5.

OTHER INFORMATION

Not Applicable.

ITEM 6.

EXHIBITS

The following exhibits are filed as part of this Quarterly Report on Form 10-Q:


Exhibit No.		Exhibit Description
10.1		Amended and Restated Revolving Credit Agreement dated March 30, 2007, among ONEOK Partners, L.P., as Borrower, the lenders from time to time party thereto, SunTrust Bank, as Administrative Agent, Wachovia Bank, National Association, as Syndication Agent, and BMO Capital Markets, Barclays Bank PLC, and Citibank, N.A., as Co-Documentation Agents.

31.1		Certification of John W. Gibson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Curtis L. Dinan pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of John W. Gibson pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)).

32.2		Certification of Curtis L. Dinan pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	ONEOK PARTNERS, L.P.
	By:	ONEOK Partners GP, L.L.C., its General Partner

Date: May 2, 2007	By:	/s/ Curtis L. Dinan

		Curtis L. Dinan
		Senior Vice President,
		Chief Financial Officer and Treasurer
		(Signing on behalf of the Registrant
		and as Principal Financial Officer)

Exhibit 10.1

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

dated as of March 30, 2007

among

ONEOK PARTNERS, L.P.,

as Borrower

THE LENDERS FROM TIME TO TIME PARTY HERETO,

SUNTRUST BANK,

as Administrative Agent

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agent

and

BMO CAPITAL MARKETS,

BARCLAYS BANK PLC,

and

CITIBANK, N.A.,

as Co-Documentation Agents

SUNTRUST ROBINSON HUMPHREY

(a division of SunTrust Capital Markets, Inc.)

and

WACHOVIA CAPITAL MARKETS, LLC,

as Co-Lead Arrangers and Book Managers

TABLE OF CONTENTS


			Page
ARTICLE I. DEFINITIONS; CONSTRUCTION			1
.	Section 1.1	Definitions	1
	Section 1.2.	Classifications of Loans and Borrowings	26
	Section 1.3.	Accounting Terms and Determination	26
	Section 1.4.	Terms Generally	26

ARTICLE II. AMOUNT AND TERMS OF THE COMMITMENTS			27
	Section 2.1.	General Description of Facilities	27
	Section 2.2.	Revolving Loans	27
	Section 2.3.	Procedure for Revolving Borrowings	27
	Section 2.4.	Swingline Commitment	28
	Section 2.5.	Funding of Borrowings	29
	Section 2.6.	Interest Elections	30
	Section 2.7.	Optional Reduction and Termination of Commitments	31
	Section 2.8.	Repayment of Loans	32
	Section 2.9.	Evidence of Indebtedness	32
	Section 2.10.	Prepayments	32
	Section 2.11.	Interest on Loans	33
	Section 2.12.	Fees	34
	Section 2.13.	Computation of Interest and Fees	35
	Section 2.14.	Inability to Determine Interest Rates	35
	Section 2.15.	Illegality	36
	Section 2.16.	Increased Costs	36
	Section 2.17.	Funding Indemnity	37
	Section 2.18.	Taxes	38
	Section 2.19.	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	39
	Section 2.20.	Letters of Credit	41
	Section 2.21.	Increase of Commitments; Additional Lenders	45
	Section 2.22.	Mitigation of Obligations	46

ARTICLE III. CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT			49
	Section 3.1.	Conditions To Effectiveness	49
	Section 3.2.	Each Credit Event	51
	Section 3.3.	Delivery of Documents	51

ARTICLE IV. REPRESENTATIONS AND WARRANTIES			51
	Section 4.1.	Existence; Power	51
	Section 4.2.	Organizational Power; Authorization	52
	Section 4.3.	Governmental Approvals; No Conflicts	52
	Section 4.4.	Financial Statements	52
	Section 4.5.	Litigation and Environmental Matters	52
	Section 4.6.	Compliance with Laws and Agreements	53

- i -


	Section 4.7.	Investment Company Act, Etc.	53
	Section 4.8.	Taxes	53
	Section 4.9.	Margin Regulations	53
	Section 4.10.	ERISA	53
	Section 4.11.	Ownership of Property	54
	Section 4.12.	Disclosure	54
	Section 4.13.	Labor Relations	54
	Section 4.14.	Subsidiaries	55
	Section 4.15.	Insolvency	55
	Section 4.16.	OFAC	55
	Section 4.17.	Patriot Act	55

ARTICLE V. AFFIRMATIVE COVENANTS			55
	Section 5.1.	Financial Statements and Other Information	55
	Section 5.2.	Notices of Material Events	57
	Section 5.3.	Existence; Conduct of Business	58
	Section 5.4.	Compliance with Laws, Etc.	58
	Section 5.5.	Payment of Obligations	58
	Section 5.6.	Books and Records	58
	Section 5.7.	Visitation, Inspection, Etc.	58
	Section 5.8.	Maintenance of Properties; Insurance	59
	Section 5.9.	Use of Proceeds and Letters of Credit	59
	Section 5.10.	Pari Passu Status	59
	Section 5.11.	Maintenance of Tax Status	59

ARTICLE VI. FINANCIAL COVENANTS			59
	Section 6.1.	Leverage Ratio	59

ARTICLE VII. NEGATIVE COVENANTS			60
	Section 7.1.	Indebtedness; Preferred Interests.	60
	Section 7.2.	Negative Pledge	61
	Section 7.3.	Fundamental Changes	61
	Section 7.4.	Investments, Loans, Etc.	62
	Section 7.5.	Restricted Payments	63
	Section 7.7.	Transactions with Affiliates	64
	Section 7.8.	Restrictive Agreements	64
	Section 7.9.	Government Regulations	64
	Section 7.10.	Hedging Transactions	64
	Section 7.11.	Accounting Changes	64
	Section 7.12.	Restrictions on Agreements Governing Indebtedness	64
	Section 7.13.	Certain Amendments to Cash Distribution Policies and Partnership Agreements	65

ARTICLE VIII. EVENTS OF DEFAULT			65
	Section 8.1.	Events of Default	65

- ii -


ARTICLE IX. THE ADMINISTRATIVE AGENT			68
	Section 9.1.	Appointment of Administrative Agent	68
	Section 9.2.	Nature of Duties of Administrative Agent	68
	Section 9.3.	Lack of Reliance on the Administrative Agent	69
	Section 9.4.	Certain Rights of the Administrative Agent	69
	Section 9.5.	Reliance by Administrative Agent	70
	Section 9.6.	The Administrative Agent in its Individual Capacity	70
	Section 9.7.	Successor Administrative Agent	70
	Section 9.8.	Authorization to Execute other Loan Documents	71
	Section 9.9.	Syndication Agent and Co-Documentation Agents	71

ARTICLE X. MISCELLANEOUS			71
	Section 10.1.	Notices	71
	Section 10.2.	Waiver; Amendments	73
	Section 10.3.	Expenses; Indemnification	74
	Section 10.4.	Successors and Assigns	76
	Section 10.5.	Governing Law; Jurisdiction; Consent to Service of Process	79
	Section 10.6.	Waiver of Jury Trial	80
	Section 10.7.	Right of Setoff	80
	Section 10.8.	Counterparts; Integration	81
	Section 10.9.	Survival	81
	Section 10.10.	Severability	81
	Section 10.11.	Confidentiality	82
	Section 10.12.	Interest Rate Limitation	82
	Section 10.13.	Waiver of Effect of Seal	82
	Section 10.14.	Patriot Act	82
	Section 10.15.	No General Partner Liability	83
	Section 10.16.	Amendment and Restatement	83

- iii -

SCHEDULES


Schedule I	–	Applicable Margin and Applicable Percentage
Schedule II	–	Commitment Amounts
Schedule 4.5(b)	–	Environmental Matters
Schedule 4.14	–	Subsidiaries
Schedule 7.2	–	Existing Liens
Schedule 7.4	–	Existing Investments
Schedule 7.7	–	Transactions with Affiliates

EXHIBITS

Exhibit A	–	Form of Revolving Credit Note
Exhibit B	–	Form of Swingline Note
Exhibit C	–	Form of Assignment and Acceptance
Exhibit D	–	Form of Intermediate Partnership Guaranty Agreement
Exhibit 2.3	–	Form of Notice of Revolving Borrowing
Exhibit 2.4	–	Form of Notice of Swingline Borrowing
Exhibit 2.6	–	Form of Notice of Continuation/Conversion
Exhibit 3.1(b)(v)	–	Form of Secretary’s Certificate
Exhibit 3.1(b)(viii)	–	Form of Officer’s Certificate
Exhibit 5.1(c)	–	Form of Compliance Certificate

- iv -

AMENDED AND RESTATED

REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Agreement”) is made and entered into as of March 30, 2007, by and among ONEOK PARTNERS, L.P., a Delaware limited partnership formerly known as Northern Border Partners, L.P. (the “Borrower”), the several banks and other financial institutions and lenders from time to time party hereto (the “Lenders”), SUNTRUST BANK, in its capacity as administrative agent for the Lenders (the “Administrative Agent”), as issuing bank (the “Issuing Bank”) and as swingline lender (the “Swingline Lender”), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (the “Syndication Agent”) and BMO CAPITAL MARKETS, BARCLAYS BANK PLC, and CITIBANK, N.A., as Co-Documentation Agents.

WITNESSETH:

WHEREAS , the Borrower, certain of the Lenders, certain other banks and financial institutions, and the Administrative Agent are parties to an Amended and Restated Revolving Credit Agreement dated as of March 30, 2006, as amended by a First Amendment to Amended and Restated Revolving Credit Agreement dated as of December 13, 2006 (as so amended, the “Existing Credit Agreement”);

WHEREAS , the Borrower has requested that the Existing Credit Agreement be amended in the manner set forth herein;

WHEREAS , the Lenders have agreed to amend and restate the Existing Credit Agreement in order to effect such amendments to the Existing Credit Agreement, all subject to the terms, conditions, and requirements of this Agreement;

NOW, THEREFORE , in consideration of the premises and the mutual covenants herein contained, the Borrower, the Lenders, the Administrative Agent, the Issuing Bank and the Swingline Lender agree that the Existing Credit Agreement is amended and restated as follows:

ARTICLE I

DEFINITIONS; CONSTRUCTION

Section 1.1. Definitions . In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):

“ Acquisition ” shall have the meaning given to such term in the definition of Consolidated EBITDA herein.

“Additional Lender ” shall have the meaning given to such term in Section 2.21 .

“ Adjusted Consolidated EBITDA ” shall mean, for the Borrower and its Subsidiaries for any period, the sum of (a) Consolidated EBITDA for such period plus (b) any Material Project EBITDA Adjustments for such period.

“ Adjusted LIBO Rate ” shall mean, with respect to each Interest Period for a Eurodollar Borrowing, the rate per annum obtained by dividing (i) LIBOR for such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve Percentage.

“ Administrative Agent ” shall have the meaning assigned to such term in the opening paragraph hereof.

“ Administrative Questionnaire ” shall mean, with respect to each Lender, an administrative questionnaire in the form prepared by the Administrative Agent and submitted to the Administrative Agent duly completed by such Lender.

“ Affiliate ” shall mean, as 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, such Person. For the purposes of this definition, “Control” shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of a Person, whether through the ability to exercise voting power, by control or otherwise. The terms “Controlling”, “Controlled by”, and “under common Control with” have the meanings correlative thereto.

“ Aggregate Revolving Commitment Amount ” shall mean the aggregate principal amount of the Aggregate Revolving Commitments from time to time. On the Restatement Date, the Aggregate Revolving Commitment Amount equals $750,000,000.

“ Aggregate Revolving Commitments ” shall mean, collectively, all Revolving Commitments of all Lenders at any time outstanding.

“ Applicable Lending Office ” shall mean, for each Lender and for each Type of Loan, the “Lending Office” of such Lender (or an Affiliate of such Lender) designated for such Type of Loan in the Administrative Questionnaire submitted by such Lender or such other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Borrower as the office by which its Loans of such Type are to be made and maintained.

“ Applicable Margin ” shall mean, as of any date, with respect to all Revolving Loans outstanding on any date or the letter of credit fee, the percentage per annum determined by reference to the applicable Debt Rating Category from time to time in effect as set forth on Schedule I ; provided, that a change in the Applicable Margin resulting from a change in the Debt Rating Category shall be effective on the day on which either rating agency changes its rating and shall continue until the day prior to the day that a further change becomes effective. The Applicable Margin as of the Restatement Date shall be at Level III as set forth on Schedule I .

“ Applicable Percentage ” shall mean, as of any date, with respect to the facility fee and utilization fee as of any date, the percentage per annum determined by reference to the applicable Debt Rating Category as set forth on Schedule I ; provided , that a change in the

Applicable Percentage resulting from a change in the Debt Rating Category shall be effective on the day on which either rating agency changes its rating and shall continue until the day prior to the day that a further change becomes effective. Notwithstanding the foregoing, the Applicable Percentage for the facility fee and utilization fee as of the Restatement Date shall be at Level III as set forth on Schedule I .

“ Approved Fund ” shall mean any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Assignment and Acceptance ” shall mean an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.4(b)) and accepted by the Administrative Agent, in the form of Exhibit C attached hereto or any other form approved by the Administrative Agent.

“ Availability Period ” shall mean the period from the Restatement Date to the Revolving Commitment Termination Date.

“ Base Rate ” shall mean the higher of (i) the per annum rate which the Administrative Agent publicly announces from time to time to be its prime lending rate, as in effect from time to time, and (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%). The Administrative Agent’s prime lending rate is a reference rate and does not necessarily represent the lowest or best rate charged to customers. The Administrative Agent may make commercial loans or other loans at rates of interest at, above or below the Administrative Agent’s prime lending rate. Each change in the Administrative Agent’s prime lending rate shall be effective from and including the date such change is publicly announced as being effective.

“ Borrower ” shall have the meaning assigned to such term in the opening paragraph hereof.

“ Borrower Partnership Agreement ” means the Third Amended and Restated Agreement of Limited Partnership of ONEOK Partners, L.P., dated as of September 15, 2006 as amended, supplemented, restated or otherwise modified from time to time.

“ Borrowing ” shall mean a borrowing consisting of (i) Loans of the same Class and Type, made, converted or continued on the same date and in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (ii) a Swingline Loan.

“ Business Day ” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia and New York, New York are authorized or required by law to close and (ii) if such day relates to a Borrowing of, a payment or prepayment of principal or interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with respect to any of the foregoing, any day on which dealings in Dollars are carried on in the London interbank market.

“ Capital Lease Obligations ” of any Person shall mean all obligations of such Person to pay rent or other amounts under any lease (or other arrangement conveying the right to use) of real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“ Capital Stock ” shall mean any non-redeemable capital stock (or in the case of a partnership or limited liability company, the partners’ or members’ equivalent equity interest) of the Borrower or any of its Subsidiaries (to the extent issued to a Person other than the Borrower), whether common or preferred.

“ Change of Control ” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of OKE or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) after the Restatement Date becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of OKE entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of OKE cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

(c) OKE shall fail to have the power to control, directly or indirectly, the management and policies of each of the Borrower and the Intermediate Partnership; provided that , in the event of any Disposition of general partner interests in either of the Borrower or the Intermediate Partnership by OKE, with respect to the Borrower, or by

the Borrower, with respect to the Intermediate Partnership, at a time when the aggregate general partner interests in the Borrower or the Intermediate Partnership owned by OKE or the Borrower, respectively, directly or indirectly through any of their wholly owned Subsidiaries, together with the aggregate voting rights of OKE or the Borrower, respectively, with respect thereto, is less than (or which Disposition would result in such ownership being less than) fifty percent (50%) of the aggregate outstanding general partner interests and voting rights of all general partners of either of the Borrower or the Intermediate Partnership (each a “ GP Disposition ”), such GP Disposition shall not be deemed to be a Change of Control so long as the Borrower provides prior written notice thereof to the Administrative Agent and the Lenders, together with such other information as may be reasonably necessary to demonstrate to the reasonable satisfaction of the Required Lenders that OKE will retain control of each of the Borrower and the Intermediate Partnership after giving effect to such GP Disposition, unless the GP Disposition is objected to in writing by the Required Lenders, or by the Administrative Agent acting at the direction of the Required Lenders, within 15 days of receipt of such notice.

“ Change in Law ” shall mean (i) the adoption of any applicable law, rule or regulation after the Original Closing Date, (ii) any change in any applicable law, rule or regulation, or any change in the interpretation or application thereof, by any Governmental Authority after the Original Closing Date, or (iii) compliance by any Lender (or its Applicable Lending Office) or the Issuing Bank (or for purposes of Section 2.16(b) , by such Lender’s or the Issuing Bank’s parent corporation, if applicable) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Original Closing Date.

“ Class ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Swingline Loans and when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment or a Swingline Commitment.

“ Code ” shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time.

“ Commitment ” shall mean a Revolving Commitment or a Swingline Commitment or any combination thereof (as the context shall permit or require).

“ Common Unit ” means units representing limited partnership interests in the Borrower offered for sale to the public.

“ Compliance Certificate ” shall mean a certificate from the principal executive officer, the principal financial officer or the treasurer of the Borrower in the form of, and containing the certifications set forth in, the certificate attached hereto as Exhibit 5.1(c) .

“ Consolidated EBITDA ” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (i) Consolidated Net Income for such period plus (ii) to the extent deducted in determining Consolidated Net Income for such period, (A) Consolidated

Interest Expense, (B) income tax expense determined on a consolidated basis in accordance with GAAP, (C) depreciation and amortization determined on a consolidated basis in accordance with GAAP, and (D) all other non-cash charges, determined in each case on a consolidated basis in accordance with GAAP for such period. For purposes of Section 6.1, if the Borrower or any Subsidiary has acquired another Person as a Subsidiary (including through the purchase or other acquisition of additional ownership interests in such Person resulting in such Person becoming a Subsidiary), or all or substantially all of the assets of another Person or a division, line of business, or other business unit of another Person (in any such case, an “ Acquisition ”), or has Disposed of a Subsidiary (including through the sale or other disposition of ownership interests in a Subsidiary resulting in its ceasing to be a Subsidiary) or all or substantially all of the assets of a Subsidiary or a division, line of business, or other business unit or, in the case of the NBPC Sale, the sale of the partnership interests of Pipeline to TCPILP, in any case as permitted by this Agreement, during the relevant period for determining the Leverage Ratio, Consolidated EBITDA shall be calculated in such ratios after giving pro forma effect thereto (such pro forma basis to have been reasonably diligenced by the Borrower), as if such Acquisition or Disposition (and in each case any related incurrence, assumption or repayment of Indebtedness) had occurred on the first day of the relevant period for determining Consolidated EBITDA.

“ Consolidated Interest Expense ” shall mean, for the Borrower and its Subsidiaries for any period determined on a consolidated basis in accordance with GAAP, the sum of (i) total interest expense, including without limitation, the interest component of any payments in respect of Capital Lease Obligations capitalized or expensed during such period (whether or not actually paid during such period) plus (ii) the net amount payable (or minus the net amount receivable) under any Hedging Transaction (relating to interest rates only) during such period (whether or not actually paid or received during such period).

“ Consolidated Net Income ” shall mean, for the Borrower and its Subsidiaries for any period, the net income (or loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded therefrom (a) the income or loss of any Person accrued prior to the date it became a Subsidiary of the Borrower, or is merged or consolidated with the Borrower or any of its Subsidiaries, or such Person’s assets were acquired by the Borrower or any of its Subsidiaries, (b) any equity interests of the Borrower or any Subsidiary in the earnings of any Person (other than a Subsidiary of the Borrower), but including dividends and similar distributions actually received by the Borrower or its Subsidiaries from any such Person, (c) the undistributed earnings of any Subsidiary of the Borrower to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of the organizational documents or Contractual Obligations of, or Requirements of Law applicable to, such Subsidiary, (d) any extraordinary gains or losses, and (e) any gains attributable to write-ups of assets.

“ Consolidated Total Capitalization ” shall mean, without duplication, the sum of (a) all of the shareholders’ equity or net worth of the Borrower and its Subsidiaries on a consolidated basis, as determined in accordance with GAAP plus (b) Consolidated Total Debt.

“ Consolidated Total Debt ” shall mean, as of any date, all Indebtedness of the Borrower and its Subsidiaries measured on a consolidated basis as of such date, but excluding Indebtedness of the type described in subsection (xi) of the definition thereto.

“ Contractual Obligation ” of any Person shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking under which such Person is obligated or by which it or any of the property in which it has an interest is bound.

“ Debt Rating ” shall mean the credit rating assigned by S&P or Moody’s, as the case may be, to the senior, unsecured long-term debt securities of the Borrower without third-party credit enhancement, whether or not any such debt securities are actually outstanding; any rating assigned to any other debt security of the Borrower shall be disregarded. The Debt Rating in effect on any date is that in effect at the close of business on such date.

“ Default ” shall mean any condition or event that, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“ Default Interes t” shall have the meaning set forth in Section 2.11(c) .

“ Dispose ” or “ Disposition ” shall mean the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ Dollar(s) ” and the sign “$” shall mean lawful money of the United States of America.

“ Eligible Assignee ” shall mean (i) a Lender; (ii) an Affiliate of a Lender; (iii) an Approved Fund; and (iv) any other Person (other than a natural Person) approved by the Administrative Agent, the Issuing Bank, and unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed). If the consent of the Borrower to an assignment or to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment thresholds specified in paragraph (b) of Section 10.4 ), the Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has actually been delivered by the assigning Lender (through the Administrative Agent) to the Borrower, unless such consent is expressly refused by the Borrower prior to such fifth Business Day.

“ Environmental Laws ” shall mean all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.

“ Environmental Liability ” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental investigation and remediation, costs

of administrative oversight, fines, natural resource damages, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (i) any actual or alleged violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) any actual or alleged exposure to any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute.

“ ERISA Affiliate ” shall mean each “person” (as defined in Section 3(a) of ERISA) (whether or not incorporated) which is, or has been within the past five years, a member of any Loan Party’s controlled group (within the meaning of PBGC regulation §4001.2).

“ ERISA Event ” shall mean (i) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (ii) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (iii) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (iv) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (v) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (vii) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“ Eurodollar ” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.

“ Eurodollar Reserve Percentage ” shall mean the aggregate of the maximum reserve percentages (including, without limitation, any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upwards to the next 1/100th of 1%) in effect on any day to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate pursuant to regulations issued by the Board of Governors of the Federal Reserve System (or any Governmental Authority succeeding to any of its principal functions) with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D). Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under Regulation D. The Eurodollar Reserve

Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“ Event of Default ” shall have the meaning provided in Article VIII .

“ Excluded Taxes ” shall mean with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which any Lender is located and (c) in the case of a Foreign Lender, any withholding tax that (i) is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement, (ii) is imposed on amounts payable to such Foreign Lender at any time that such Foreign Lender designates a new lending office, other than taxes that have accrued prior to the designation of such lending office that are otherwise not Excluded Taxes, and (iii) is attributable to such Foreign Lender’s failure to comply with Section 2.18(e) .

“ Existing Credit Agreement ” shall have the meaning provided in the recitals.

“ Existing Lenders ” shall mean the lenders party to the Existing Credit Agreement as of the date hereof.

“ Federal Funds Rate ” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.

“ Fee Letter ” shall mean that certain fee letter, dated as of March 19, 2007, executed by SunTrust Capital Markets, Inc. and SunTrust Bank, and that certain fee letter dated as of March 19, 2007, executed by Wachovia Capital Markets, LLC and Wachovia Bank, National Association, in each case as accepted by the Borrower.

“ Fiscal Quarter ” shall mean any fiscal quarter of the Borrower. “Fiscal Year” shall mean any fiscal year of the Borrower.

“ Foreign Lender ” shall mean any Lender that is not a United States person under Section 7701(a)(3) of the Code.

“ Foreign Subsidiary ” shall mean any Subsidiary that is organized under the laws of a jurisdiction other than one of the fifty states of the United States or the District of Columbia.

“ Fort Union, L.L.C. ” means Fort Union Gas Gathering, L.L.C., a Delaware limited liability company.

“ Fort Union Project Finance Documents ” means the Construction and Term Credit Agreement dated as of April 16, 1999 among Fort Union, L.L.C., as Borrower, Fleet National Bank, as administrative agent and the other lenders and agents parties thereto, and the other agreements executed as security therefor or pursuant thereto, as the same may from time to time be amended, together with all loan, finance, security and related documents and agreements executed and delivered in connection with the financing of the planned expansion of the Ft. Union, L.L.C. pipeline scheduled to be completed in 2007.

“ GAAP ” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.3 .

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“ Guarantee ” of or by any Person (the “ guarantor ”) shall mean any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly and including any obligation, direct or indirect, of the guarantor (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (ii) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) as an account party in respect of any letter of credit or letter of guaranty issued in support of such Indebtedness or obligation; provided, that the term “Guarantee” shall not include endorsements for collection or deposits in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which Guarantee is made or, if not so stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. The term “Guarantee” used as a verb has a corresponding meaning.

“ Guarantor ” shall mean the Intermediate Partnership.

“ Guaranty Agreement ” shall mean the Amended and Restated Guaranty Agreement, dated as of the date hereof and substantially in the form of Exhibit D , made by the Guarantor in favor of the Administrative Agent for the benefit of the Lenders.

“ Hazardous Materials ” shall mean all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or

any fraction or by-product thereof, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“ Hedging Obligations ” of any Person shall mean any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired under (i) any and all Hedging Transactions, (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Hedging Transactions and (iii) any and all renewals, extensions and modifications of any Hedging Transactions and any and all substitutions for any Hedging Transactions.

“ Hedging Transaction ” of any Person shall mean any transaction (including an agreement with respect thereto) now existing or hereafter entered into by such Person that is a rate swap, basis swap, forward rate transaction, commodity swap, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collateral transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

“ Hybrid Securities ” means any trust preferred securities, or deferrable interest subordinated debt with a maturity of at least 20 years, which provides for the optional or mandatory deferral of interest or distributions, issued by the Borrower, or any business trusts, limited liability companies, limited partnerships or similar entities (i) substantially all of the common equity, general partner or similar interests of which are owned (either directly or indirectly through one or more wholly owned Subsidiaries) at all times by the Borrower or any of its Subsidiaries, (ii) that have been formed for the purpose of issuing such trust preferred securities or deferrable interest subordinated debt and (iii) substantially all the assets of which consist of (A) subordinated debt of the Borrower or a Subsidiary of the Borrower and (B) payments made from time to time on the subordinated debt.

“ Hydrocarbon Interests ” means all rights, titles, interests and estates now owned or hereafter acquired by the Borrower or any of its Subsidiaries in any and all oil, gas and other liquid or gaseous hydrocarbon properties and interests, including without limitation, mineral fee or lease interests, production sharing agreements, concession agreements, license agreements, service agreements, risk service agreements or similar Hydrocarbon interests granted by an appropriate Governmental Authority, farmout, overriding royalty and royalty interests, net profit interests, oil payments, production payment interests and similar interests in Hydrocarbons, including any reserved or residual interests of whatever nature.

“ Hydrocarbons ” means oil, gas, casing head gas, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons, all products refined, separated, settled and dehydrated therefrom, including, without limitation, kerosene, liquefied petroleum gas, refined lubricating oils, diesel fuel, drip gasoline, natural gasoline, helium, sulfur and all other minerals.

“ Indebtedness ” of any Person shall mean, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds,

debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business on terms customary in the trade), (iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i) through (vi) above, (viii) all Indebtedness of a third party secured by any Lien granted by such Person on property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (ix) [reserved], (x) Off-Balance Sheet Liabilities and (xi) all Hedging Obligations. The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) arising under the Fort Union Project Finance Documents which is secured by Liens on the limited liability company interests of Crestone Powder River, L.L.C. in Fort Union, L.L.C., nor indebtedness (which is not assumed or guaranteed by Borrower or any Subsidiary of Borrower) which is secured by Liens on the limited liability company interests of Crestone Wind River, L.L.C. in Lost Creek, L.L.C.

“ Indemnified Taxes ” shall mean Taxes other than Excluded Taxes.

“ Information Memorandum ” shall mean the Confidential Executive Summary dated March 2007 relating to the Borrower and the transactions contemplated by this Agreement and the other Loan Documents.

“ Interest Period ” shall mean with respect to (i) any Swingline Borrowing, such period as the Swingline Lender and the Borrower shall mutually agree and (ii) any Eurodollar Borrowing, a period of one, two, three or six months; provided, that:

(i) the initial Interest Period for such Borrowing shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of another Type), and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;

(ii) if any Interest Period would otherwise end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such Interest Period would end on the next preceding Business Day;

(iii) any Interest Period which begins on the last Business Day of a calendar month or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period shall end on the last Business Day of such calendar month; and

(iv) no Interest Period may extend beyond the Revolving Commitment Termination Date.

“ Intermediate Partnership ” shall mean ONEOK Partners Intermediate Limited Partnership, a Delaware limited partnership.

“ Intermediate Partnership Agreement ” shall mean that certain Amended and Restated Agreement of Limited Partnership of Intermediate Partnership dated as of October 1, 1993, as amended, supplemented, restated or otherwise modified from time to time.

“ Issuing Bank ” shall mean SunTrust Bank or any other Lender, each in its capacity as an issuer of Letters of Credit pursuant to Section 2.20 .

“ LC Commitment ” shall mean that portion of the Aggregate Revolving Commitment Amount that may be used by the Borrower for the issuance of Letters of Credit in an aggregate face amount not to exceed $100,000,000.

“ LC Disbursement ” shall mean a payment made by the Issuing Bank pursuant to a Letter of Credit.

“ LC Documents ” shall mean the Letters of Credit and all applications, agreements and instruments relating to the Letters of Credit.

“ LC Exposure ” shall mean, at any time, the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (ii) the aggregate amount of all LC Disbursements that have not been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender shall be its Pro Rata Share of the total LC Exposure at such time.

“ Lenders ” shall have the meaning assigned to such term in the opening paragraph of this Agreement and shall include, where appropriate, the Swingline Lender and each Additional Lender that joins this Agreement pursuant to Section 2.21

“ Letter of Credit ” shall mean any stand-by letter of credit issued pursuant to Section 2.20 by the Issuing Bank for the account of the Borrower pursuant to the LC Commitment.

“ Leverage Ratio ” shall mean, as of any date, the ratio of (i) Consolidated Total Debt as of such date (excluding any amount of Hybrid Securities not to exceed a total of 15% of Consolidated Total Capitalization) to (ii) Adjusted Consolidated EBITDA for the four consecutive Fiscal Quarters ending on or immediately prior to such date.

“ LIBOR ” shall mean, for any applicable Interest Period with respect to any Eurodollar Loan, the British Bankers’ Association Interest Settlement Rate per annum for deposits in Dollars for a period equal to such Interest Period appearing on the display designated as Page 3750 on the Dow Jones Markets Service (or such other page on that service or such other service designated by the British Bankers’ Association for the display of such Association’s Interest Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England time) on the day that is two Business Days prior to the first day of the Interest Period or if such Page 3750 is unavailable for any reason at such time, the rate which appears on the Reuters Screen ISDA Page as of such date and such time; provided , that if the Administrative Agent determines that the relevant foregoing sources are unavailable for the relevant Interest Period, LIBOR shall mean the

rate of interest determined by the Administrative Agent to be the average (rounded upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at which deposits in Dollars are offered to the Administrative Agent two (2) Business Days preceding the first day of such Interest Period by leading banks in the London interbank market as of 10:00 a.m. (New York time) for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan of the Administrative Agent.

“ Lien ” shall mean (i) any mortgage, deed of trust, deed to secure debt, pledge, security interest, lien (statutory or otherwise), charge, claim, easement or encumbrance, hypothecation, assignment, deposit arrangement, or (ii) any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any capital lease having the same economic effect as any of the foregoing).

“ Limited Partnership Units ” means Common Units and any other units representing a limited partner’s interest in the Borrower.

“ Loan Documents ” shall mean, collectively, this Agreement, the Notes (if any), the LC Documents, the Guaranty Agreement, all Notices of Borrowing, all Notices of Conversion/Continuation, all Compliance Certificates and any and all other instruments, agreements, documents and writings executed in connection with any of the foregoing.

“ Loan Parties ” shall mean the Borrower and the Guarantor.

“ Loans ” shall mean all Revolving Loans and Swingline Loans in the aggregate or any of them, as the context shall require.

“ Lost Creek L.L.C. ” means Lost Creek Gathering Company, L.L.C., a Delaware limited liability company.

“ Lost Creek Project Finance Documents ” means the Construction and Term Credit Agreement dated as of September 24, 1999 among Lost Creek, L.L.C. as Borrower, Barclays Bank PLC, as administrative agent and the other lenders party thereto and the other agreements executed as security therefor or pursuant thereto, as the same may from time to time be amended.

“ Material Adverse Effect ” shall mean (a) a material adverse change in, or a material adverse effect upon, the financial condition of the Borrower and its Subsidiaries taken as a whole; provided however, (i) a downgrade by S&P and/or Moody’s of Borrower’s Debt Rating shall not, in and of itself, be deemed to be a Material Adverse Effect, and (ii) the fact that the Borrower is unable to borrow in the commercial paper market shall not, in and of itself, be deemed to be a Material Adverse Effect; but for purposes of clarity in interpreting the foregoing clauses (i) and (ii), it is agreed that the event(s), change(s), circumstance(s) or condition(s) that causes such downgrade (or an announcement of a potential downgrade or a review for possible ratings change) of the Debt Rating or that causes such inability of the Borrower to borrow in the commercial paper market, and the effect or change caused by such downgrade (or an announcement of a potential downgrade or a review for possible ratings change) of the Debt

Rating or by such inability to borrow, will be considered in determining whether there has been a Material Adverse Effect; (b) a material impairment of the ability of the Borrower to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any Loan Document to which it is a party.

“ Material Indebtedness ” shall mean Indebtedness (other than the Loans and Letters of Credit) and Hedging Obligations of the Borrower or any of its Subsidiaries, individually or in an aggregate principal amount, exceeding $100,000,000. For purposes of determining the amount of attributed Indebtedness from Hedging Obligations, the “principal amount” of any Hedging Obligations at any time shall be the Net Mark-to-Market Exposure of such Hedging Obligations.

“ Material Project ” shall mean each new pipeline, storage facility, processing plant or other capital expansion project wholly owned by the Borrower or its Subsidiaries, the construction of which commenced after March 30, 2006 and which has a budgeted capital cost exceeding $25,000,000.

“ Material Project EBITDA Adjustments ” shall mean, with respect to each Material Project, (A) prior to completion of the Material Project, a percentage (based on the then-current completion percentage of the Material Project) of an amount to be approved by the Administrative Agent as the projected Consolidated EBITDA attributable to such Material Project (such amount to be determined based on contracts relating to such Material Project, the creditworthiness of the other parties to such contracts and projected revenues from such contracts, capital costs and expenses, scheduled completion, and other factors deemed appropriate by the Administrative Agent) which may, at the Borrower’s option, be added to actual Consolidated EBITDA for the Borrower and its Subsidiaries for the fiscal quarter in which construction of such Material Project commences and for each fiscal quarter thereafter until completion of the Material Project (net of any actual Consolidated EBITDA attributable to such Material Project following its completion), provided that if construction of the Material Project is not completed by the scheduled completion date, then the foregoing amount shall be reduced by the following percentage amounts depending on the period of delay for completion (based on the period of actual delay or then-estimated delay, whichever is longer): (i) longer than 90 days, but not more than 180 days, 25%, (ii) longer than 180 days but not more than 270 days, 50%, and (iii) longer than 270 days, 100%; and (B) beginning with the first full fiscal quarter following completion of the Material Project and for the two immediately succeeding fiscal quarters, an amount to be approved by the Administrative Agent as the projected Consolidated EBITDA attributable to the Material Project (determined in the same manner set forth in clause (A) above) for the balance of the four full fiscal quarter period following completion shall be added to the actual Consolidated EBITDA attributable to the Material Project for such fiscal quarter or quarters, for determining Consolidated EBITDA for the fiscal quarter then ending and the immediately preceding three fiscal quarters. Notwithstanding the foregoing, (i) no such additions shall be allowed with respect to any Material Project unless not later than 45 days prior to commencement of construction thereof, the Borrower shall have delivered to the Administrative Agent written pro forma projections of Consolidated EBITDA attributable to such Material Project and such other information and documentation as the Administrative Agent may reasonably request, all in form and substance satisfactory to the Administrative Agent, and

(ii) the aggregate amount of all Material Project EBITDA Adjustments during any period shall be limited to 20% of the total actual Consolidated EBITDA of the Borrower and its Subsidiaries for such period (which total actual Consolidated EBITDA shall be determined without including any Material Project EBITDA Adjustments or any adjustments in respect of any Acquisitions or Dispositions as provided in the definition of Consolidated EBITDA).

“ Maturity Date ” means the later of (a) March 30, 2012 and (b) if maturity is extended pursuant to Section 2.23 , such extended maturity date as determined pursuant to such Section; provided , however , that, in each case, if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

“ Multiemployer Plan ” shall have the meaning set forth in Section 4001(a)(3) of ERISA.

“ NBPC Sale ” shall mean the sale by the Guarantor to TCPILP of 20% of the partnership interests of Pipeline for a cash purchase price of approximately $300,000,000 (subject to adjustment as provided in Section 3.2 of the Partnership Interest Purchase and Sale Agreement referenced in the definition of NBPC Sale Documents) pursuant to the NBPC Sale Documents, the proceeds of which sale are to be used by the Borrower to fund a portion of the consideration for the OKE Acquisition and related transaction costs and fees.

“ NBPC Sale Documents ” shall mean, collectively, the Partnership Interest Purchase and Sale Agreement between the Intermediate Partnership and TCPILP dated as of December 31, 2005, and the other “Transaction Documents” as defined therein, in each case with all exhibits, schedules and supplements thereto.

“ Net Mark-to-Market Exposure ” of any Person shall mean, as of any date of determination with respect to any Hedging Obligation, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from such Hedging Obligation. “Unrealized losses” shall mean the fair market value of the cost to such Person of replacing the Hedging Transaction giving rise to such Hedging Obligation as of the date of determination (assuming the Hedging Transaction were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Hedging Transaction as of the date of determination (assuming such Hedging Transaction were to be terminated as of that date).

“ Notes ” shall mean, collectively, the Revolving Credit Notes and the Swingline Note.

“ Notices of Borrowing ” shall mean, collectively, the Notices of Revolving Borrowing and the Notices of Swingline Borrowing.

“ Notice of Conversion/Continuation ” shall mean the notice given by the Borrower to the Administrative Agent in respect of the conversion or continuation of an outstanding Borrowing as provided in Section 2.6(b) .

“ Notice of Revolving Borrowing ” shall have the meaning as set forth in Section 2.3 .

“ Notice of Swingline Borrowing ” shall have the meaning as set forth in Section 2.4 .

“ Obligations ” shall mean all amounts owing by the Borrower to the Administrative Agent, the Issuing Bank or any Lender (including the Swingline Lender) pursuant to or in connection with this Agreement or any other Loan Document, including without limitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses of counsel to the Administrative Agent, the Issuing Bank and any Lender (including the Swingline Lender) incurred pursuant to this Agreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunder or thereunder, and all Hedging Obligations owed to the Administrative Agent, any Lender or any of their Affiliates incurred in order to limit interest rate or fee fluctuation with respect to the Loans and Letters of Credit, and all obligations and liabilities incurred in connection with collecting and enforcing the foregoing, together with all renewals, extensions, modifications or refinancings thereof.

“ Off-Balance Sheet Liabilities ” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (iii) any Synthetic Lease Obligation or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

“ Oil and Gas Agreements ” means operating agreements, processing agreements, farm-out and farm-in agreements, development agreements, area of mutual interest agreements, contracts for the gathering and/or transportation of oil and natural gas, unitization agreements, pooling arrangements, joint bidding agreements, joint venture agreements, participation agreements, surface use agreements, service contracts, leases and subleases of Oil and Gas Properties or other similar agreements which are customary in the oil and gas business, howsoever designated, in each case made or entered into in the ordinary course of the oil and gas business as conducted by the Borrower and its Subsidiaries.

“ Oil and Gas Properties ” means (a) Hydrocarbon Interests; (b) the property now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or

attributable to such Hydrocarbon Interest; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, the lands covered thereby and all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the Hydrocarbon Interests; and (f) all tenements, hereditaments, appurtenances and property in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests, and any and all property, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

“ OKE ” shall mean ONEOK, Inc., an Oklahoma corporation.

“ OKE Acquisition ” shall mean the acquisition by the Borrower from OKE of its gathering and processing, pipelines and storage, and natural gas liquids businesses for consideration in an aggregate amount of (i) $1,350,000,000 in cash (subject to adjustments as provided in Section 1.4 of the Purchase and Sale Agreement referenced in the definition of OKE Acquisition Documents), and (ii) 36,494,126 Class B limited partnership units of the Borrower, pursuant to the OKE Acquisition Documents.

“ OKE Acquisition Documents ” shall mean, collectively, the Contribution Agreement among OKE, the Borrower, and the Intermediate Partnership dated as of February 14, 2006, together with the “Services Agreement” as defined therein, and the Purchase and Sale Agreement between OKE and the Borrower dated as of February 14, 2006, together with the “Services Agreement” as defined therein, in each case with all exhibits, schedules and supplements thereto.

“ Original Closing Date ” shall mean May 16, 2005.

“ OSHA ” shall mean the Occupational Safety and Health Act of 1970, as amended from time to time, and any successor statute.

“ Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

“ Participant ” shall have the meaning set forth in Section 10.4(d) .

“ Payment Office ” shall mean the office of the Administrative Agent located at 303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to which the Administrative Agent shall have given written notice to the Borrower and the other Lenders.

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA, and any successor entity performing similar functions.

“ Permitted Encumbrances ” shall mean:

(i) Liens imposed by law for taxes, assessments or other governmental charges or levies not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(ii) Liens of landlords, carriers, operators, warehousemen, mechanics, and materialmen, statutory Liens of producers of hydrocarbons, and similar Liens arising by operation of law, in each case incurred in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained to the extent such amounts exceed $500,000;

(iii) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance, other social security laws or regulations or other forms of governmental insurance or benefits, other than any Lien imposed by ERISA;

(iv) deposits to secure the performance of tenders, bids, contracts (other than for borrowed money), leases, statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature, in each case entered into in the ordinary course of business or to secure obligations on surety bonds;

(v) judgment and attachment liens not giving rise to an Event of Default or Liens created by or existing from any litigation or legal proceeding that are currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in accordance with GAAP;

(vi) title defects, easements, zoning restrictions, rights-of-way, land use and environmental regulations, and similar encumbrances affecting real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Borrower and its Subsidiaries taken as a whole;

(vii) Liens securing obligations of others, neither assumed nor guaranteed by any Loan Party nor on which it customarily pays interest, existing upon real estate or rights in or relating to real estate acquired by such Person for substation, metering station, compression station, gathering line, transmission line, transportation line, distribution line or right of way purposes, and any Liens reserved in leases for rent and for compliance with the terms of the leases in the case of leasehold estates, to the extent that any such Lien referred to in this clause (vii) does not materially impair the use of the property;

(viii) Liens granted pursuant to any Loan Document;

(ix) easements or reservations in any property of the Borrower or a Subsidiary for the purpose of roads, pipe lines, gas transmission and distribution lines, electric light and power transmission and distribution lines, water mains and other like purposes, and zoning ordinances, regulations and restrictions which do not impair the use of such property in the operation of the business of the Borrower or a Subsidiary;

(x) any Liens on any property or asset of the Borrower or any Subsidiary existing on the Restatement Date set forth on Schedule 7.2 ; provided, that such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary;

(xi) Liens upon or in any fixed or capital assets to secure the purchase price or the cost of construction or improvement of such fixed or capital assets or to secure Indebtedness incurred solely for the purpose of financing the acquisition, construction or improvement of such fixed or capital assets (including Liens securing any Capital Lease Obligations and Synthetic Lease Obligations); provided, that (i) such Lien secures Indebtedness permitted by Section 7.1 , (ii) such Lien attaches to such asset concurrently or within 180 days after the acquisition, improvement or completion of the construction thereof; (iii) such Lien does not extend to any other asset; and (iv) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets;

(xii) any Lien (i) existing on any asset of any Person at the time such Person becomes a Subsidiary of the Borrower, (ii) existing on any asset of any Person at the time such Person is merged with or into the Borrower or any Subsidiary of the Borrower or (iii) existing on any asset prior to the acquisition thereof by the Borrower or any Subsidiary of the Borrower; provided, that any such Lien was not created in the contemplation of any of the foregoing and any such Lien secures only those obligations which it secures on the date that such Person becomes a Subsidiary or the date of such merger or the date of such acquisition;

(xiii) Liens on the limited liability company interests in Fort Union, L.L.C. which are owned by Crestone Powder River L.L.C., a Delaware limited liability company, which Liens secure amounts owed under the Fort Union Project Finance Documents;

(xiv) Liens on the limited liability company interests in Lost Creek, L.L.C. which are owned by Crestone Wind River, L.L.C., a Delaware limited liability company, which Liens secure amounts owed under the Lost Creek Project Finance Documents;

(xv) extensions, renewals, or replacements of any Lien referred to in paragraphs (x) through (xiv) above; provided, that the principal amount of the Indebtedness secured thereby is not increased and that any such extension, renewal or replacement is limited to the assets originally encumbered thereby;

(xvi) any Liens (i) in favor of the Administrative Agent arising under Section 2.20(g), (ii) at any time that Pipeline is a Subsidiary of the Borrower, in favor of the administrative agent under section 2.20(g) of the Pipeline Credit Agreement, and (iii) in favor of any trustee under any indentures governing Indebtedness of the Borrower or any of its Subsidiaries securing unpaid fees of such trustee in collateral in the possession of such trustee;

(xvii) any right which any municipal or governmental body or agency may have by virtue of any franchise, license, contract or status to purchase or designate a purchaser of, or order the sale of, any property of the Borrower or any Subsidiary upon payment of reasonable compensation therefor or to terminate any franchise, license or other rights or to regulate the property and business of the Borrower or any Subsidiary;

(xviii) Liens on cash and cash equivalents granted pursuant to master netting agreements entered into in the ordinary course of business in connection with Hedging Transactions; provided that (i) the transactions secured by such Liens are governed by standard International Swaps and Derivatives Association, Inc. (“ISDA”) documentation, and (ii) such Hedging Transactions consist of derivative transactions contemplated to be settled in cash and not by physical delivery and are designed to minimize the risk of fluctuations in oil and gas prices with respect to the Borrower’s and its Subsidiaries’ operations in the ordinary course of its business;

(xix) Liens pursuant to master netting agreements entered into in the ordinary course of business in connection with Hedging Transactions, in each case pursuant to which the Borrower or any Subsidiary of the Borrower, as a party to such master netting agreement and as pledgor, pledges or otherwise transfers to the other party to such master netting agreement, as pledgee, in order to secure the Borrower’s or such Subsidiary’s obligations under such master netting agreement, a Lien upon and/or right of set off against, all right, title, and interest of the pledgor in any obligations of the pledgee owed to the pledgor, together with all accounts and general intangibles and payment intangibles in respect of such obligations and all dividends, interest, and other proceeds from time to time received, receivable, or otherwise distributed in respect of, or in exchange for, any or all of the foregoing;

(xx) Liens arising in the ordinary course of business under Oil and Gas Agreements to secure compliance with such agreements, provided that any such Lien referred to in this clause are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP, and provided further that any such Lien referred to in this clause does not materially impair the use of the property covered by such Lien for the purposes for which such property is held by the Borrower or any Subsidiary or materially impair the value of such property subject thereto, and provided further that such Liens are limited to property that is the subject of the relevant Oil and Gas Agreement; and

(xxi) Liens not otherwise included in the definition of Permitted Encumbrances if at the time of, and after giving effect to, the creation or assumption of

any such Lien, the aggregate of all obligations of the Borrower and its Subsidiaries secured by any Liens not otherwise permitted does not exceed ten percent (10%) of Consolidated Total Capitalization.

“ Permitted Investments ” shall mean:

(i) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States), in each case maturing within one year from the date of acquisition thereof;

(ii) commercial paper and auction rate securities having the highest rating, at the time of acquisition thereof, of S&P or Moody’s and in either case maturing or having an auction date within six months from the date of acquisition thereof;

(iii) certificates of deposit, bankers’ acceptances and time deposits maturing within 180 days of the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(iv) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (i) above and entered into with a financial institution satisfying the criteria described in clause (iii) above; and

(v) mutual funds investing solely in any one or more of the Permitted Investments described in clauses (i) through (iv) above.

“ Person ” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

“ Pipeline ” means Northern Border Pipeline Company, a Texas general partnership.

“ Pipeline Credit Agreement ” means that certain Revolving Credit Agreement, dated as of May 16, 2005, among Pipeline, Wachovia Bank, National Association, as administrative agent, and the lenders defined therein, as in effect on the Restatement Date.

“ Pipeline Leverage Ratio ” means the ratio calculated in accordance with section 6.1 of the Pipeline Credit Agreement, as in effect on the Restatement Date, without regard to whether said credit agreement is amended or ceases to be in effect after such date.

“ Pipeline Partnership Agreement ” means that certain General Partnership Agreement relating to the formation of Pipeline effective as of March 9, 1978, as amended, supplemented, restated or otherwise modified from time to time.

“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“ Pro Rata Share ” shall mean with respect to any Commitment of any Lender at any time, a percentage, the numerator of which shall be such Lender’s Commitment (or if such Commitments have been terminated or expired or the Loans have been declared to be due and payable, such Lender’s Revolving Credit Exposure), and the denominator of which shall be the sum of such Commitments of all Lenders (or if such Commitments have been terminated or expired or the Loans have been declared to be due and payable, all Revolving Credit Exposure of all Lenders).

“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

“ Related Parties ” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“ Release ” shall mean any release, spill, emission, leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment (including ambient air, surface water, groundwater, land surface or subsurface strata) or within any building, structure, facility or fixture.

“ Required Lenders ” shall mean, at any time, Lenders holding more than 50% of the aggregate outstanding Revolving Commitments at such time or if the Lenders have no Commitments outstanding, then Lenders holding more than 50% of the Revolving Credit Exposure.

“ Requirement of Law ” for any Person shall mean the articles or certificate of incorporation, bylaws, partnership certificate and agreement, or limited liability company certificate of organization and agreement, as the case may be, and other organizational and governing documents of such Person, and any law, treaty, rule or regulation, or determination of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“ Responsible Officer ” shall mean any of the president, the chief executive officer, the chief operating officer, the chief financial officer, the treasurer or a vice president of the general partner of the Borrower or such other representative of the Borrower or its general partner as may be designated in writing by any one of the foregoing with the consent of the Administrative Agent, and, with respect to the financial covenants and Compliance Certificates only, the chief executive officer, chief financial officer or treasurer of the general partner of the Borrower.

“ Restatement Date ” shall mean the date on which the conditions precedent set forth in Section 3.1 and Section 3.2 have been satisfied or waived in accordance with Section 10.2 .

“ Restricted Payment ” shall have the meaning set forth in Section 7.5 .

“ Revolving Commitment ” shall mean, with respect to each Lender, the obligation of such Lender to make Revolving Loans to the Borrower and to participate in Letters of Credit and Swingline Loans in an aggregate principal amount not exceeding the amount set forth with respect to such Lender on Schedule II , as such schedule may be amended pursuant to Section 2.21 , or in the case of a Person becoming a Lender after the Restatement Date through an assignment of an existing Revolving Commitment, the amount of the assigned “Revolving Commitment” as provided in the Assignment and Acceptance executed by such Person as an assignee, as the same may be increased or deceased pursuant to terms hereof.

“ Revolving Commitment Termination Date ” shall mean the earliest of (i) the Maturity Date, (ii) the date on which the Revolving Commitments are terminated pursuant to Section 2.7 and (iii) the date on which all amounts outstanding under this Agreement have been declared or have automatically become due and payable (whether by acceleration or otherwise).

“ Revolving Credit Exposure ” shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans, LC Exposure and Swingline Exposure.

“ Revolving Credit Note ” shall mean a promissory note of the Borrower payable to the order of a requesting Lender in the principal amount of such Lender’s Revolving Commitment, in substantially the form of Exhibit A .

“ Revolving Loan ” shall mean a loan made by a Lender (other than the Swingline Lender) to the Borrower under its Revolving Commitment, which may either be a Base Rate Loan or a Eurodollar Loan.

“ S&P ” shall mean Standard & Poor’s, a Division of the McGraw-Hill Companies.

“ Senior Note Indentures ” means the 2010 Senior Note Indenture and/or the 2011 Senior Note Indenture, as the case may be.

“ Senior Notes ” means the 2010 Senior Notes and/or the 2011 Senior Notes, as the case may be.

“ Subsidiary ” shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, or in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned,

controlled or held. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of the Borrower.

“ Swingline Commitment ” shall mean the commitment of the Swingline Lender to make Swingline Loans in an aggregate principal amount at any time outstanding not to exceed (i) during the period from the Restatement Date to the date that is five (5) Business Days thereafter, $75,000,000, and (ii) at all times after the period described in the preceding clause (i), $50,000,000.

“ Swingline Exposure ” shall mean, with respect to each Lender, the principal amount of the Swingline Loans in which such Lender is legally obligated either to make a Base Rate Loan or to purchase a participation in accordance with Section 2.4 , which shall equal such Lender’s Pro Rata Share of all outstanding Swingline Loans.

“ Swingline Lender ” shall mean SunTrust Bank, or any other Lender that may agree to make Swingline Loans hereunder.

“ Swingline Loan ” shall mean a loan made to the Borrower by the Swingline Lender under the Swingline Commitment.

“ Swingline Note ” shall mean the promissory note of the Borrower payable to the order of the Swingline Lender in the principal amount of the Swingline Commitment, substantially the form of Exhibit B .

“ Syndication Agent ” shall mean Wachovia Bank, National Association, as Syndication Agent.

“ Synthetic Lease ” shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

“ Synthetic Lease Obligations ” shall mean, with respect to any Person, the sum of (i) all remaining rental obligations of such Person as lessee under Synthetic Leases which are attributable to principal and, without duplication, (ii) all rental and purchase price payment obligations of such Person under such Synthetic Leases assuming such Person exercises the option to purchase the lease property at the end of the lease term.

“ 2010 Senior Notes ” means the unsecured 8-7/8% notes dated as of June 2, 2000 issued by the Borrower in an aggregate principal amount of $250,000,000 with a maturity date of June 15, 2010.

“ 2010 Senior Note Indenture ” means the indenture authorizing the issuance of the 2010 Senior Notes.

“ 2011 Senior Notes ” means the 7.10% unsecured notes dated as of March 21, 2001 issued by the Borrower in an aggregate principal amount of $225,000,000 with a maturity date of March 15, 2011.

“ 2011 Senior Note Indenture ” means the indenture authorizing the issuance of the 2011 Senior Notes.

“ Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“ TCPILP ” means TC PipeLines Intermediate Limited Partnership, a Delaware limited partnership.

“ Threshold Amount ” means $100,000,000.

“ Type ,” when used in reference to a Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Base Rate.

“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.2. Classifications of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class (e.g. a “Revolving Loan” or “Swingline Loan”) or by Type (e.g. a “Eurodollar Loan” or “Base Rate Loan”) or by Class and Type (e.g. “Revolving Eurodollar Loan”). Borrowings also may be classified and referred to by Class (e.g. “Revolving Borrowing”) or by Type (e.g. “Eurodollar Borrowing”) or by Class and Type (e.g. “Revolving Eurodollar Borrowing”).

Section 1.3. Accounting Terms and Determination . Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statement of the Borrower delivered pursuant to Section 5.1(a) ; provided , that if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Article VI to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article VI for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Borrower and the Required Lenders.

Section 1.4. Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the word “to” means “to but excluding”. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or

other document herein shall be construed as referring to such agreement, instrument or other document as it was originally executed or as it may from time to time be amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder” and words of similar import shall be construed to refer to this Agreement as a whole and not to any particular provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v) all references to a specific time shall be construed to refer to the time in the city and state of the Administrative Agent’s principal office, unless otherwise indicated.

ARTICLE II

AMOUNT AND TERMS OF THE COMMITMENTS

Section 2.1. General Description of Facilities . Subject to and upon the terms and conditions herein set forth, (i) the Lenders hereby establish in favor of the Borrower a revolving credit facility pursuant to which each Lender severally agrees (to the extent of such Lender’s Revolving Commitment) to make Revolving Loans to the Borrower in accordance with Section 2.2, (ii) the Issuing Bank agrees to issue Letters of Credit in accordance with Section 2.20, (iii) the Swingline Lender agrees to make Swingline Loans in accordance with Section 2.4 and (iv) each Lender agrees to purchase a participation interest in the Letters of Credit and the Swingline Loans pursuant to the terms and conditions hereof; provided, that in no event shall the aggregate principal amount of all outstanding Revolving Loans, Swingline Loans and outstanding LC Exposure exceed at any time the Aggregate Revolving Commitment Amount from time to time in effect.

Section 2.2. Revolving Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make Revolving Loans, ratably in proportion to its Pro Rata Share, to the Borrower, from time to time during the Availability Period, in an aggregate principal amount outstanding at any time that will not result in such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Commitment. During the Availability Period, the Borrower shall be entitled to borrow, prepay and reborrow Revolving Loans in accordance with the terms and conditions of this Agreement; provided, that the Borrower may not borrow or reborrow should there exist a Default or Event of Default.

Section 2.3. Procedure for Revolving Borrowings . The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Revolving Borrowing substantially in the form of Exhibit 2.3 (a “ Notice of Revolving Borrowing ”) (x) prior to 11:00 a.m. (New York time) on the requested date of each Base Rate Borrowing and (y) prior to 11:00 a.m. (New York time) three (3) Business Days prior to the requested date of each Eurodollar Borrowing. Each Notice of Revolving Borrowing shall be irrevocable and shall specify: (i) the aggregate principal amount of such Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the Type of such Revolving Loan

comprising such Borrowing and (iv) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period applicable thereto (subject to the provisions of the definition of Interest Period). Each Revolving Borrowing shall consist entirely of Base Rate Loans or Eurodollar Loans, as the Borrower may request. The aggregate principal amount of each Borrowing shall be not less than $5,000,000 or a larger multiple of $1,000,000; provided, that Base Rate Loans made pursuant to Section 2.4 or Section 2.20(d) may be made in lesser amounts as provided therein. At no time shall the total number of Eurodollar Borrowings outstanding at any time exceed five. Promptly following the receipt of a Notice of Revolving Borrowing in accordance herewith, the Administrative Agent shall advise each Lender of the details thereof and the amount of such Lender’s Revolving Loan to be made as part of the requested Revolving Borrowing.

Section 2.4. Swingline Commitment .

(a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower, from time to time during the Availability Period, in an aggregate principal amount outstanding at any time not to exceed the lesser of (i) the Swingline Commitment then in effect and (ii) the difference between the Aggregate Revolving Commitment Amount and the aggregate Revolving Credit Exposures of all Lenders; provided , that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. The Borrower shall be entitled to borrow, repay and reborrow Swingline Loans in accordance with the terms and conditions of this Agreement.

(b) The Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Swingline Borrowing substantially in the form of Exhibit 2.4 attached hereto (“ Notice of Swingline Borrowing ”) prior to 11:00 a.m. (New York time) on the requested date of each Swingline Borrowing. Each Notice of Swingline Borrowing shall be irrevocable and shall specify: (i) the principal amount of such Swingline Loan, (ii) the date of such Swingline Loan (which shall be a Business Day) and (iii) the account of the Borrower to which the proceeds of such Swingline Loan should be credited. The Administrative Agent will promptly advise the Swingline Lender of each Notice of Swingline Borrowing. Each Swingline Loan shall accrue interest at the Base Rate or any other interest rate as agreed between the Borrower and the Swingline Lender and shall have an Interest Period (subject to the definition thereof) as agreed between the Borrower and the Swingline Lender. The aggregate principal amount of each Swingline Loan shall be not less than $100,000 or a larger multiple of $50,000, or such other minimum amounts agreed to by the Swingline Lender and the Borrower. The Swingline Lender will make the proceeds of each Swingline Loan available to the Borrower in Dollars in immediately available funds at the account specified by the Borrower in the applicable Notice of Swingline Borrowing not later than 1:00 p.m. (New York time) on the requested date of such Swingline Loan.

(c) The Swingline Lender, at any time and from time to time in its sole discretion, may, on behalf of the Borrower (which hereby irrevocably authorizes and directs the Swingline Lender to act on its behalf), give a Notice of Revolving Borrowing to the Administrative Agent requesting the Lenders (including the Swingline Lender) to make Base Rate Loans in an amount equal to the unpaid principal amount of any Swingline Loan. Each Lender will make the proceeds of its Base Rate Loan included in such Borrowing available to the

Administrative Agent for the account of the Swingline Lender in accordance with Section 2.5 , which will be used solely for the repayment of such Swingline Loan.

(d) If for any reason a Base Rate Borrowing may not be (as determined in the sole discretion of the Administrative Agent), or is not, made in accordance with the foregoing provisions, then each Lender (other than the Swingline Lender) shall purchase an undivided participating interest in such Swingline Loan in an amount equal to its Pro Rata Share thereof on the date that such Base Rate Borrowing should have occurred. On the date of such required purchase, each Lender shall promptly transfer, in immediately available funds, the amount of its participating interest to the Administrative Agent for the account of the Swingline Lender. If such Swingline Loan bears interest at a rate other than the Base Rate, such Swingline Loan shall automatically become a Base Rate Loan on the effective date of any such participation and interest shall become payable on demand.

(e) Each Lender’s obligation to make a Base Rate Loan pursuant to Section 2.4(c) or to purchase the participating interests pursuant to Section 2.4(d) shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or any other Person may have or claim against the Swingline Lender, the Borrower or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event of Default or the termination of any Lender’s Revolving Commitment, (iii) the existence (or alleged existence) of any event or condition which has had or could reasonably be expected to have a Material Adverse Effect, (iv) any breach of this Agreement or any other Loan Document by the Borrower, the Administrative Agent or any Lender or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made available to the Swingline Lender by any Lender, the Swingline Lender shall be entitled to recover such amount on demand from such Lender, together with accrued interest thereon for each day from the date of demand thereof (i) at the Federal Funds Rate until the second Business Day after such demand and (ii) at the Base Rate at all times thereafter. Until such time as such Lender makes its required payment, the Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of the unpaid participation for all purposes of the Loan Documents. In addition, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Loans and any other amounts due to it hereunder, to the Swingline Lender to fund the amount of such Lender’s participation interest in such Swingline Loans that such Lender failed to fund pursuant to this Section 2.4, until such amount has been purchased in full.

Section 2.5. Funding of Borrowings .

(a) Each Lender will make available each Loan to be made by it hereunder on the proposed date thereof by wire transfer in immediately available funds by 1:00 p.m. (New York time) to the Administrative Agent at the Payment Office; provided , that the Swingline Loans will be made as set forth in Section 2.4 . The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts that it receives, in like funds by the close of business on such proposed date, to an account maintained by the Borrower with the Administrative Agent or at the Borrower’s option, by effecting a wire transfer of such amounts to an account designated by the Borrower to the Administrative Agent.

(b) Unless the Administrative Agent shall have been notified by any Lender (x) prior to 12:00 p.m. (New York time) on the requested date of a Base Rate Borrowing and (y) prior to 5:00 p.m. (New York time) one (1) Business Day prior to the date of a Eurodollar Borrowing in which such Lender is to participate that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date, and the Administrative Agent, in reliance on such assumption, may make available to the Borrower on such date a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender on the date of such Borrowing, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest at the Federal Funds Rate until the second Business Day after such demand and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Borrower, and the Borrower shall immediately pay such corresponding amount to the Administrative Agent together with interest at the rate specified for such Borrowing. Nothing in this subsection shall be deemed to relieve any Lender from its obligation to fund its Pro Rata Share of any Borrowing hereunder or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender hereunder.

(c) All Revolving Borrowings shall be made by the Lenders on the basis of their respective Pro Rata Shares. No Lender shall be responsible for any default by any other Lender in its obligations hereunder, and each Lender shall be obligated to make its Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.

Section 2.6. Interest Elections .

(a) Each Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing, and in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Notice of Borrowing. Thereafter, the Borrower may elect to convert such Borrowing into a different Type or to continue such Borrowing, and in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.6 . The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall NOT apply to Swingline Borrowings, which may not be converted or continued.

(b) To make an election pursuant to this Section 2.6 , the Borrower shall give the Administrative Agent prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing substantially in the form of Exhibit 2.6 attached hereto (a “ Notice of Conversion/Continuation ”) that is to be converted or continued, as the case may be, (x) prior to 11:00 a.m. (New York time) on the requested date of a conversion into a Base Rate Borrowing and (y) prior to 11:00 a.m. (New York time) three (3) Business Days prior to a continuation of or conversion into a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be irrevocable and shall specify (i) the Borrowing to which such Notice of Continuation/Conversion applies and if different options are being elected with respect to different portions thereof, the

portions thereof that are to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Notice of Continuation/Conversion, which shall be a Business Day, (iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the Interest Period applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of “Interest Period”. If any such Notice of Continuation/Conversion requests a Eurodollar Borrowing but does not specify an Interest Period, the Borrower shall be deemed to have selected an Interest Period of one month. The principal amount of any resulting Borrowing shall satisfy the minimum borrowing amount for Eurodollar Borrowings and Base Rate Borrowings set forth in Section 2.3 .

(c) If, on the expiration of any Interest Period in respect of any Eurodollar Borrowing, the Borrower shall have failed to deliver a Notice of Conversion/Continuation, then, unless such Borrowing is repaid as provided herein, the Borrower shall be deemed to have elected to convert such Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a Eurodollar Borrowing if a Default or an Event of Default exists, unless the Administrative Agent and each of the Lenders shall have otherwise consented in writing. No conversion of any Eurodollar Loans shall be permitted except on the last day of the Interest Period in respect thereof.

(d) Upon receipt of any Notice of Conversion/Continuation, the Administrative Agent shall promptly notify each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

Section 2.7. Optional Reduction and Termination of Commitments .

(a) Unless previously terminated, all Revolving Commitments, Swingline Commitments and LC Commitments shall terminate on the Revolving Commitment Termination Date.

(b) Upon at least three (3) Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent (which notice shall be irrevocable), the Borrower may reduce the Aggregate Revolving Commitments in part or terminate the Aggregate Revolving Commitments in whole; provided , that (i) any partial reduction shall apply to reduce proportionately and permanently the Revolving Commitment of each Lender, (ii) any partial reduction pursuant to this Section 2.7 shall be in an amount of at least $5,000,000 and any larger multiple of $1,000,000, and (iii) no such reduction shall be permitted which would reduce the Aggregate Revolving Commitment Amount to an amount less than the outstanding Revolving Credit Exposures of all Lenders. Any such reduction in the Aggregate Revolving Commitment Amount below the sum of the principal amount of the Swingline Commitment and the LC Commitment shall result in a proportionate reduction (rounded to the next lowest integral multiple of $100,000) in the Swingline Commitment and the LC Commitment.

Section 2.8. Repayment of Loans .

(a) The outstanding principal amount of all Revolving Loans shall be due and payable (together with accrued and unpaid interest thereon) on the Revolving Commitment Termination Date.

(b) The principal amount of each Swingline Borrowing shall be due and payable (together with accrued and unpaid interest thereon) on the earlier of (i) the last day of the Interest Period applicable to such Borrowing and (ii) the Revolving Commitment Termination Date.

Section 2.9. Evidence of Indebtedness . (a) Each Lender shall maintain in accordance with its usual practice appropriate records evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable thereon and paid to such Lender from time to time under this Agreement. The Administrative Agent shall maintain appropriate records in which shall be recorded (i) the Revolving Commitment of each Lender, (ii) the amount of each Loan made hereunder by each Lender, the Class and Type thereof and the Interest Period applicable thereto, (iii) the date of each continuation thereof pursuant to Section 2.6 , (iv) the date of each conversion of all or a portion thereof to another Type pursuant to Section 2.6 , (v) the date and amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder in respect of such Loans and (vi) both the date and amount of any sum received by the Administrative Agent hereunder from the Borrower in respect of the Loans and each Lender’s Pro Rata Share thereof. The entries made in such records shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided , that the failure or delay of any Lender or the Administrative Agent in maintaining or making entries into any such record or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans (both principal and unpaid accrued interest) of such Lender in accordance with the terms of this Agreement.

(b) At the request of any Lender (including the Swingline Lender) at any time, the Borrower agrees that it will execute and deliver to such Lender a Revolving Credit Note and, in the case of the Swingline Lender only, a Swingline Note, payable to the order of such Lender.

Section 2.10. Prepayments .

(a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, without premium or penalty, by giving irrevocable written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent no later than (i) in the case of prepayment of any Eurodollar Borrowing, 11:00 a.m. (New York time) not less than three (3) Business Days prior to any such prepayment, (ii) in the case of any prepayment of any Base Rate Borrowing, not less than one Business Day prior to the date of such prepayment, and (iii) in the case of Swingline Borrowings, prior to 11:00 a.m. (New York time) on the date of such prepayment. Each such notice shall be irrevocable and shall specify the proposed date of such prepayment and the principal amount of each Borrowing or portion thereof to be prepaid. Upon receipt of any such notice, the Administrative Agent shall promptly notify each affected Lender of the contents thereof and of such Lender’s Pro Rata Share of any such

prepayment. If such notice is given, the aggregate amount specified in such notice shall be due and payable on the date designated in such notice, together with accrued interest to such date on the amount so prepaid in accordance with Section 2.11(d) ; provided , that if a Eurodollar Borrowing is prepaid on a date other than the last day of an Interest Period applicable thereto, the Borrower shall also pay all amounts required pursuant to Section 2.17 . Each partial prepayment of any Loan (other than a Swingline Loan) shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type pursuant to Section 2.2 or in the case of a Swingline Loan pursuant to Section 2.4 . Each prepayment of a Borrowing shall be applied ratably to the Loans comprising such Borrowing.

(b) If at any time the Revolving Credit Exposure of all Lenders exceeds the Aggregate Revolving Commitment Amount, as reduced pursuant to Section 2.7 or otherwise, the Borrower shall immediately repay Swingline Loans and Revolving Loans in an amount equal to such excess, together with all accrued and unpaid interest on such excess amount and any amounts due under Section 2.17 . Each prepayment shall be applied first to the Swingline Loans to the full extent thereof, second to the Base Rate Loans to the full extent thereof, and finally to Eurodollar Loans to the full extent thereof. If after giving effect to prepayment of all Swingline Loans and Revolving Loans, the Revolving Credit Exposure of all Lenders exceeds the Aggregate Revolving Commitment Amount, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Issuing Bank and the Lenders, an amount in cash equal to such excess plus any accrued and unpaid fees thereon to be held as collateral for the LC Exposure. Such account shall be administered in accordance with Section 2.20(g) hereof.

Section 2.11. Interest on Loans .

(a) The Borrower shall pay interest on each Base Rate Loan at the Base Rate in effect from time to time and on each Eurodollar Loan at the Adjusted LIBO Rate for the applicable Interest Period in effect for such Loan, plus , in each case, the Applicable Margin in effect from time to time.

(b) The Borrower shall pay interest on each Swingline Loan at the rate applicable to such Loan pursuant to Section 2.4(b) .

(c) While an Event of Default exists or after acceleration, at the option of the Required Lenders, the Borrower shall pay interest (“ Default Interest ”) with respect to all Eurodollar Loans at the rate otherwise applicable for the then-current Interest Period plus an additional 2% per annum until the last day of such Interest Period, and thereafter, and with respect to all Base Rate Loans (including all Swingline Loans) and all other Obligations hereunder (other than Loans), at an all-in rate in effect for Base Rate Loans, plus an additional 2% per annum.

(d) Interest on the principal amount of all Loans shall accrue from and including the date such Loans are made to but excluding the date of any repayment thereof. Interest on all outstanding Base Rate Loans shall be payable quarterly in arrears on the last day of each March, June, September and December and on the Revolving Commitment Termination Date. Interest on all outstanding Eurodollar Loans shall be payable on the last day of each

Interest Period applicable thereto, and, in the case of any Eurodollar Loans having an Interest Period in excess of three months or 90 days, respectively, on each day which occurs every three months or 90 days, as the case may be, after the initial date of such Interest Period, and on the Revolving Commitment Termination Date. Interest on each Swingline Loan shall be payable on the maturity date of such Loan, which shall be the last day of the Interest Period applicable thereto, and on the Revolving Commitment Termination Date. Interest on any Loan which is converted into a Loan of another Type or which is repaid or prepaid shall be payable on the date of such conversion or on the date of any such repayment or prepayment (on the amount repaid or prepaid) thereof. All Default Interest shall be payable on demand.

(e) The Administrative Agent shall determine each interest rate applicable to the Loans hereunder and shall promptly notify the Borrower and the Lenders of such rate in writing (or by telephone, promptly confirmed in writing). Any such determination shall be conclusive and binding for all purposes, absent manifest error.

Section 2.12. Fees .

(a) The Borrower shall pay to the Administrative Agent and the Syndication Agent for their own respective accounts fees in the amounts and at the times previously agreed upon in writing by the Borrower and the Administrative Agent or the Syndication Agent, as applicable, including the amounts described in the Fee Letter.

(b) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Percentage per annum (determined daily in accordance with Schedule I ) on the daily amount of the Revolving Commitment (whether used or unused) of such Lender during the Availability Period; provided , that if such Lender continues to have any Revolving Credit Exposure after the Revolving Commitment Termination Date, then the facility fee shall continue to accrue on the daily amount of such Revolving Credit Exposure from and after the Revolving Commitment Termination Date to the date that all of such Lender’s Revolving Credit Exposure has been paid in full.

(c) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a utilization fee, which shall accrue at the Applicable Percentage per annum (determined daily in accordance with Schedule I ) on the daily amount of the Revolving Credit Exposure for each day that the Revolving Credit Exposure on such date equals or exceeds 50% of the Aggregate Revolving Commitment Amount on such date during the Availability Period; provided that if the Lenders continue to have Revolving Credit Exposure that equals or exceeds 50% of the Aggregate Revolving Commitment Amount after the Revolving Commitment Termination Date, then the utilization fee shall continue to accrue on the daily amount of such Revolving Credit Exposure from and after the Revolving Commitment Termination Date to the date that all of such Revolving Credit Exposure has been paid in full.

(d) The Borrower agrees to pay (i) to the Administrative Agent, for the account of each Lender, a letter of credit fee with respect to its participation in each Letter of Credit, which shall accrue at a rate per annum equal to the Applicable Margin for Eurodollar Loans then in effect on the average daily amount of such Lender’s LC Exposure attributable to such Letter of Credit during the period from and including the date of issuance of such Letter of

Credit to but excluding the date on which such Letter of Credit expires or is drawn in full (including without limitation any LC Exposure that remains outstanding after the Revolving Commitment Termination Date) and (ii) to the Issuing Bank for its own account a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the Availability Period (or until the date that such Letter of Credit is irrevocably cancelled, whichever is later), as well as the Issuing Bank’s standard fees with respect to issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Notwithstanding the foregoing, if the Required Lenders elect to increase the interest rate on the Loans to the Default Interest pursuant to Section 2.11(c) , the rate per annum used to calculate the letter of credit fee pursuant to clause (i) above shall automatically be increased by an additional 2% per annum.

(e) The Borrower shall pay to the Administrative Agent all other fees previously agreed upon by the Borrower and the Administrative Agent in the Fee Letter, which shall be due and payable on the Restatement Date.

(f) Accrued fees under paragraphs (b), (c) and (d) above shall be payable quarterly in arrears on the last day of each March, June, September and December, and on the Revolving Commitment Termination Date (and if later, the date the Loans and LC Exposure shall be repaid in their entirety); provided further , that any such fees accruing after the Revolving Commitment Termination Date shall be payable on demand.

Section 2.13. Computation of Interest and Fees . Interest hereunder based on the Administrative Agent’s prime lending rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed (including the first day but excluding the last day). All other interest and all fees shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Each determination by the Administrative Agent of an interest amount or fee hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes.

Section 2.14. Inability to Determine Interest Rates . If prior to the commencement of any Interest Period for any Eurodollar Borrowing,

(i) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant interbank market, adequate means do not exist for ascertaining LIBOR for such Interest Period, or

(ii) the Administrative Agent shall have received notice from the Required Lenders that the Adjusted LIBO Rate does not adequately and fairly reflect the cost to such Lenders (or Lender, as the case may be) of making, funding or maintaining their (or its, as the case may be) Eurodollar Loans for such Interest Period,

the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in writing) to the Borrower and to the Lenders as soon as practicable thereafter. In the case of

Eurodollar Loans, until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) the obligations of the Lenders to make Eurodollar Revolving Loans or to continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended and (ii) all such affected Loans shall be converted into Base Rate Loans on the last day of the then current Interest Period applicable thereto unless the Borrower prepays such Loans in accordance with this Agreement. Unless the Borrower notifies the Administrative Agent at least one Business Day before the date of any Eurodollar Revolving Borrowing for which a Notice of Revolving Borrowing has previously been given that it elects not to borrow on such date, then such Revolving Borrowing shall be made as a Base Rate Borrowing.

Section 2.15. Illegality . If any Change in Law shall make it unlawful or impossible for any Lender to make, maintain or fund any Eurodollar Loan and such Lender shall so notify the Administrative Agent, the Administrative Agent shall promptly give notice thereof to the Borrower and the other Lenders, whereupon until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make Eurodollar Revolving Loans, or to continue or convert outstanding Loans as or into Eurodollar Loans, shall be suspended. In the case of the making of a Eurodollar Revolving Borrowing, such Lender’s Revolving Loan shall be made as a Base Rate Loan as part of the same Revolving Borrowing for the same Interest Period and if the affected Eurodollar Loan is then outstanding, such Loan shall be converted to a Base Rate Loan either (i) on the last day of the then current Interest Period applicable to such Eurodollar Loan if such Lender may lawfully continue to maintain such Loan to such date or (ii) immediately if such Lender shall determine that it may not lawfully continue to maintain such Eurodollar Loan to such date. Notwithstanding the foregoing, the affected Lender shall, prior to giving such notice to the Administrative Agent, designate a different Applicable Lending Office if such designation would avoid the need for giving such notice and if such designation would not otherwise be disadvantageous to such Lender in the good faith exercise of its discretion.

Section 2.16. Increased Costs .

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit or similar requirement that is not otherwise included in the determination of the Adjusted LIBO Rate hereunder against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

(ii) impose on any Lender or on the Issuing Bank or the eurodollar interbank market any other condition affecting this Agreement or any Eurodollar Loans made by such Lender or any Letter of Credit or any participation therein;

and the result of either of the foregoing is to increase the cost to such Lender of making, converting into, continuing or maintaining a Eurodollar Loan or to increase the cost to such Lender or the Issuing Bank of participating in or issuing any Letter of Credit or to reduce the amount received or receivable by such Lender or the Issuing Bank hereunder (whether of

principal, interest or any other amount), then the Borrower shall promptly pay, upon written notice from and demand by such Lender on the Borrower (with a copy of such notice and demand to the Administrative Agent), to the Administrative Agent for the account of such Lender, within five Business Days after the date of such notice and demand, additional amount or amounts sufficient to compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or the Issuing Bank shall have determined that on or after the date of this Agreement any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital (or on the capital of such Lender’s or the Issuing Bank’s parent corporation) as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s parent corporation could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies or the policies of such Lender’s or the Issuing Bank’s parent corporation with respect to capital adequacy) then, from time to time, within five (5) Business Days after receipt by the Borrower of written demand by such Lender (with a copy thereof to the Administrative Agent), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s parent corporation for any such reduction suffered.

(c) A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s parent corporation, as the case may be, specified in paragraph (a) or (b) of this Section 2.16 shall be delivered to the Borrower (with a copy to the Administrative Agent) and shall be conclusive, absent manifest error. The Borrower shall pay any such Lender or the Issuing Bank, as the case may be, such amount or amounts within 10 days after receipt thereof.

(d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.16 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided , that the Borrower shall not be required to compensate a Lender or the Issuing Bank under this Section 2.16 for any increased costs or reductions incurred more than 90 days prior to the date that such Lender or the Issuing Bank notifies the Borrower of such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor; provided further , that if the Change in Law giving rise to such increased costs or reductions is retroactive, then such 90 day period shall be extended to include the period of such retroactive effect.

Section 2.17. Funding Indemnity . In the event of (a) the payment of any principal of a Eurodollar Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion or continuation of a Eurodollar Loan other than on the last day of the Interest Period applicable thereto or (c) the failure by the Borrower to borrow, prepay, convert or continue any Eurodollar Loan on the date specified in any applicable notice (regardless of whether such notice is withdrawn or revoked). In the case of a Eurodollar Loan, such loss, cost or expense shall be deemed to include an amount determined by such Lender to be the excess, if any, of (A) the amount of interest that would have accrued on the principal amount of such Eurodollar Loan if such event had not occurred at the Adjusted

LIBO Rate applicable to such Eurodollar Loan for the period from the date of such event to the last day of the then current Interest Period therefor (or in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Eurodollar Loan) over (B) the amount of interest that would accrue on the principal amount of such Eurodollar Loan for the same period if the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid or converted or the date on which the Borrower failed to borrow, convert or continue such Eurodollar Loan. A certificate as to any additional amount payable under this Section 2.17 submitted to the Borrower by any Lender (with a copy to the Administrative Agent) shall be conclusive, absent manifest error.

Section 2.18. Taxes .

(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided , that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.18 ) the Administrative Agent, any Lender or the Issuing Bank (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within five (5) Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.18 ) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the Code or any treaty to which the United States is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly

completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Without limiting the generality of the foregoing, each Foreign Lender agrees that it will deliver to the Administrative Agent and the Borrower (or in the case of a Participant, to the Lender from which the related participation shall have been purchased), as appropriate, two (2) duly completed copies of (i) Internal Revenue Service Form W-8 ECI, or any successor form thereto, certifying that the payments received from the Borrower hereunder are effectively connected with such Foreign Lender’s conduct of a trade or business in the United States; or (ii) Internal Revenue Service Form W-8 BEN, or any successor form thereto, certifying that such Foreign Lender is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding tax on payments of interest; or (iii) Internal Revenue Service Form W-8 BEN, or any successor form prescribed by the Internal Revenue Service, together with a certificate (A) establishing that the payment to the Foreign Lender qualifies as “portfolio interest” exempt from U.S. withholding tax under Code section 871(h) or 881(c), and (B) stating that (1) the Foreign Lender is not a bank for purposes of Code section 881(c)(3)(A), or the obligation of the Borrower hereunder is not, with respect to such Foreign Lender, a loan agreement entered into in the ordinary course of its trade or business, within the meaning of that section; (2) the Foreign Lender is not a 10% shareholder of the Borrower within the meaning of Code section 871(h)(3) or 881(c)(3)(B); and (3) the Foreign Lender is not a controlled foreign corporation that is related to the Borrower within the meaning of Code section 881(c)(3)(C); or (iv) such other Internal Revenue Service forms as may be applicable to the Foreign Lender, including Forms W-8 IMY or W-8 EXP. Each such Foreign Lender shall deliver to the Borrower and the Administrative Agent such forms on or before the date that it becomes a party to this Agreement (or in the case of a Participant, on or before the date such Participant purchases the related participation). In addition, each such Foreign Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Foreign Lender. Each such Foreign Lender shall promptly notify the Borrower and the Administrative Agent at any time that it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the Internal Revenue Service for such purpose).

Section 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs .

(a) The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Sections 2.16 , 2.17 or 2.18 , or otherwise) prior to 12:00 noon (New York time) on the date when due, in immediately available funds, free and clear of any defenses, rights of set-off, counterclaim, or withholding or deduction of taxes. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at the Payment Office, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.16 , 2.17 and 2.18 and 10.3 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business

Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be made payable for the period of such extension. All payments hereunder shall be made in Dollars.

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans that would result in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided , that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements or Swingline Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount or amounts due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment

to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.4(b) , 2.5(b) , 2.19(d) , 2.20(d) or (e) or 10.3(d) , then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

Section 2.20. Letters of Credit .

(a) At any time before the fifth Business Day prior to expiration of the Availability Period, the Issuing Bank, in reliance upon the agreements of the other Lenders pursuant to Section 2.20(d) , agrees to issue, at the request of the Borrower, Letters of Credit for the account of the Borrower or any of its Subsidiaries on the terms and conditions hereinafter set forth; provided , that (i) each Letter of Credit shall expire on the earlier of (A) the date one year after the date of issuance of such Letter of Credit (or in the case of any renewal or extension thereof, one year after such renewal or extension) and (B) the date that is five (5) Business Days prior to the Revolving Commitment Termination Date; (ii) each Letter of Credit shall be in a stated amount of at least $100,000; and (iii) the Borrower may not request any Letter of Credit, if, after giving effect to such issuance (A) the aggregate LC Exposure would exceed the LC Commitment or (B) the aggregate Revolving Credit Exposure of all Lenders would exceed the Aggregate Revolving Commitment Amount. Each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank without recourse a participation in each Letter of Credit equal to such Lender’s Pro Rata Share of the aggregate amount available to be drawn under such Letter of Credit on the date of issuance with respect to all Letters of Credit. Each issuance of a Letter of Credit shall be deemed to utilize the Revolving Commitment of each Lender by an amount equal to the amount of such participation.

(b) To request the issuance of a Letter of Credit (or any amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall give the Issuing Bank and the Administrative Agent irrevocable written notice at least three (3) Business Days prior to the requested date of such issuance specifying the date (which shall be a Business Day) such Letter of Credit is to be issued (or amended, extended or renewed, as the case may be), the expiration date of such Letter of Credit, the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. In addition to the satisfaction of the conditions in Article III , the issuance of such Letter of Credit (or any amendment which increases the amount of such Letter of Credit) will be subject to the further conditions that such Letter of Credit shall be in such form and contain such terms as the Issuing Bank shall approve and that the Borrower shall have executed and delivered any additional applications, agreements and instruments relating to such Letter of Credit as the Issuing Bank shall reasonably require; provided , that in the event of any conflict between such applications, agreements or instruments and this Agreement, the terms of this Agreement shall control.

(c) At least two Business Days prior to the issuance of any Letter of Credit, the Issuing Bank will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received such notice and if not, the Issuing Bank will provide the Administrative Agent with a copy thereof. Unless the Issuing Bank has received notice from the Administrative Agent on or before the Business Day immediately preceding the date the Issuing Bank is to issue the requested Letter of Credit (1) directing the Issuing Bank not to issue the Letter of Credit because such issuance is not then permitted hereunder because of the limitations set forth in Section 2.20(a) or that one or more conditions specified in Article III are not then satisfied, then, subject to the terms and conditions hereof, the Issuing Bank shall, on the requested date, issue such Letter of Credit in accordance with the Issuing Bank’s usual and customary business practices.

(d) The Issuing Bank shall examine all documents purporting to represent a demand for payment under a Letter of Credit promptly following its receipt thereof. The Issuing Bank shall notify the Borrower and the Administrative Agent of such demand for payment and whether the Issuing Bank has made or will make a LC Disbursement thereunder; provided , that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to such LC Disbursement. The Borrower shall be irrevocably and unconditionally obligated to reimburse the Issuing Bank for any LC Disbursements paid by the Issuing Bank in respect of such drawing, without presentment, demand or other formalities of any kind. Unless the Borrower shall have notified the Issuing Bank and the Administrative Agent prior to 11:00 a.m. (New York time) on the Business Day immediately prior to the date on which such drawing is honored that the Borrower intends to reimburse the Issuing Bank for the amount of such drawing in funds other than from the proceeds of Revolving Loans, the Borrower shall be deemed to have timely given a Notice of Revolving Borrowing to the Administrative Agent requesting the Lenders to make a Base Rate Borrowing on the date on which such drawing is honored in an exact amount due to the Issuing Bank; provided , that for purposes solely of such Borrowing, the conditions precedents set forth in Section 3.2 hereof shall not be applicable. The Administrative Agent shall notify the Lenders of such Borrowing in accordance with Section 2.3 , and each Lender shall make the proceeds of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the account of the Issuing Bank in accordance with Section 2.5 . The proceeds of such Borrowing shall be applied directly by the Administrative Agent to reimburse the Issuing Bank for such LC Disbursement.

(e) If for any reason a Base Rate Borrowing may not be (as determined in the sole discretion of the Administrative Agent), or is not, made in accordance with the foregoing provisions, then each Lender (other than the Issuing Bank) shall be obligated to fund the participation that such Lender purchased pursuant to subsection (a) in an amount equal to its Pro Rata Share of such LC Disbursement on and as of the date which such Base Rate Borrowing should have occurred. Each Lender’s obligation to fund its participation shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (i) any setoff, counterclaim, recoupment, defense or other right that such Lender or any other Person may have against the Issuing Bank or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event of Default or the termination of the Aggregate Revolving Commitments, (iii) any adverse change in the condition (financial or otherwise) of the Borrower or any of its Subsidiaries, (iv) any breach of this Agreement by the Borrower or any other

Lender, (v) any amendment, renewal or extension of any Letter of Credit or (vi) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. On the date that such participation is required to be funded, each Lender shall promptly transfer, in immediately available funds, the amount of its participation to the Administrative Agent for the account of the Issuing Bank. Whenever, at any time after the Issuing Bank has received from any such Lender the funds for its participation in a LC Disbursement, the Issuing Bank (or the Administrative Agent on its behalf) receives any payment on account thereof, the Administrative Agent or the Issuing Bank, as the case may be, will distribute to such Lender its Pro Rata Share of such payment; provided, that if such payment is required to be returned for any reason to the Borrower or to a trustee, receiver, liquidator, custodian or similar official in any bankruptcy proceeding, such Lender will return to the Administrative Agent or the Issuing Bank any portion thereof previously distributed by the Administrative Agent or the Issuing Bank to it.

(f) To the extent that any Lender shall fail to pay any amount required to be paid pursuant to paragraph (d) above on the due date therefor, such Lender shall pay interest to the Issuing Bank (through the Administrative Agent) on such amount from such due date to the date such payment is made at a rate per annum equal to the Federal Funds Rate; provided , that if such Lender shall fail to make such payment to the Issuing Bank within three (3) Business Days of such due date, then, retroactively to the due date, such Lender shall be obligated to pay interest on such amount at the rate set forth in Section 2.11(c) .

(g) If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Issuing Bank and the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid fees thereon; provided , that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (g) or (h) of Section 8.1 . Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Borrower agrees to execute any documents and/or certificates to effectuate the intent of this paragraph. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest and profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it had not been reimbursed and to the extent so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, with the consent of the Required Lenders, be applied to satisfy other obligations of the Borrower under this Agreement and the other Loan Documents. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not so applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

(h) Promptly following the end of each calendar quarter, the Issuing Bank shall deliver (through the Administrative Agent) to each Lender and the Borrower a report describing the aggregate Letters of Credit outstanding at the end of such Fiscal Quarter. Upon the request of any Lender from time to time, the Issuing Bank shall deliver to such Lender any other information reasonably requested by such Lender with respect to each Letter of Credit then outstanding.

(i) The Borrower’s obligation to reimburse LC Disbursements hereunder shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under all circumstances whatsoever and irrespective of any of the following circumstances:

(i) Any lack of validity or enforceability of any Letter of Credit or this Agreement, or whether any Letter of Credit was issued for the account of any Subsidiary of Borrower;

(ii) The existence of any claim, set-off, defense or other right which the Borrower or any Subsidiary or Affiliate of the Borrower may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such beneficiary or transferee may be acting), any Lender (including the Issuing Bank) or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto or any unrelated transaction;

(iii) Any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect;

(iv) Payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document to the Issuing Bank that does not comply with the terms of such Letter of Credit;

(v) Any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.20 , constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; or

(vi) The existence of a Default or an Event of Default.

Neither the Administrative Agent, the Issuing Bank, the Lenders nor any Related Party of any of the foregoing shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to above), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided , that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any actual direct damages (as opposed to special, indirect (including claims for lost profits or other

consequential damages), or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise due care when determining whether drafts or other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree, that in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised due care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(j) Each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, or the International Standby Practices (1998 Revision), International Chamber of Commerce Publication No. 590, in each case as the same may be amended from time to time, and, to the extent not inconsistent therewith, the governing law of this Agreement set forth in Section 10.5 .

(k) For all purposes of this Agreement, the letter of credit issued by SunTrust Bank, in its capacity as Issuing Bank under the existing Credit Agreement, on May 2, 2006, for the account of the Borrower (formerly Northern Border Partners, L.P.) in favor of Western Gas Resources in the sum of $10,000,000, shall constitute a Letter of Credit issued pursuant to this Section 2.20 of this Agreement effective as of the Restatement Date.

Section 2.21. Increase of Commitments; Additional Lenders .

(a) So long as no Event of Default has occurred and is continuing, from time to time after the Restatement Date, the Borrower may, upon at least 30 days’ written notice to the Administrative Agent and each of the Lenders that the Borrower selects for participation, propose to increase the Aggregate Revolving Commitments to an amount not to exceed $1,000,000,000 (the amount of any such increase, the “ Additional Commitment Amount ”). The Borrower may also invite one or more Eligible Assignees to become additional Lenders for all or any part of the Additional Commitment Amount provided that any new bank or financial institution must be reasonably acceptable to the Administrative Agent and shall execute a joinder agreement in form and substance satisfactory to the Administrative Agent. Each selected Lender (and Eligible Assignee, if applicable) shall have the right for a period of 15 days following receipt of such notice, to elect by written notice to the Borrower and the Administrative Agent to increase its Revolving Commitment by a principal amount of the Additional Commitment Amount as indicated in such notice. No Lender (or any successor thereto) shall have any obligation to increase its Revolving Commitment or its other obligations under this Agreement and the other Loan Documents, and any decision by a Lender to increase its Revolving Commitment shall be made in its sole discretion independently from any other Lender.

(b) If any Lender shall not elect to increase its Revolving Commitment pursuant to subsection (a) of this Section 2.21 , the Borrower may designate another bank or other financial institution (which may be, but need not be, one or more of the existing Lenders) which at the time agrees to, in the case of any such Person that is an existing Lender, increase its Revolving Commitment and in the case of any other such Person (an “ Additional Lender ”), become a party to this Agreement; provided, however , that any new bank or financial institution must be reasonably acceptable to the Administrative Agent. The sum of the increases in the Revolving Commitments of the existing Lenders pursuant to this subsection (b) plus the Revolving Commitments of the Additional Lenders shall not in the aggregate exceed the unsubscribed amount of the Additional Commitment Amount.

(c) An increase in the Aggregate Revolving Commitments pursuant to this Section 2.21 shall become effective upon the receipt by the Administrative Agent of an supplement or joinder in form and substance satisfactory to the Administrative Agent executed by the Borrower and by each Additional Lender and by each other Lender whose Revolving Commitment is to be increased, setting forth the new Revolving Commitments of such Lenders and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be bound by all the terms and provisions hereof, together with Notes evidencing such increase in the Revolving Commitments, and such evidence of appropriate organizational authorization on the part of the Borrower with respect to the increase in the Revolving Commitments and such opinions of counsel for the Borrower with respect to the increase in the Revolving Commitments as the Administrative Agent may reasonably request.

(d) Upon the acceptance of any such agreement by the Administrative Agent, the Aggregate Revolving Commitment Amount shall automatically be increased by the amount of the Revolving Commitments added through such agreement and Schedule II shall automatically be deemed amended to reflect the Revolving Commitments of all Lenders after giving effect to the addition of such Revolving Commitments.

(e) Upon any increase in the Aggregate Revolving Commitments pursuant to this Section 2.21 that is not pro rata among all Lenders, (x) within five Business Days, in the case of any Base Rate Loans then outstanding, and at the end of the then current Interest Period with respect thereto, in the case of any Eurodollar Loans then outstanding, the Borrower shall prepay such Loans in their entirety and, to the extent the Borrower elects to do so and subject to the conditions specified in Article III , the Borrower shall reborrow Loans from the Lenders in proportion to their respective Revolving Commitments after giving effect to such increase, until such time as all outstanding Loans are held by the Lenders in proportion to their respective Commitments after giving effect to such increase and (y) effective upon such increase, the amount of the participations held by each Lender in each Letter of Credit then outstanding shall be adjusted automatically such that, after giving effect to such adjustments, the Lenders shall hold participations in each such Letter of Credit in proportion to their respective Revolving Commitments.

Section 2.22. Mitigation of Obligations . If any Lender requests compensation under Section 2.16 , or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.18 , then such Lender shall use reasonable efforts to designate a different lending office for

funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the sole judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable under Section 2.16 or Section 2.18 , as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all costs and expenses incurred by any Lender in connection with such designation or assignment.

Section 2.23. Extension of Maturity Date .

(a) Requests for Extension . After the first anniversary of the Restatement Date, the Borrower may, by written notice to the Administrative Agent (who shall promptly notify the Lenders), not later than 45 days prior to the Maturity Date then in effect hereunder (the “ Existing Maturity Date ”), request the Lenders to extend such Existing Maturity Date for an additional year. The Borrower shall not make any such request more than once during any twelve month period or more than twice during the term of this Agreement. The date any such written request is received by the Administrative Agent is the “ Request Date ”, and such request shall specify the date (the “ Extension Effective Date ”) such extension would become effective; provided that such Extension Effective Date must be a Business Day and shall be at least 45 days, and not more than 60 days, after the Request Date.

(b) Lender Elections to Extend . Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent given not later than 15 days after the Request Date (or such later date as the Borrower and Administrative Agent may agree), advise the Administrative Agent whether or not such Lender agrees to such extension. Each Lender that determines not to so extend its Maturity Date, or that fails to advise the Administrative Agent as to its election under this Section 2.23(b) , shall be a “ Non-Extending Lender ” for purposes of this Section. The Revolving Commitment of each Non-Extending Lender shall be terminated on the Existing Maturity Date for such Lender (without regard to extensions by any other Lenders) and on such Existing Maturity Date the Borrower shall pay in full the unpaid principal amount of all Loans owing to such Non-Extending Lender, together with all accrued and unpaid interest thereon and all fees accrued under this Agreement and unpaid to such date, and all other amounts then due to such Non-Extending Lender under this Agreement. The election of any Lender to agree to such extension (each such Lender is herein called an “ Extending Lender ”) shall not obligate any other Lender to so agree.

(c) Notification by Administrative Agent . The Administrative Agent shall promptly notify the Borrower of each Lender’s determination under this Section and shall promptly notify the Extending Lenders of the aggregate Revolving Commitments of the Non-Extending Lenders.

(d) Increased and Additional Commitments . Each Extending Lender may offer to increase its respective Revolving Commitment by an amount not to exceed the aggregate amount of the Non-Extending Lenders’ Revolving Commitments, and such Extending Lender shall deliver to the Administrative Agent a notice of its offer to so increase its Revolving Commitment no later than 20 days after the Request Date (or such later date to which the Borrower and the Administrative Agent shall agree), and such offer shall be irrevocable until the

Extension Effective Date. To the extent the aggregate amount of additional Revolving Commitments that the Extending Lenders offer pursuant to the preceding sentence exceeds the aggregate amount of the Non-Extending Lenders’ Revolving Commitments, such additional Revolving Commitments shall be reduced on a pro rata basis. To the extent the aggregate amount of Revolving Commitments that the Extending Lenders have so offered to extend is less than the aggregate amount of the Revolving Commitments that the Borrower has so requested to be extended, the Borrower shall have the right but not the obligation to require any Non-Extending Lender to (and any such Non-Extending Lender shall) assign in full its rights and obligations under this Agreement to one or more Extending Lenders or other banks or financial institutions qualifying as Eligible Assignees and otherwise reasonably acceptable to the Administrative Agent, which at the time agree to, in the case of any Extending Lender, increase its Revolving Commitment, and in the case of any new Lender (each, an “ Additional Commitment Lender ”) become a party to this Agreement; provided that (i) such assignment is otherwise in compliance with all requirements and provisions of Section 10.4(b) , (ii) such Non-Extending Lender receives payment in full of the unpaid principal amount of all Loans owing to such Non-Extending Lender, together with all accrued and unpaid interest thereon and all fees accrued under this Agreement and unpaid to such date, and all other amounts then due to such Non-Extending Lender under this Agreement, and (iii) any such assignment shall be effective on the date on or before such Extension Effective Date as may be specified by the Borrower and agreed to by the respective Extending Lenders and Additional Commitment Lenders, as the case may be, and the Administrative Agent.

(e) Minimum Extension Requirement . If (and only if) the total of the Revolving Commitments of the Lenders that have agreed so to extend the then Existing Maturity Date and the additional Revolving Commitments of the Additional Commitment Lenders shall be more than 50% of the aggregate amount of the Revolving Commitments in effect on the Request Date, then, effective as of the Extension Effective Date, the Maturity Date of each Extending Lender and of each such Additional Commitment Lender shall be extended to the date falling one year after the Existing Maturity Date of each such Extending Lender (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.

(f) Conditions to Effectiveness of Extensions . Notwithstanding the foregoing, the extension of the Maturity Date pursuant to this Section shall not be effective with respect to any Lender unless:

(i) no Default shall have occurred and be continuing on the date of such extension and after giving effect thereto;

(ii) the representations and warranties contained in this Agreement are true and correct on and as of the date of such extension and after giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

(iii) on the Maturity Date applicable to each Non-Extending Lender, the Borrower shall prepay any Revolving Loans and Swingline Borrowings outstanding

on such date, accrued interest thereon, accrued fees payable hereunder, and any additional amounts required pursuant to Section 2.17 , to the extent necessary to satisfy in full Obligations due to such Non-Extending Lender as of such date; and

(iv) on the Maturity Date applicable to each Non-Extending Lender, the Borrower shall cash collateralize any existing Letters of Credit or make other credit accommodations satisfactory to the Issuing Bank with respect to such Letters of Credit to the extent that, after giving effect to the prepayment required by the preceding clause (iii), the Revolving Credit Exposure exceeds the Revolving Commitments of the remaining Lenders.

ARTICLE III

CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT

Section 3.1. Conditions To Effectiveness . This Agreement shall become effective, and the Lenders, the Swingline Lender and Issuing Bank shall be obligated to make the initial Loans and issue the initial Letters of Credit hereunder, upon the satisfaction of the following conditions, in addition to the conditions precedent specified in Section 3.2 :

(a) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Restatement Date, including reimbursement or payment of all out-of-pocket expenses (including reasonable fees, charges and disbursements of outside counsel to the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder, under any other Loan Document and under any agreement with the Administrative Agent or with SunTrust Robinson Humphrey or Wachovia Capital Markets, LLC, as Arrangers.

(b) The Administrative Agent (or its counsel) shall have received the following:

(i) a counterpart of this Agreement signed by or on behalf of each party hereto or written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement;

(ii) a duly executed Revolving Credit Note payable to each Lender requesting the same and the Swingline Note payable to the Swingline Lender;

(iii) the Guaranty Agreement duly executed by the Guarantor;

(iv) evidence that all outstanding Loans and all accrued interest, fees and expenses outstanding under the Existing Credit Agreement as of the Restatement Date have been paid in full (including any amounts required by any Lenders, as a condition to the effectiveness of this Agreement, to be paid pursuant to Section 2.17 of the Existing Credit Agreement in connection with such payment);

(v) a certificate of the Secretary or Assistant Secretary of each Loan Party in the form of Exhibit 3.1(b)(v) , attaching and certifying copies of its bylaws and of the resolutions of its boards of directors, or partnership agreement or limited liability company agreement, or comparable organizational documents and authorizations, authorizing the execution, delivery and performance of the Loan Documents to which it is a party and certifying the name, title and true signature of each officer of such Loan Party executing the Loan Documents to which it is a party;

(vi) certified copies of the articles or certificate of incorporation, certificate of organization or limited partnership, or other registered organizational documents of each Loan Party, together with certificates of good standing or existence, as may be available from the Secretary of State of the jurisdiction of organization of such Loan Party and each other jurisdiction where such Loan Party is required to be qualified to do business as a foreign limited partnership;

(vii) favorable written opinions, addressed to the Administrative Agent and each of the Lenders, and covering such matters relating to the Loan Parties, the Loan Documents and the transactions contemplated therein as the Administrative Agent or the Required Lenders shall reasonably request, of GableGotwals and Locke, Liddell & Sapp, each as counsel to the Borrower and Intermediate Partnership;

(viii) a certificate in the form of Exhibit 3.1(b)(viii) , dated the Restatement Date and signed by a Responsible Officer, certifying that (x) no Default or Event of Default exists, (y) all representations and warranties of each Loan Party set forth in the Loan Documents are true and correct and (z) since the date of the financial statements of the Borrower described in Section 4.4 , there shall have been no change which has had or could reasonably be expected to have a Material Adverse Effect;

(ix) a duly executed Notice of Borrowing;

(x) a duly executed funds disbursement letter, together with a report setting forth the sources and uses of the proceeds hereof;

(xi) certified copies of all consents, approvals, authorizations, registrations and filings and orders required or advisable to be made or obtained under any Requirement of Law, or by any Contractual Obligation of each Loan Party, in connection with the execution, delivery, performance, validity and enforceability of the Loan Documents or any of the transactions contemplated thereby, and such consents, approvals, authorizations, registrations, filings and orders shall be in full force and effect and all applicable waiting periods shall have expired, and no investigation or inquiry by any governmental authority regarding the Credit Facility or any transaction being financed with the proceeds thereof shall be ongoing; and

(xii) copies of the audited consolidated balance sheets and related statements of income, owners’ equity, and cash flows of the Borrower and its Subsidiaries for the Fiscal Years ending December 31, 2004, December 31, 2005 and December 31, 2006.

Section 3.2. Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit is subject to the satisfaction of the following conditions:

(a) at the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall exist;

(b) at the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, all representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, extension or renewal of such Letter of Credit, in each case before and after giving effect thereto;

(d) the Administrative Agent shall have received such other documents, certificates, information or legal opinions as the Administrative Agent or the Required Lenders may reasonably request, all in form and substance reasonably satisfactory to the Administrative Agent or the Required Lenders and consistent with the terms of the Agreement.

Each Borrowing and each issuance, amendment, extension or renewal of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section 3.2 .

Section 3.3. Delivery of Documents . All of the Loan Documents, certificates, legal opinions and other documents and papers referred to in this Article III , unless otherwise specified, shall be delivered to the Administrative Agent for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall be in form and substance satisfactory in all respects to the Administrative Agent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and each Lender as follows:

Section 4.1. Existence; Power . The Borrower and each of its Subsidiaries (i) is duly organized, validly existing and in good standing as a corporation, partnership or limited liability company under the laws of the jurisdiction of its organization, (ii) has all requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect.

Section 4.2. Organizational Power; Authorization . The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational, and if required, shareholder, partner or member, action. This Agreement has been duly executed and delivered by the Borrower, and constitutes, and each other Loan Document to which any Loan Party is a party, when executed and delivered by such Loan Party, will constitute, valid and binding obligations of the Borrower or such Loan Party (as the case may be), enforceable against it in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

Section 4.3. Governmental Approvals; No Conflicts . The execution, delivery and performance by the Borrower of this Agreement, and by each Loan Party of the other Loan Documents to which it is a party (a) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, (b) will not violate any Requirements of Law applicable to the Borrower or any of its Subsidiaries or any judgment, order or ruling of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding on the Borrower or any of its Subsidiaries or any of its assets or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, in each case other than violations, defaults or rights which could not reasonably expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries, except Liens (if any) created under the Loan Documents.

Section 4.4. Financial Statements . The Borrower has furnished to each Lender the audited consolidated balance sheet of the Borrower and its Subsidiaries as of December 31, 2006 and the related consolidated statements of income, owners’ equity and cash flows for the Fiscal Year then ended, together with the audit report of KPMG LLP or other independent public accountants of nationally recognized standing. Such financial statements fairly present the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of operations for such periods in conformity with GAAP consistently applied.

Section 4.5. Litigation and Environmental Matters .

(a) No litigation, investigation or proceeding of or before any arbitrators or Governmental Authorities is pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination that could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect or (ii) which in any manner draws into question the validity or enforceability of this Agreement or any other Loan Document.

(b) Except for the matters set forth on Schedule 4.5(b) , neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any

claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability, that, in each case, could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

Section 4.6. Compliance with Laws and Agreements . The Borrower and each Subsidiary is in compliance with (a) all Requirements of Law and all judgments, decrees and orders of any Governmental Authority and (b) all indentures, agreements or other instruments binding upon it or its properties, except where non-compliance, either singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 4.7. Investment Company Act, Etc . Neither the Borrower nor any of its Subsidiaries is (a) an “investment company” or is “controlled” by an “investment company”, as such terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) otherwise subject to any other regulatory scheme limiting its ability to incur debt or requiring any approval or consent from or registration or filing with, any Governmental Authority in connection therewith.

Section 4.8. Taxes . The Borrower and its Subsidiaries and each other Person for whose taxes the Borrower or any Subsidiary could become liable have timely filed or caused to be filed, or received extensions of time for the filing of, all Federal income tax returns and all other material tax returns that are required to be filed by them, and have paid all taxes shown to be due and payable on such returns or on any assessments made against it or its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except where the same are currently being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as the case may be, has set aside on its books adequate reserves in accordance with GAAP. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so provided are anticipated.

Section 4.9. Margin Regulations . None of the proceeds of any of the Loans or Letters of Credit will be used, directly or indirectly, for “purchasing” or “carrying” any “margin stock” with the respective meanings of each of such terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect or for any purpose that violates the provisions of the Regulation U. Neither the Borrower nor its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying “margin stock.”

Section 4.10. ERISA . No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans.

Section 4.11. Ownership of Property .

(a) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold or easement interests in, or the right to use, all of its real and personal property material to the operation of its business, including all such properties reflected in the most recent audited consolidated balance sheet of the Borrower referred to in Section 4.4 or purported to have been acquired by the Borrower or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement, except to the extent that the failure to have such good title, valid leasehold or easement interests or rights to use, or that such Liens exist, could not reasonably be expected to result in a Material Adverse Effect. All leases that individually or in the aggregate are material to the business or operations of the Borrower and its Subsidiaries are valid and subsisting and are in full force, except to the extent that failure of such lease to be valid and subsisting could not reasonably be expected to result in a Material Adverse Effect.

(b) Each of the Borrower and its Subsidiaries owns, or is licensed, or otherwise has the right, to use, all patents, trademarks, service marks, trade names, copyrights and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe in any material respect on the rights of any other Person except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

(c) The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies which are not Affiliates of the Borrower, in such amounts with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or any applicable Subsidiary operates.

Section 4.12. Disclosure . The Borrower has disclosed to the Lenders all agreements, instruments, and corporate or other restrictions to which the Borrower or any of its Subsidiaries is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the Information Memorandum nor any of the reports (including without limitation all reports that the Borrower is required to file with the Securities and Exchange Commission), financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation or syndication of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by any other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in each case when taken as a whole, in light of the circumstances under which they were made, not misleading.

Section 4.13. Labor Relations . There are no strikes, lockouts or other material labor disputes or grievances against the Borrower or any of its Subsidiaries, or, to the Borrower’s knowledge, threatened against or affecting the Borrower or any of its Subsidiaries, and no significant unfair labor practice, charges or grievances are pending against the Borrower or any of its Subsidiaries, or to the Borrower’s knowledge, threatened against any of them before any Governmental Authority. All payments due from the Borrower or any of its Subsidiaries

pursuant to the provisions of any collective bargaining agreement have been paid or accrued as a liability on the books of the Borrower or any such Subsidiary, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

Section 4.14. Subsidiaries . Schedule 4.14 sets forth the name of, the jurisdiction of incorporation or organization of, and the type of, each Subsidiary, in each case as of the Restatement Date.

Section 4.15. Insolvency . After giving effect to the execution and delivery of the Loan Documents, the making of the Loans under this Agreement, neither the Borrower nor its Subsidiaries will be “insolvent,” within the meaning of such term as defined in § 101 of Title 11 of the United States Code, as amended from time to time, or be unable to pay its debts generally as such debts become due, or have an unreasonably small capital to engage in any business or transaction, whether current or contemplated.

Section 4.16. OFAC . No Loan Party (i) is a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such person in any manner violative of Section 2, or (iii) is a person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

Section 4.17. Patriot Act . Each Loan Party is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

ARTICLE V

AFFIRMATIVE COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any Obligation remains unpaid or outstanding:

Section 5.1. Financial Statements and Other Information . The Borrower will deliver to the Administrative Agent and each Lender:

(a) as soon as available and in any event within 120 days after the end of each Fiscal Year of Borrower, a copy of the annual audited report for such Fiscal Year for the Borrower and its Subsidiaries, containing a consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows (together with all footnotes thereto) of the Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all in reasonable detail and reported on by KPMG LLP or other independent public accountants of nationally recognized standing (without a “going concern” or like qualification, exception or explanation and without any qualification or exception as to scope of such audit) to the effect that such financial statements present fairly in all material respects the financial condition and the results of operations of the Borrower and its Subsidiaries for such Fiscal Year on a consolidated and consolidating basis in accordance with GAAP and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards;

(b) as soon as available and in any event within 60 days after the end of each Fiscal Quarter of the Borrower, an unaudited consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter and the related unaudited consolidated and consolidating statements of income and cash flows of the Borrower and its Subsidiaries for such Fiscal Quarter and the then elapsed portion of such Fiscal Year, setting forth in each case in comparative form the figures for the corresponding quarter and the corresponding portion of Borrower’s previous Fiscal Year;

(c) concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a Compliance Certificate signed by a Responsible Officer;

(d) concurrently with the delivery of the financial statements referred to in clauses (a) and (b) above, a description of each Material Project commenced or in progress during the periods covered by such financial statements that has been approved the purpose of making Material Project EBITDA Adjustments, the current budget and scheduled completion date for such Material Project, a description in reasonable detail as to the status of the construction and percentage completion of such Material Project as of the end of such periods, and such other information in respect of such Material Project as the Administrative Agent or any Lender may reasonably request;

(e) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all functions of said Commission;

(f) prior written notice of any Disposition of general partner interests in either the Borrower or the Intermediate Partnership by OKE, with respect to the Borrower, or by the Borrower, with respect to the Intermediate Partnership, at a time when the aggregate general partner interests in the Borrower or the Intermediate Partnership owned by OKE or the Borrower, respectively, directly or indirectly through any of their wholly owned Subsidiaries, together with the aggregate voting rights of OKE or the Borrower, respectively, with respect to the Borrower or the Intermediate Partnership, respectively, is less than (or which Disposition

would result in such ownership being less than) fifty percent (50%) of the aggregate outstanding general partner interests and voting rights of all general partners of either the Borrower or the Intermediate Partnership, together with such other information as may be reasonably necessary to demonstrate to the reasonable satisfaction of the Required Lenders that OKE and the Borrower, as applicable, will retain control of the Borrower and the Intermediate Partnership, respectively, after giving effect to such Disposition; and

(g) promptly following any request therefor, such other information regarding the results of operations, business affairs and financial condition of the Borrower or any Subsidiary as the Administrative Agent or any Lender may reasonably request.

Documents required to be delivered pursuant to Section 5.1(a), (b) or (e) (to the extent any such documents are included in materials otherwise filed with the Securities and Exchange Commission or any successor thereto) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) (A) after which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at www.oneok.com; or (B) after which such documents are posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent), and (ii) the Borrower notifies (which may be by facsimile or electronic mail) the Administrative Agent and each Lender of the posting of any such documents; provided that the Borrower shall deliver paper copies or soft copies (by electronic mail) of such documents to the Administrative Agent or any Lender that requests the Borrower to deliver such paper copies or soft copies until a written request to cease delivering paper copies or soft copies is given by the Administrative Agent or such Lender. Each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

Section 5.2. Notices of Material Events . The Borrower will furnish to the Administrative Agent prompt written notice of the following:

(a) the occurrence of any Default or Event of Default;

(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of the Borrower, affecting the Borrower or any Subsidiary which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any event or any other development by which the Borrower or any of its Subsidiaries (i) fails to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) becomes subject to any Environmental Liability, (iii) receives notice of any claim with respect to any Environmental Liability, or (iv) becomes aware of any basis for any Environmental Liability and in each of the preceding clauses, which individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(d) the occurrence of any ERISA Event that alone, or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $15,000,000;

(e) the occurrence of any default or event of default, or the receipt by Borrower or any of its Subsidiaries of any written notice of an alleged default or event of default, respect of any Material Indebtedness of the Borrower or any of its Subsidiaries; and

(f) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 5.2 shall be accompanied by a written statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 5.3. Existence; Conduct of Business . The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence and its respective rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business and will continue to engage in the same business as presently conducted or such other businesses that are reasonably related thereto; provided , that nothing in this Section 5.3 shall prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.3 .

Section 5.4. Compliance with Laws, Etc. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and requirements of any Governmental Authority applicable to its business and properties, including without limitation, all Environmental Laws, ERISA and OSHA, except where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 5.5. Payment of Obligations . The Borrower will, and will cause each of its Subsidiaries to, pay and discharge at or before maturity, all of its material obligations and liabilities (including without limitation all tax liabilities and claims that could result in a statutory Lien) before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

Section 5.6. Books and Records . The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries shall be made of all dealings and transactions in relation to its business and activities to the extent necessary to prepare the consolidated financial statements of Borrower in conformity with GAAP.

Section 5.7. Visitation, Inspection, Etc. The Borrower will, and will cause each of its Subsidiaries to, permit any representative of the Administrative Agent or any Lender, to visit and inspect its properties, to examine its books and records and to make copies and take

extracts therefrom, and to discuss its affairs, finances and accounts with any of its officers and with its independent certified public accountants, all at such reasonable times and as often as the Administrative Agent or any Lender may reasonably request after reasonable prior notice to the Borrower; provided, however , if an Event of Default has occurred and is continuing, no prior notice shall be required.

Section 5.8. Maintenance of Properties; Insurance . The Borrower will, and will cause each of its Subsidiaries to, (a) maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted and (b) maintain with financially sound and reputable insurance companies, insurance with respect to its properties and business, and the properties and business of its Subsidiaries, against loss or damage of the kinds customarily insured against by companies in the same or similar businesses operating in the same or similar locations.

Section 5.9. Use of Proceeds and Letters of Credit . The Borrower will use the proceeds of all Loans to refinance existing indebtedness, to finance permitted acquisitions and investments, to pay related fees and expenses, and to provide for working capital needs and for other general business purposes of the Borrower and its Subsidiaries. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that would violate any rule or regulation of the Board of Governors of the Federal Reserve System, including Regulations T, U or X. All Letters of Credit will be used for general business purposes.

Section 5.10. Pari Passu Status . Each Loan Party will ensure the claims and rights of the Lenders against it under this Agreement and each other Loan Document will not be subordinate to, and will rank at all times at least pari passu with, all other unsecured Debt of such Loan Party.

Section 5.11. Maintenance of Tax Status . The Borrower shall take all action necessary to prevent the Borrower and Intermediate Partnership from being, and will take no action which would have the effect of causing either of the Borrower or Intermediate Partnership to be, treated as an association taxable as a corporation or otherwise to be taxed as an entity for federal income tax purposes.

ARTICLE VI

FINANCIAL COVENANT

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any Obligation remains unpaid or outstanding:

Section 6.1. Leverage Ratio . The Borrower will maintain at all times a Leverage Ratio of not greater than 5.00:1.00 (the “ Required Threshold ”); provided, however , that if the Borrower consummates one or more Acquisitions permitted hereunder in which the aggregate purchase price of all such Acquisitions exceeds $25,000,000, then the Required Threshold shall be increased to 5.50:1.00 for the first three full fiscal reporting periods during any 12-month period immediately following the consummation of such acquisitions.

ARTICLE VII

NEGATIVE COVENANTS

The Borrower covenants and agrees that so long as any Lender has a Commitment hereunder or any Obligation remains unpaid or outstanding:

Section 7.1. Indebtedness; Preferred Interests . The Borrower will not permit any of its Subsidiaries to create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness of any Person that becomes a Subsidiary of the Borrower pursuant to an Acquisition, and Indebtedness of any Subsidiary resulting from the assumption by such Subsidiary of the Indebtedness of another Person pursuant to an Acquisition by such Subsidiary, in each case together with any renewals, extensions or refinancings of such Indebtedness, provided that (i) such Indebtedness exists at the time of such Acquisition and is not incurred, created, drawn down or increased in contemplation of or in connection with such Acquisition, and (ii) any renewal, extension or refinancing thereof is in an aggregate principal amount not greater than the principal amount of the Indebtedness being renewed, extended or refinanced, and does not shorten the weighted average life to maturity of such Indebtedness;

(b) trade debt for goods furnished or services rendered in the ordinary course of business and payable in accordance with customary trade terms that are not more than 90 days past due;

(d) to the extent Pipeline is a Subsidiary of the Borrower, Indebtedness of Pipeline under the Pipeline Credit Agreement and other Indebtedness of Pipeline, so long as the Pipeline Leverage Ratio does not exceed 4.75:1.0 (the “ Pipeline Required Threshold ”); provided , however , that if Pipeline consummates one or more acquisitions permitted hereunder in which the aggregate purchase price of all such acquisitions exceeds $25,000,000, then the Pipeline Required Threshold shall be increased to 5.50:1.00 for the first three full fiscal reporting periods during any 12-month period immediately following the consummation of such acquisitions;

(e) other Indebtedness of the Subsidiaries of the Borrower (excluding Indebtedness otherwise permitted in this Section 7.1 ) which does not exceed at any time an aggregate amount equal to ten percent (10%) of Consolidated Total Debt;

(f) Indebtedness of the Subsidiaries of the Borrower resulting from loans made by the Borrower to Intermediate Partnership, loans by Intermediate Partnership to another Subsidiary or other loans by a Subsidiary to another Subsidiary; provided , however , that any Indebtedness of Intermediate Partnership resulting from loans made by any Subsidiary to Intermediate Partnership shall be subordinated on terms and conditions satisfactory to Administrative Agent and the Required Lenders in right of payment to its obligations under the Guaranty Agreements;

(g) the guaranty by Intermediate Partnership of the Borrower’s Indebtedness; and

(h) Indebtedness of Guardian Pipeline, L.L.C. (“ Guardian ”) pursuant to the Master Shelf Agreement and Revolving Note Agreement, each dated as of November 8, 2001, among Guardian, Prudential Insurance Company of America and the other parties thereto, in each case as amended from time to time (the “ Guardian Agreements ”), together with any renewals, extensions or refinancings thereof, provided that any renewal, extension or refinancing thereof is not greater than the principal amount of the Indebtedness being renewed, extended or refinanced, and does not shorten the weighted average life to maturity of such Indebtedness;

provided , however , no Indebtedness otherwise permitted under this Section 7.1 shall be permitted if, after giving effect to the incurrence thereof, any Default or Event of Default shall have occurred and be continuing.

Borrower will not, and will not permit any Subsidiary to, issue any preferred shares or other preferred partnership, limited liability company or other equity interests that (i) mature or are mandatorily redeemable prior to the first anniversary of the Maturity Date pursuant to a sinking fund obligation or otherwise, (ii) are or may become redeemable or repurchaseable by Borrower or such Subsidiary prior to the first anniversary of the Maturity Date at the option of any holders thereof, in whole or in part, or (iii) are convertible or exchangeable at the option of any holders thereof for Indebtedness prior to the first anniversary of the Maturity Date, or for preferred shares of a type described in clause (i) or (ii) above, or for or any other preferred partnership, limited liability company or other equity interests of a type described in clause (i) or (ii) above.

Section 7.2. Negative Pledge . The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of its assets or property now owned or hereafter acquired other than Permitted Encumbrances.

Section 7.3. Fundamental Changes .

(a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate into any other Person, or permit any other Person to merge into or consolidate with it, or liquidate or dissolve, or sell, lease, transfer or otherwise Dispose of (in a single transaction or a series of transactions) all or a Material Portion of the assets of the Borrower and its Subsidiaries taken as a whole; provided , that if at the time thereof and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, then (i) the Borrower or any Subsidiary may merge with a Person if the Borrower (or such Subsidiary if the Borrower is not a party to such merger) is the surviving Person, (ii) any Subsidiary may merge into another Subsidiary; and (iii) any Subsidiary may sell, transfer, lease or otherwise Dispose of all or substantially all of its assets to the Borrower or to any other Subsidiary, and (iv) any Subsidiary (other than a Subsidiary Loan Party) may liquidate or dissolve; provided , however , that in no event shall any such merger, consolidation, sale, transfer, lease or other Disposition whether or not otherwise permitted by this Section 7.3 have the effect of releasing any Loan Party from any of its obligations and liabilities under this Agreement or the other Loan Documents.

(b) For purposes of determining compliance with Section 7.03(a), in the event of a Disposition of assets by the Borrower or a Subsidiary, the assets being Disposed of by the

Borrower or such Subsidiary shall be considered to constitute a “Material Portion of the assets of the Borrower and its Subsidiaries taken as a whole” only if: (a) the aggregate book value of such assets being Disposed of, plus (b) the book value of all other assets Disposed of by the Borrower and Subsidiaries taken as a whole since the Restatement Date, minus (c) the book value of all assets (other than cash and cash equivalents) acquired by the Borrower and Restricted Subsidiaries taken as a whole since the Restatement Date, is equal to or greater than One Billion One Hundred Million Dollars ($1.1 billion).

(c) The Borrower shall not (i) engage in any business activity except the ownership and management of capital stock (or in the case of a partnership or limited liability company, the partners’ or members’ equivalent equity interest), whether common or preferred, obligations, and other securities of or interests in, its Subsidiaries and in joint ventures and other Persons, in each case that are engaged principally in the business of purchasing, gathering, compression, transportation, distribution, marketing, or storage of natural gas, compressed natural gas and natural gas liquids, the exploration or production of natural gas or oil or the processing or fractionation of natural gas or natural gas liquids, the underground piping of natural gas distribution systems, other businesses substantially related to any of the foregoing, the generation and marketing of electricity and such other activities as may be substantially related or incidental thereto, or (ii) permit the Intermediate Partnership or any Subsidiaries of the Borrower or the Intermediate Partnership to engage, directly or indirectly, in any material line of business substantially different from those lines of business conducted by the Borrower, the Intermediate Partnership and their respective Subsidiaries as of the Restatement Date and other businesses substantially related or incidental thereto, provided that the gross income from such other activities and businesses allows the Borrower to meet the exception in Section 7704 of the Code.

Section 7.4. Investments, Loans, Etc. The Borrower will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly-owned Subsidiary prior to such merger), any common stock, evidence of indebtedness or other securities (including any option, warrant, or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any investment or any other interest in, any other Person (all of the foregoing being collectively called “ Investments ”), or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person that constitute a business unit, except:

(a) Investments (other than Permitted Investments) existing on the date hereof and set forth on Schedule 7.4 (including Investments in Subsidiaries);

(b) Permitted Investments;

(d) loans or advances to employees, officers or directors of the Borrower or any Subsidiary in the ordinary course of business for travel, relocation and related expenses; provided, however , that the aggregate amount of all such loans and advances does not exceed $1,000,000 at any time;

(e) Hedging Transactions permitted by Section 7.10 ;

(f) Investments in and through Intermediate Partnership permitted by Section 7.3(c) ; and

(g) Investments in the capital stock (or in the case of a partnership or limited liability company, the partners’ or members’ equivalent equity interest), whether common or preferred, assets, obligations or other securities of, or interest in, (i) Subsidiaries of the Borrower, and (ii) joint ventures and other Persons that are not Subsidiaries of the Borrower up to an aggregate amount of such Investments pursuant to this clause (ii) at any time not to exceed an amount equal to five percent (5%) of Consolidated Total Capitalization, in each case where such Subsidiaries, joint ventures and other Persons are engaged principally in the business of the purchasing, gathering, compression, transportation, distribution, marketing, or storage of natural gas, compressed natural gas and natural gas liquids, the exploration or production of natural gas or oil or the processing or fractionation of natural gas or natural gas liquids, the underground piping of natural gas distribution systems, other businesses substantially related to any of the foregoing, or the generation and marketing of electricity; provided that such Investments are not opposed by the board of directors or management of such Person.

Section 7.5. Restricted Payments . The Borrower will not, and will not permit its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any dividend on any class of its Capital Stock, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of, any shares of Capital Stock or Indebtedness subordinated to the Obligations of the Borrower or any Guarantee thereof or any options, warrants, or other rights to purchase such Capital Stock or such Indebtedness, whether now or hereafter outstanding (each, a “ Restricted Payment ”), except for (i) dividends payable by Subsidiaries of the Borrower solely in shares of any class of its Capital Stock, (ii) Restricted Payments made by any Subsidiary to the Borrower or to another Subsidiary, on at least a pro rata basis with any other holders of its Capital Stock if such Subsidiary is not wholly owned by the Borrower and other wholly owned Subsidiaries, (iii) distributions on the Limited Partnership Units and General Partners’ interests in accordance with the Borrower Partnership Agreement and (iv) so long as no Event of Default has occurred and is continuing, repurchases of the Limited Partnership Interests.

Section 7.6. Burdensome Agreements . Enter into any Contractual Obligation that limits the ability of any Restricted Subsidiary to pay dividends or make other payments or distributions to the Borrower or to otherwise transfer property to the Borrower; provided that the following shall not be deemed to violate the foregoing restriction: (i) any such Contractual Obligation of a Person existing at the time such Person is merged with or into or consolidated with or acquired, or existing at the time of the acquisition of assets that are subject to such a Contractual Obligation, so long as such Contractual Obligation was not entered into in contemplation of, and was in existence prior to such merger, consolidation or acquisition and does not extend to any assets other than those acquired or the assets of the Person merged into or consolidated that were subject to such Contractual Obligation prior to such merger, consolidation or acquisition; (ii) the issuance by a master limited partnership of limited partnership interests with preferential distribution rights, and (iii) any restriction on the sale or transfer of assets imposed by the instruments and agreements governing the Indebtedness incurred for the purpose

of acquiring or constructing such assets and secured by such assets pursuant to a Permitted Encumbrance, or any renewal, extension or refinancing of such Indebtedness in an aggregate amount not greater than the principal amount of the Indebtedness being renewed, extended or refinanced, provided that such restriction applies only to the assets so securing such Indebtedness.

Section 7.7. Transactions with Affiliates . Except as set forth in Schedule 7.7 , the Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Borrower and any other Loan Party not involving any other Affiliates and (c) any Restricted Payment permitted by Section 7.5 .

Section 7.8. [Reserved] .

Section 7.9. Government Regulations . No Loan Party will conduct its business in such a way that it will become subject to regulation under the Investment Company Act of 1940, as amended, the Federal Power Act, as amended, or any other Law (other than Regulations T, U, and X of the Board of Governors of the Federal Reserve System) which regulates the incurrence of Indebtedness.

Section 7.10. Hedging Transactions . The Borrower will not, and will not permit any of the Subsidiaries to, enter into any Hedging Transaction, other than Hedging Transactions entered into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its business or the management of its liabilities. Solely for the avoidance of doubt, the Borrower acknowledges that a Hedging Transaction entered into for speculative purposes or of a speculative nature (which shall be deemed to include any Hedging Transaction under which the Borrower or any of the Subsidiaries is or may become obliged to make any payment (i) in connection with the purchase by any third party of any common stock or any Indebtedness or (ii) as a result of changes in the market value of any common stock or any Indebtedness but shall be deemed to exclude any Hedging Transaction in which the Borrower hedges the issuance price of its Limited Partnership Units in connection with an anticipated offering of additional Limited Partnership Units) is not a Hedging Transaction entered into in the ordinary course of business to hedge or mitigate risks.

Section 7.11. Accounting Changes . The Borrower will not, and will not permit any of its Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change the fiscal year of the Borrower or of any of its Subsidiaries, except to change the fiscal year of a Subsidiary to conform its fiscal year to that of the Borrower.

Section 7.12. Restrictions on Agreements Governing Indebtedness . The Borrower will not, and will not permit any of its Subsidiaries to, enter into or otherwise become a party to any agreement governing Indebtedness of the Borrower or such Subsidiary which contains any redemption or “put rights” with respect to such Indebtedness that may be exercised

by any holders of such Indebtedness or any trustee, agent or other representative on behalf of such holders, except for the Senior Notes, the Senior Notes Indentures and any Hybrid Securities permitted by this Agreement.

Section 7.13. Certain Amendments to Cash Distribution Policies and Partnership Agreements . Each Loan Party agrees that it shall not consent to, vote in favor of or permit any amendment of (a) the cash distribution policies of Pipeline or Intermediate Partnership in any manner which would result in a Material Adverse Effect with respect to any Loan Party or materially adversely affect the rights and remedies of Lenders under and in connection with this Agreement, the Notes or any other Loan Document; or (b) the Borrower Partnership Agreement, the Pipeline Partnership Agreement or the Intermediate Partnership Agreement in any manner which would (i) have a material adverse effect on the rights and remedies of Lenders under and in connection with this Agreement, the Notes or any other Loan Document; or (ii) result in a Material Adverse Effect.

ARTICLE VIII

EVENTS OF DEFAULT

Section 8.1. Events of Default . If any of the following events (each an “Event of Default”) shall occur:

(a) the Borrower shall fail to pay any principal of any Loan or of any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or otherwise; or

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount payable under clause (a) of this Section 8.1 ) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) days; or

(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document (including the Schedules attached thereto) and any amendments or modifications hereof or waivers hereunder, or in any certificate, report, financial statement or other document submitted to the Administrative Agent or the Lenders by any Loan Party or any representative of any Loan Party pursuant to or in connection with this Agreement or any other Loan Document shall prove to be incorrect in any material respect when made or deemed made or submitted; or

(d) the Borrower shall fail to observe or perform any covenant or agreement contained in Sections 5.1 , 5.2 , or 5.3 (with respect to the Borrower’s existence) or Articles VI or VII ; or

(e) any Loan Party shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those referred to in clauses (a), (b) and (d) above) or any

other Loan Document, and such failure shall remain unremedied for 30 days after the earlier of (i) any officer of the Borrower becomes aware of such failure, or (ii) notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or

(f) the Borrower or any Subsidiary (whether as primary obligor or as guarantor or other surety) shall fail to pay any principal of, or premium or interest on, any Material Indebtedness that is outstanding, when and as the same shall become due and payable (whether at scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument evidencing or governing such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or permit the acceleration of, the maturity of such Indebtedness; or any such Indebtedness shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case prior to the stated maturity thereof; provided, that no Default will result from a Rating Decline Offer (as such term is defined in the Senior Note Indentures), or the event causing such offer, under the Senior Notes or the election by one or more holders of Senior Note(s) to exercise its or their rights to have all or any portion of their Senior Notes repurchased by the Borrower; or

(g) the Borrower or any Subsidiary shall (i) commence a voluntary case or other proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official of it or any substantial part of its property, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Section 8.1 , (iii) apply for or consent to the appointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any such Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any action for the purpose of effecting any of the foregoing; or

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or any substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the appointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and in any such case, such proceeding or petition shall remain undismissed for a period of 60 days or an order or decree approving or ordering any of the foregoing shall be entered; or

(i) the Borrower or any Subsidiary shall become unable to pay, shall admit in writing its inability to pay, or shall fail to pay, its debts as they become due; or

(j) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with other ERISA Events that have occurred, could reasonably be expected to result in liability to the Borrower and the Subsidiaries in an aggregate amount exceeding the Threshold Amount; or

(k) any judgments or orders for the payment of money in excess of the Threshold Amount in the aggregate shall be rendered against the Borrower or any Subsidiaries, and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or orders or (ii) there shall be a period of 30 consecutive days during which a stay of enforcement of such judgments or orders, by reason of a pending appeal or otherwise, shall not be in effect; or

(l) any non-monetary judgment or order shall be rendered against the Borrower or any Subsidiary that could reasonably be expected to have a Material Adverse Effect, and there shall be a period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(m) a Change in Control shall occur or exist; or

(n) any Loan Document shall, at any time after its execution and delivery and for any reason, cease to be in full force and effect in any material respect or be declared to be null and void (other than in accordance with the terms hereof or thereof) or the validity or enforceability thereof be contested by any Loan Party thereto or any Loan Party shall deny in writing that it has any or any further liability or obligations under any Loan Document to which it is a party; or

(o) any event or condition shall occur or exist with respect to any activity or substance regulated under the Environmental Law and, as a result of such event or condition, any Loan Party or any of their respective Subsidiaries shall have incurred or in the opinion of the Required Lenders will be reasonably likely to incur a liability in excess of the Threshold Amount during any consecutive twelve (12) month period; or

(p) any Loan Party or, so long as Pipeline is a Subsidiary of the Borrower, Pipeline shall dissolve, liquidate, or otherwise terminate their existence, except, with respect to Pipeline, pursuant to Section 14 or Section 15 (to the extent it applies to a merger pursuant to Section 14) of Pipeline’s Partnership Agreement; or

(q) any material provision of any Guaranty Agreement shall for any reason cease to be valid and binding on, or enforceable against any Guarantor, or any Guarantor shall so state in writing, or any Guarantor shall seek to terminate its Guaranty Agreement; or

(r) so long as Pipeline is a Subsidiary of the Borrower, any “Event of Default” shall occur or exist under the terms of the Pipeline Credit Agreement;

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Section 8.1 ) and at any time thereafter during the continuance of such event, the Administrative Agent may, and upon the written request of the Required Lenders shall, by notice to the Borrower, take any or all of the following actions, at the

same or different times: (i) terminate the Commitments, whereupon the Commitment of each Lender shall terminate immediately, (ii) declare the principal of and any accrued interest on the Loans, and all other Obligations owing hereunder, to be, whereupon the same shall become, due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower, (iii) exercise all remedies contained in any other Loan Document, and (iv) exercise any other remedies available at law or in equity; and that, if an Event of Default specified in either clause (g) or (h) shall occur, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon, and all fees, and all other Obligations shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE IX

THE ADMINISTRATIVE AGENT

Section 9.1. Appointment of Administrative Agent .

(a) Each Lender irrevocably appoints SunTrust Bank as the Administrative Agent and authorizes it to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent under this Agreement and the other Loan Documents, together with all such actions and powers that are reasonably incidental thereto. The Administrative Agent may perform any of its duties hereunder or under the other Loan Documents by or through any one or more sub-agents or attorneys-in-fact appointed by the Administrative Agent. The Administrative Agent and any such sub-agent or attorney-in-fact may perform any and all of its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions set forth in this Article shall apply to any such sub-agent or attorney-in-fact and the Related Parties of the Administrative Agent, any such sub-agent and any such attorney-in-fact and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

(b) The Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith until such time and except for so long as the Administrative Agent may agree at the request of the Required Lenders to act for the Issuing Bank with respect thereto; provided, that the Issuing Bank shall have all the benefits and immunities (i) provided to the Administrative Agent in this Article with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term “Administrative Agent” as used in this Article included the Issuing Bank with respect to such acts or omissions and (ii) as additionally provided in this Agreement with respect to the Issuing Bank.

Section 9.2. Nature of Duties of Administrative Agent . The Administrative Agent shall not have any duties or obligations except those expressly set forth in this Agreement

and the other Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except those discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2 ), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it, its sub-agents or attorneys-in-fact with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.2 ) or in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents or attorneys-in-fact selected by it with reasonable care. The Administrative Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until written notice thereof (which notice shall include an express reference to such event being a “Default” or “Event of Default” hereunder) is given to the Administrative Agent by the Borrower or any Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements, or other terms and conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent may consult with legal counsel (including counsel for the Borrower) concerning all matters pertaining to such duties.

Section 9.3. Lack of Reliance on the Administrative Agent . Each of the Lenders, the Swingline Lender and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each of the Lenders, the Swingline Lender and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, continue to make its own decisions in taking or not taking of any action under or based on this Agreement, any related agreement or any document furnished hereunder or thereunder.

Section 9.4. Certain Rights of the Administrative Agent . If the Administrative Agent shall request instructions from the Required Lenders with respect to any action or actions (including the failure to act) in connection with this Agreement, the Administrative Agent shall be entitled to refrain from such act or taking such act, unless and until it shall have received instructions from such Lenders; and the Administrative Agent shall

not incur liability to any Person by reason of so refraining. Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders where required by the terms of this Agreement.

Section 9.5. Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed, sent or made by the proper Person. The Administrative Agent may also rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or not taken by it in accordance with the advice of such counsel, accountants or experts.

Section 9.6. The Administrative Agent in its Individual Capacity . The bank serving as the Administrative Agent shall have the same rights and powers under this Agreement and any other Loan Document in its capacity as a Lender as any other Lender and may exercise or refrain from exercising the same as though it were not the Administrative Agent; and the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity. The bank acting as the Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the Borrower as if it were not the Administrative Agent hereunder.

Section 9.7. Successor Administrative Agent .

(a) The Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent, subject to the approval by the Borrower provided that no Default or Event of Default shall exist at such time. If no successor Administrative Agent shall have been so appointed, and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administr

March 31,
2007

December 31,
2006