Exhibit 10.3
DELEGATION OF CONTROL AGREEMENT
DATED AS OF [__________], 2002
AMONG
ENBRIDGE ENERGY MANAGEMENT, L.L.C.
ENBRIDGE ENERGY COMPANY, INC.
AND
ENBRIDGE ENERGY PARTNERS, L.P.
DELEGATION OF CONTROL AGREEMENT
This DELEGATION OF CONTROL AGREEMENT (this "AGREEMENT") dated as of
[_____________________], 2002 (the "EFFECTIVE DATE"), is among Enbridge Energy
Management, L.L.C., a Delaware limited liability company ("Management"),
Enbridge Energy Company, Inc., a Delaware corporation (the "GENERAL PARTNER")
and Enbridge Energy Partners, L.P., a Delaware limited partnership (the "MLP").
R E C I T A L S
WHEREAS, the General Partner is the sole general partner of the MLP; and
WHEREAS, the General Partner desires to delegate to Management all of the
General Partner's power and authority to manage and control the business and
affairs of the MLP to the fullest extent permitted under that certain Third
Amended and Restated Agreement of Limited Partnership of the MLP dated as of
even date herewith (the "MLP PARTNERSHIP AGREEMENT"); and
WHEREAS, Management desires to accept such delegation; and
WHEREAS, SECTION 6.6(C) of the Master Partnership Agreement and Section
17-403(c) of the Delaware Revised Uniform Limited Partnership Act permit such
delegation; and
WHEREAS, the MLP wishes to confirm hereby its agreement with the terms of
this Agreement relating to the management and control of its business and
affairs by Management and certain other agreements for the benefit of the
General Partner, Management, their Affiliates and certain Indemnitees and
Indemnified Parties; and
WHEREAS, concurrently with the execution of this Agreement, Management is
issuing and selling in an initial public offering (the "OFFERING") its shares
representing limited liability company interests in Management (the "LISTED
SHARES"), and the MLP is issuing to Management its i-units representing limited
partner interests in the MLP.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined in this
Agreement shall have the meanings given to them in the MLP Partnership
Agreement.
SECTION 1.02. RULES OF CONSTRUCTION. The following provisions shall be
applied wherever appropriate herein:
(i) "herein," "hereby," "hereunder," "hereof," "hereto" and
other equivalent words shall refer to this Agreement as an entirety
and not
solely to the particular portion of this Agreement in which any such
word is used;
(ii) "including" means "including without limitation" and is a
term of illustration and not of limitation;
(iii) all definitions set forth herein shall be deemed
applicable whether the words defined are used herein in the singular
or the plural;
(iv) unless otherwise expressly provided, any term defined
herein by reference to any other document shall be deemed to be
amended herein to the extent that such term is subsequently amended
in such document;
(v) references herein to other documents and agreements shall
mean such documents and agreements as amended and restated from time
to time;
(vi) wherever used herein, any pronoun or pronouns shall be
deemed to include both the singular and plural and to cover all
genders;
(vii) neither this Agreement nor any other agreement, document
or instrument referred to herein or executed and delivered in
connection herewith shall be construed against any Person as the
principal draftsperson hereof or thereof;
(viii) the section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define,
limit, construe or describe the scope or extent of such Section, or
in any way affect this Agreement; and
(ix) any references herein to a particular Section, Article,
Exhibit or Schedule means a Section or Article of, or an Exhibit or
Schedule to, this Agreement unless another agreement is specified.
ARTICLE II
DELEGATION AND RELATED MATTERS
SECTION 2.01. DELEGATION TO MANAGEMENT.
(a) The General Partner hereby irrevocably delegates to Management,
to the fullest extent permitted under the MLP Partnership Agreement and Delaware
law, all of the General Partner's power and authority to manage and control the
business and affairs of the MLP (such delegation being referred to herein as the
"MAXIMUM PERMITTED DELEGATION"), subject to termination only in accordance with
ARTICLE IV hereof, and all provisions in this Agreement are qualified to the
extent required in order for all such
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provisions to be consistent, now and in the future, with the Maximum Permitted
Delegation.
(b) Notwithstanding the delegation provided for in SECTION 2.01(A),
the General Partner is not hereby withdrawing as general partner, or otherwise,
from the MLP, and the General Partner is retaining all of its Partnership
Interests and Percentage Interests and all of its rights to profits, losses,
distributions and allocations from the MLP, and none of the foregoing are hereby
being assigned or transferred to Management.
SECTION 2.02. CONTINUED RESPONSIBILITY OF GENERAL PARTNER. Notwithstanding
the making by the General Partner of the Maximum Permitted Delegation to
Management, the General Partner shall remain responsible to the MLP for actions
taken or omitted by Management within the scope of such delegation as if the
General Partner had itself taken or omitted to take any such actions. The
General Partner's responsibility to the MLP is not expanded or limited by this
Agreement and shall be in effect to the same extent and on the same terms and
conditions as specified in the MLP Partnership Agreement or under Delaware law.
The General Partner shall be entitled to monitor Management's performance under
this Agreement and shall have the right and power to direct Management to take,
or to cease from taking, any action that would constitute a breach of the MLP
Partnership Agreement. The General Partner shall have access to the books,
records and documents of the MLP and Management and to any of their officers,
directors and employees to monitor Management's performance under this
Agreement.
SECTION 2.03. ACCEPTANCE OF DELEGATION BY MANAGEMENT. Management hereby
accepts the Maximum Permitted Delegation and agrees to perform the Maximum
Permitted Delegation according to the standards specified in ARTICLE III hereto.
SECTION 2.04. APPROVAL BY GENERAL PARTNER. Without expanding or limiting
the definition of Maximum Permitted Delegation, the taking by Management of the
following actions shall require the prior written approval of the General
Partner:
(i) amend or propose an amendment to the MLP Partnership
Agreement;
(ii) allow a merger or consolidation involving the MLP;
(iii) allow a sale or exchange of all or substantially all of
the assets of the MLP; or
(iv) dissolve or liquidate the MLP.
SECTION 2.05. USE OF AFFILIATES BY MANAGEMENT. Management may perform the
Maximum Permitted Delegation either directly or through one or more Affiliates.
If Management performs all or any part of the Maximum Permitted Delegation
through any Affiliate, (i) Management shall remain fully responsible for actions
taken or omitted by the Affiliate and (ii) for purposes of ARTICLES I through V,
Management and all such Affiliates shall be taken together and treated as
Management.
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ARTICLE III
POWERS AND DUTIES
SECTION 3.01. STANDARDS OF PERFORMANCE.
(a) In performing the Maximum Permitted Delegation, Management shall
be responsible to the General Partner and the MLP to the same extent and
according to the same standards as would have been applicable to the General
Partner in favor of the MLP had the General Partner continued to exercise the
delegated power and authority directly. Management shall owe the same duties and
responsibilities, shall receive the same benefits, shall be entitled to the same
procedural protections and indemnifications and shall be governed by the same
standards that would apply to the General Partner with respect to the MLP, but
for this Agreement. If the power and/or authority of the General Partner are
modified pursuant to a subsequent amendment and/or restatement of the MLP
Partnership Agreement, changes in Delaware law or otherwise, then the power and
authority delegated to Management shall be modified on the same basis.
(b) Without limiting the generality of the foregoing, SECTIONS 6.8,
6.9 and 6.10 of the MLP Partnership Agreement shall be applicable to
Management's performance of the Maximum Permitted Delegation.
SECTION 3.02. RESOLUTION OF CONFLICTS OF INTEREST. Without limiting the
generality of SECTION 3.01, all potential and actual conflicts of interest that
exist or arise between the General Partner, Management and any of their
respective Affiliates, on the one hand, and the MLP, any of its subsidiaries,
any Partner or any Assignee, on the other hand, shall be resolved in accordance
with SECTION 6.9 of the MLP Partnership Agreement.
SECTION 3.03. RELIANCE ON COUNSEL, ETC. Without limiting the generality of
SECTION 3.01, Management may rely on SECTION 6.10 of the MLP Partnership
Agreement to the same extent as the General Partner.
SECTION 3.04. RELIANCE BY THIRD PARTIES. Without limiting the generality
of SECTION 3.01, Management may rely on SECTION 6.13 of the MLP Partnership
Agreement to the same extent as the General Partner.
SECTION 3.05. INDEMNIFICATION. Without limiting the generality of SECTION
3.01, Management is an "Indemnitee" and an "Affiliate" with respect to the
General Partner and the MLP (as each of those terms is defined in ARTICLE II of
the MLP Partnership Agreement). Management and its officers and directors and
all other persons covered thereby shall be entitled to mandatory indemnity and
shall be entitled to be held harmless by the MLP to the extent that the General
Partner is entitled to indemnity under the MLP Partnership Agreement, subject to
the conditions provided in the MLP Partnership Agreement. The General Partner
hereby deems it advisable that such indemnification and holding harmless shall
(rather than may) be done and provided by the MLP to the fullest extent and
subject to the conditions provided in the MLP Partnership Agreement.
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The General Partner and the other parties specified in the MLP Partnership
Agreement shall continue to be entitled to the benefits of the indemnity
provisions set forth therein.
SECTION 3.06. DAMAGE LIMITATIONS. Without limiting the generality of
SECTION 3.01, the provisions of SECTION 6.8 of the MLP Partnership Agreement
shall be applicable to Management.
SECTION 3.07. REIMBURSEMENT.
(a) Without limiting the generality of SECTION 3.01, Management
shall be entitled to the benefit of SECTION 6.4 of the MLP Partnership
Agreement, which allows the General Partner to be reimbursed by the MLP for
direct, indirect, necessary and/or appropriate expenses it incurs or payments it
makes on behalf of the MLP, or which are allocable to or otherwise reasonably
incurred by the General Partner or the MLP, including reimbursement for all fees
and expenses incurred in connection with the performance of its obligations
under the Securities Act of 1933, as amended, the Securities Act of 1934, as
amended, and any other federal and state laws, including, fees and expenses of
legal counsel, accountants and financial advisors. Such reimbursements shall be
made in such form, to such persons and at such intervals as Management shall
determine in its sole discretion. The General Partner shall continue to be
entitled to be reimbursed as provided in the MLP Partnership Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, so
long as the Maximum Permitted Delegation continues in effect, Management shall
be entitled to be reimbursed by the MLP for foreign, state and local taxes not
otherwise paid or reimbursed pursuant to the Tax Indemnification Agreement dated
as of even date herewith between Management and Enbridge Inc.
ARTICLE IV
TERMINATION OF DELEGATION
SECTION 4.01. TERMINATION. The Maximum Permitted Delegation under this
Agreement commences on the Effective Date and shall continue in effect until the
earliest to occur of any of the following, at which time such delegation shall
cease and terminate as provided below:
(i) All outstanding Listed Shares shall become owned by the
General Partner or its Affiliates (including, without limitation,
Enbridge Inc. ("ENBRIDGE") or its Affiliates) and such termination
of the Maximum Permitted Delegation shall have been approved by the
General Partner and Management at which time the Maximum Permitted
Delegation shall cease; or
(ii) The General Partner shall withdraw or shall be removed as
general partner of the MLP, at which time the Maximum Permitted
Delegation shall cease; or
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(iii) A termination of the Maximum Permitted Delegation shall
have been approved by (A) General Partner, (B) Management and (C)
holders (other than the General Partner and its Affiliates) of a
majority of the outstanding Listed Shares (excluding any Listed
Shares owned by the General Partner and its Affiliates).
ARTICLE V
MISCELLANEOUS
SECTION 5.01. FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking actions as
may be necessary or appropriate to achieve the purposes of this Agreement.
SECTION 5.02. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their successors and
permitted assigns. This Agreement may not be assigned, in whole or in part, by
any party to this Agreement without the written consent of the other parties to
this Agreement.
SECTION 5.03. INTEGRATION. This Agreement and the other instruments and
agreements specifically referenced herein constitute the entire agreement among
the parties hereto.
SECTION 5.04. CREDITORS. None of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of any party
hereto.
SECTION 5.05. WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 5.06. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on all
parties hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
SECTION 5.07. APPLICABLE LAW. This Agreement shall be subject to and
governed by the laws of the State of Delaware, excluding any conflicts of law
rule or principle that might refer the construction or interpretation hereof to
the laws of another state.
SECTION 5.08. INVALIDITY OF PROVISIONS. If any provision of this Agreement
is or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
SECTION 5.09. AMENDMENTS. This Agreement may be amended by an agreement in
writing signed by Management, the General Partner and the MLP without the vote,
approval or consent of the holders of Listed Shares, unless such amendment
would, as determined in the sole discretion of the board of directors of
Management, materially
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adversely affect the rights or preferences of such holders of Listed Shares or
would reduce the time for any notice to which such holders of Listed Shares may
be entitled, in which case such amendment shall require the affirmative vote or
consent of the holders of at least a majority of the Listed Shares then
Outstanding (as that term is defined in Management's limited liability company
agreement).
SECTION 5.10. COVENANT OF GENERAL PARTNER. The General Partner hereby
covenants and agrees that it shall not withdraw as general partner of the MLP so
long as any of the Listed Shares are owned by any persons other than Enbridge or
its Affiliates.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Effective Date.
ENBRIDGE ENERGY MANAGEMENT, L.L.C.
By:
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Name:
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Title:
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ENBRIDGE ENERGY COMPANY, INC.
By:
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Name:
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Title:
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ENBRIDGE ENERGY PARTNERS, L.P.
By: Enbridge Energy Company, Inc.,
as general partner
By:
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Name:
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Title:
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SIGNATURE PAGE TO DELEGATION OF CONTROL AGREEMENT