Exhibit 10.5

 

CREDIT AGREEMENT

 

Dated as of March 31, 2006

 

Among

 

TC PIPELINES, LP

 

as Borrower

 

(By its General Partner TC PipeLines GP, Inc.)

and

 

THE INITIAL LENDERS NAMED HEREIN

 

as Initial Lenders

 

and

 

CITICORP NORTH AMERICA, INC.

 

as Administrative Agent

 

and

 

MIZUHO CORPORATE BANK, LTD.

 

and

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., HOUSTON AGENCY

 

as Co-Documentation Agents

 

and

 

CITICORP NORTH AMERICA, INC.

 

as Administrative Agent

 

and

 

CITIGROUP GLOBAL MARKETS INC.

 

and

 

UBS LOAN FINANCE LLC

 

as Joint Lead Arrangers and Joint Book Managers

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

ARTICLE I

 

SECTION 1.01. Certain Defined Terms

1

 

 

SECTION 1.02. Computation of Time Periods

10

 

 

SECTION 1.03. Accounting Terms

10

 

 

ARTICLE II

 

SECTION 2.01. The Advances

10

 

 

SECTION 2.02. Making the Advances

10

 

 

SECTION 2.03. Fees

11

 

 

SECTION 2.04. Optional Termination or Reduction of the Commitments

11

 

 

SECTION 2.05. Repayment

11

 

 

SECTION 2.06. Interest on Advances

11

 

 

SECTION 2.07. Interest Rate Determination

12

 

 

SECTION 2.08. Optional Conversion of Advances

13

 

 

SECTION 2.09. Prepayments of Advances

13

 

 

SECTION 2.10. Increased Costs

14

 

 

SECTION 2.11. Illegality

14

 

 

SECTION 2.12. Payments and Computations

14

 

 

SECTION 2.13. Taxes

15

 

 

SECTION 2.14. Sharing of Payments, Etc.

17

 

 

SECTION 2.15. Evidence of Debt

17

 

 

SECTION 2.16. Use of Proceeds

18

 

 

SECTION 2.17. Change of Lending Office

18

 

 

ARTICLE III

 

SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01

18

 

 

SECTION 3.02. Conditions Precedent to Each Borrowing

20

 

 

SECTION 3.03. Determinations Under Section 3.01

20

 

--------------------------------------------------------------------------------

 

ARTICLE IV

 

SECTION 4.01. Representations and Warranties of the Borrower

20

 

 

ARTICLE V

 

SECTION 5.01. Affirmative Covenants

21

 

 

SECTION 5.02. Negative Covenants

24

 

 

SECTION 5.03. Financial Covenants

25

 

 

ARTICLE VI

 

SECTION 6.01. Events of Default

25

 

 

ARTICLE VII

 

SECTION 7.01. Authorization and Action

27

 

 

SECTION 7.02. Agent’s Reliance, Etc.

27

 

 

SECTION 7.03. CNAI and Affiliates

28

 

 

SECTION 7.04. Lender Credit Decision

28

 

 

SECTION 7.05. Indemnification

28

 

 

SECTION 7.06. Successor Agent

28

 

 

SECTION 7.07. Other Agents

29

 

 

ARTICLE VIII

 

SECTION 8.01. Amendments, Etc.

29

 

 

SECTION 8.02. Notices, Etc.

29

 

 

SECTION 8.03. No Waiver; Remedies

30

 

 

SECTION 8.04. Costs and Expenses

30

 

 

SECTION 8.05. Right of Set-off

31

 

 

SECTION 8.06. Binding Effect

31

 

 

SECTION 8.07. Assignments and Participations

31

 

 

SECTION 8.08. Confidentiality

33

 

 

SECTION 8.09. Governing Law

33

 

 

SECTION 8.10. Execution in Counterparts

33

 

 

SECTION 8.11. Jurisdiction, Etc.

33

 

--------------------------------------------------------------------------------

 

SECTION 8.12. Patriot Act Notice

34

 

 

SECTION 8.13. Judgment

34

 

 

SECTION 8.14. Non-Recourse to the General Partner and Associated Persons

34

 

 

SECTION 8.15. Waiver of Jury Trial

35

 

--------------------------------------------------------------------------------

 

Schedules

 

Schedule I - List of Applicable Lending Offices

 

[Schedule 3.01(b) - Disclosed Litigation]

 

Schedule 5.02(a) - Existing Liens

 

Exhibits

 

Exhibit A-1

-

Form of Note

 

 

 

Exhibit B-1

-

Form of Notice of Borrowing

 

 

 

Exhibit C

-

Form of Assignment and Acceptance

 

 

 

Exhibit D

-

Form of Opinion of Counsel for the Borrower

 

--------------------------------------------------------------------------------

 

CREDIT AGREEMENT

 

Dated as of March 31, 2006

 

TC PIPELINES, LP, a Delaware limited partnership (the “Borrower”), by its
General Partner TC PipeLines GP, Inc., the banks, financial institutions and
other institutional lenders (the “Initial Lenders”) listed on the signature
pages hereof, and CITICORP NORTH AMERICA, INC. (“CNAI”), as agent (the “Agent”)
for the Lenders (as hereinafter defined), agree as follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTING TERMS

 

SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

 

“Acquisition” means the Borrower’s acquisition of an additional 20% interest in
the Northern Border Pipeline Company.

 

“Adjusted Cash Flow” means, with reference to any period (i) the net income (or
loss) of the Borrower and its consolidated Subsidiaries for such period
calculated on a consolidated basis in accordance with GAAP, plus (ii) to the
extent taken into account in determining such net income (or loss), the sum of
interest expense, expense for taxes paid or accrued, depreciation, amortization
and extraordinary losses incurred other than in the ordinary course of business,
minus (iii) to the extent taken into account in determining such net income (or
loss), extraordinary gains realized other than in the ordinary course of
business, minus (iv) to the extent taken into account in determining such net
income (or loss), equity earnings of any Person in which the Borrower or any of
its consolidated Subsidiaries has an interest (which interest does not cause the
net income of such Person to be consolidated with the net income of the Borrower
and its consolidated Subsidiaries in accordance with GAAP), plus (v) the
aggregate amount of all cash dividends and other distributions of cash actually
received by the Borrower or any of its consolidated Subsidiaries during such
period from any Person in which the Borrower or any of its consolidated
Subsidiaries has an interest (which interest does not cause the net income of
such other Person to be consolidated with the net income of the Borrower and its
consolidated Subsidiaries in accordance with GAAP).

 

“Advance” means an advance by a Lender to the Borrower as part of a Borrowing
under Section 2.01 and refers to a Base Rate Advance or a Eurodollar Rate
Advance (each of which shall be a “Type” of Advance).

 

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise, provided, that, for purposes of Section 5.01(h), each of
Northern Border and Tuscarora shall be deemed to be an Affiliate of the Borrower
as long as it qualifies as a Significant Subsidiary.

 

“Agent” has the meaning specified in the recitals hereto.

 

--------------------------------------------------------------------------------

 

“Agent’s Account” means the account of the Agent maintained by the Agent at
Citibank at its office at 388 Greenwich Street, New York, New York 10013,
Account No. 36852248, Attention:  Bank Loan Syndications.

 

“Applicable Lending Office” means, with respect to each Lender, such Lender’s
Domestic Lending Office in the case of a Base Rate Advance and such Lender’s
Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

 

“Applicable Margin” means as of any date, a percentage per annum determined by
reference to the Leverage Ratio in effect on such date as set forth below:

 

 

Leverage Ratio

 

Applicable Margin for
Base Rate Advances

 

Applicable Margin for
Eurodollar Rate Advances

 

£ 2.50 to 1.00

 

0.000

%

0.875

%

> 2.50 to 1.00 but £ 4.50 to 1.00

 

0.125

%

0.950

%

> 4.50 to 1.00

 

0.250

%

1.250

%

 

provided, that the Applicable Margin will be increased by 0.125% per annum on
the date that is 12 months after the Effective Date and will be further
increased by 0.25% per annum on the date that is 18 months after the Effective
Date. The Applicable Margin shall be determined by reference to the Leverage
Ratio in effect from time to time; provided, that no reduction in the Applicable
Margin shall be effective until three Business Days after the date on which the
Agent receives the financial statements required to be delivered pursuant to
Section 5.01(i)(i) or (ii), as the case may be, and a certificate of the Chief
Financial Officer or Controller of the General Partner of the Borrower
demonstrating such ratio.

 

“Applicable Percentage” means, as of any date, a percentage per annum determined
by reference to the Leverage Ratio in effect on such date as set forth below:

 

 

Leverage Ratio

 

Applicable
Percentage

 

£ 2.50 to 1.00

 

0.175

%

> 2.50 to 1.00 but £ 4.50 to 1.00

 

0.225

%

> 4.50 to 1.00

 

0.275

%

 

The Applicable Percentage shall be determined by reference to the Leverage Ratio
in effect from time to time; provided, that no reduction in the Applicable
Percentage shall be effective until three Business Days after the date on which
the Agent receives the financial statements required to be delivered pursuant to
Section 5.01(i)(i) or (ii), as the case may be, and a certificate of the Chief
Financial Officer of the Borrower demonstrating such ratio.

 

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Agent, in substantially the
form of Exhibit C hereto.

 

“Base Rate” means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the higher of:

 

(a)           the rate of interest announced publicly by Citibank in New York,
New York, from time to time, as Citibank’s base rate; and

 

--------------------------------------------------------------------------------

 

(b)           ½ of one percent per annum above the Federal Funds Rate.

 

“Base Rate Advance” means an Advance that bears interest as provided in
Section 2.06(a)(i).

 

“Borrower” has the meaning specified in the recitals hereto.

 

“Borrower Information” has the meaning specified in Section 8.08.

 

“Borrowing” means a borrowing consisting of simultaneous Advances of the same
Type made by the Lenders.

 

“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City, Calgary, Canada and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.

 

“Change in Accounting Principles” means changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or any successor thereto, the SEC or, if
applicable, the Public Company Accounting Oversight Board.

 

“Citibank” means Citibank, N.A.

 

“Commitment” means as to any Lender (a) the amount set forth opposite such
Lender’s name on Schedule I hereto as such Lender’s “Commitment” or (b) if such
Lender has entered into any Assignment and Acceptance, the amount set forth for
such Lender in the Register maintained by the Agent pursuant to Section 8.07(d),
as such amount may be reduced pursuant to Section 2.04.

 

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

 

“Convert”, “Conversion” and “Converted” each refers to a conversion of Advances
of one Type into Advances of the other Type pursuant to Section 2.07 or 2.08.

 

“Covenant Indebtedness” of any Person means all items that, in accordance with
GAAP, would be classified as indebtedness on a Consolidated balance sheet of
such Person.

 

“Debt” of any Person means, without duplication, (a) all indebtedness of such
Person for borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services (other than trade payables incurred in
the ordinary course of such Person’s business), (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all obligations of such Person created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee under leases that have
been or should be, in accordance with GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person in respect of acceptances,
letters of credit or similar extensions of credit, (g) all Debt of others
referred to in clauses (a) through (f) above or clause (h) below and other
payment obligations (collectively, “Guaranteed Debt”) guaranteed directly or
indirectly in any manner by such Person, or in effect guaranteed directly or
indirectly by such Person through an agreement (1) to pay or purchase such
Guaranteed Debt or to advance or supply funds for the payment or purchase of
such Guaranteed Debt, (2) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Guaranteed Debt or to assure the holder of
such Guaranteed Debt against loss, (3) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are rendered)
or (4) otherwise to assure a creditor against loss, and (h) all Debt referred to
in clauses (a) through (g) above (including Guaranteed Debt)

 

--------------------------------------------------------------------------------

 

secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt, provided, that if such Person is not liable for such obligation, the
amount of such Person’s Debt with respect thereto shall be deemed to be the
lesser of the stated amount of such obligation and the value of the property
subject to such Lien.

 

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

 

“Disclosed Litigation” has the meaning specified in Section 3.01(b).

 

“Domestic Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.

 

“Effective Date” has the meaning specified in Section 3.01.

 

“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; and
(iii) any other Person approved by the Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in accordance
with Section 8.07, the Borrower, such approval not to be unreasonably withheld
or delayed; provided, however, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.

 

“Environmental Action” means any action, suit, demand, demand letter, claim,
notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

 

“Environmental Law” means any federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, judgment, decree or judicial or agency
interpretation, policy or guidance relating to pollution or protection of the
environment, health, safety or natural resources, including, without limitation,
those relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Materials.

 

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

 

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of the Borrower’s controlled group, or under common control with the
Borrower, within the meaning of Section 414 of the Internal Revenue Code.

 

“ERISA Event” means (a) (i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as

 

--------------------------------------------------------------------------------

 

defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the following 30
days; (b) the application for a minimum funding waiver with respect to a Plan;
(c) the provision by the administrator of any Plan of a notice of intent to
terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such
notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of the Borrower or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (f)  the conditions for the imposition
of a lien under Section 302(f) of ERISA shall have been met with respect to any
Plan; (g) the adoption of an amendment to a Plan requiring the provision of
security to such Plan pursuant to Section 307 of ERISA; or (h) the institution
by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section 4042 of
ERISA that constitutes grounds for the termination of, or the appointment of a
trustee to administer, a Plan.

 

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Board of Governors of the Federal Reserve System, as in effect from time
to time.

 

“Eurodollar Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.

 

“Eurodollar Rate” means, for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the rate per annum (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on
Moneyline Telerate Markets Page 3750 (or any successor page) as the London
interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period or, if for any reason such rate is
not available, the average (rounded upward to the nearest whole multiple of 1/16
of 1% per annum, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars are offered by the principal office of each of
the Reference Banks in London, England to prime banks in the London interbank
market at 11:00 A.M. (London time) two Business Days before the first day of
such Interest Period in an amount substantially equal to such Reference Bank’s
Eurodollar Rate Advance comprising part of such Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest Period by
(b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for
such Interest Period. If the Moneyline Telerate Markets Page 3750 (or any
successor page) is unavailable, the Eurodollar Rate for any Interest Period for
each Eurodollar Rate Advance comprising part of the same Borrowing shall be
determined by the Agent on the basis of applicable rates furnished to and
received by the Agent from the Reference Banks two Business Days before the
first day of such Interest Period, subject, however, to the provisions of
Section 2.07.

 

“Eurodollar Rate Advance” means an Advance that bears interest as provided in
Section 2.06(a)(ii).

 

“Eurodollar Rate Reserve Percentage” for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing means the reserve percentage
applicable two Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that

 

--------------------------------------------------------------------------------

 

includes deposits by reference to which the interest rate on Eurodollar Rate
Advances is determined) having a term equal to such Interest Period.

 

“Events of Default” has the meaning specified in Section 6.01.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

 

“GAAP” has the meaning specified in Section 1.03.

 

“General Partner” means TC PipeLines GP, Inc.

 

“Hazardous Materials” means (a) petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and (b) any other chemicals, materials
or substances designated, classified or regulated as hazardous or toxic or as a
pollutant or contaminant under any Environmental Law.

 

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts and other similar agreements.

 

“Hedge Termination Value” means, in respect of any one or more Hedge Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Hedge Agreements, (a) for any date on or after the
date such Hedge Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Hedge Agreements, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Agreements (which may include any Lender).

 

“Information Memorandum” means the confidential information memorandum dated
March 13, 2006 used by the Agent in connection with the syndication of the
Commitments.

 

“Initial Lenders” has the meaning specified in the recitals hereto.

 

“Interest Expense” means, for any period, total interest expense determined in
accordance with GAAP.

 

“Interest Period” means, for each Eurodollar Rate Advance comprising part of the
same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, and subject to clause (c) of this definition, nine or
twelve months, as the Borrower may, upon notice received by the Agent not later
than 11:00 A.M. (New York City time) on the third Business Day prior to the
first day of such Interest Period, select; provided, however, that:

 

--------------------------------------------------------------------------------

 

(a)           the Borrower may not select any Interest Period that ends after
the Termination Date;

 

(b)           Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same duration;

 

(c)           the Borrower shall not be entitled to select an Interest Period
having duration of nine or twelve months unless, by 2:00 P.M. (New York City
time) on the third Business Day prior to the first day of such Interest Period,
each Lender notifies the Agent that such Lender will be providing funding for
such Borrowing with such Interest Period (the failure of any Lender to so
respond by such time being deemed for all purposes of this Agreement as an
objection by such Lender to the requested duration of such Interest Period);
provided that, if any or all of the Lenders object to the requested duration of
such Interest Period, the duration of the Interest Period for such Borrowing
shall be one, two, three or six months, as specified by the Borrower requesting
such Borrowing in the applicable Notice of Borrowing as the desired alternative
to an Interest Period of nine or twelve months;

 

(d)           whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day, provided, however,
that, if such extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day; and

 

(e)           whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.

 

“Lenders” means the Initial Lenders and each Person that shall become a party
hereto pursuant to Section 8.07.

 

“Leverage Ratio” means, as of any date, the ratio of Covenant Indebtedness of
the Borrower on such date to Adjusted Cash Flow of the Borrower for the period
of four fiscal quarters most recently ended on or immediately prior to such
date.

 

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

 

“Material Adverse Change” means any material adverse change in the business,
condition (financial or otherwise), operations, performance or properties of the
Borrower, its Subsidiaries, Northern Border and Tuscarora taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance or properties of the
Borrower, its Subsidiaries, Northern Border and Tuscarora taken as a whole,
(b) the rights and remedies of the Agent or any Lender under this Agreement or
any Note or (c) the ability of the Borrower to perform its obligations under
this Agreement or any Note.

 

“Maturity Date” means the second anniversary of the Effective Date.

 

--------------------------------------------------------------------------------

 

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.

 

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and at least one Person other than the Borrower
and the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.

 

“Net Cash Proceeds” means, with respect to any sale, lease, transfer or other
disposition of any asset or the incurrence or issuance of any Debt or the sale
or issuance of any equity by the Borrower, the aggregate amount of cash received
from time to time (whether as initial consideration or through payment or
disposition of deferred consideration) by or on behalf of such Person in
connection with such transaction after deducting therefrom only (without
duplication) (a) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal and accounting fees, filing fees, finder’s fees and
other similar fees and commissions, (b) the amount of taxes estimated in good
faith by the Borrower to be payable by the Borrower or any of its Subsidiaries
in connection with or as a result of such transaction, (c) the amount of any
Debt secured by a Lien on such asset, (d) in the case of any receipt of proceeds
by a Subsidiary of the Borrower, any amount required to be distributed to the
holders of any minority equity interest in the respective Subsidiary (or in any
other Subsidiary which directly or indirectly holds capital stock or equivalent
interests in such Subsidiary), and (e) with respect to any sale, lease, transfer
or other disposition of any asset, any amount of such Net Cash Proceeds set
aside as a reserve established in good faith by the Borrower or such Subsidiary
for indemnity or other potential claims in connection therewith until any unused
reserves are no longer maintained in connection therewith, in each case to the
extent, but only to the extent, that the amounts so deducted are at the time of
receipt of such cash, actually paid to a Person that is not an Affiliate of the
Borrower and are properly attributable to such transaction or to the asset that
is the subject thereof, provided, that for purposes of determining the date of
receipt of Net Cash Proceeds from the sale, lease, transfer or other disposition
of any asset, such Net Cash Proceeds shall be deemed to have been received on
the date that is six months after the date of such disposition.

 

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

 

“Note” means a promissory note of the Borrower payable to the order of any
Lender, delivered pursuant to a request made under Section 2.15 and in
substantially the form of Exhibit A hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the Advance made by
such Lender.

 

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

 

“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56, signed into law October 26, 2001.

 

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

 

“Permitted Liens” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been
commenced:  (a) Liens for taxes, assessments and governmental charges or levies
to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens
imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and
repairmen’s Liens and other similar Liens arising in the ordinary course of
business securing obligations that are not overdue for a period of more than 30
days unless being contested in good faith, provided that adequate reserves for
the payment thereof have been established in accordance with GAAP and no
property of the Borrower or any Subsidiary is subject to impending risk of loss
or forfeiture by reason of nonpayment of the obligations

 

--------------------------------------------------------------------------------

 

secured by such Liens; (c) pledges or deposits to secure obligations under
workers’ compensation laws or similar legislation or to secure public or
statutory obligations; and (d) easements, rights of way and other encumbrances
on title to real property that do not render title to the property encumbered
thereby unmarketable or materially adversely affect the use of such property for
its present purposes.

 

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, unincorporated association, joint venture,
limited liability company or other entity, or a government or any political
subdivision or agency thereof.

 

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

“Reference Banks” means CNAI, UBS Loan Finance LLC and Mizuho Corporate Bank,
Ltd.

 

“Register” has the meaning specified in Section 8.07(d).

 

“Required Lenders” means at any time Lenders owed or holding at least a majority
in interest of the Advances outstanding at such time or, if no Advances are then
outstanding, Lenders holding at least a majority of the Commitments at such
time.

 

“SEC” means the Securities and Exchange Commission, any successor thereto and
any analogous governmental authority.

 

“Significant Subsidiary” has the meaning specified in Article 1, Rule 1-02(w) of
Regulation S-X of the Securities Exchange Act of 1934 as of the Effective Date,
provided, that, even if Northern Border and Tuscarora would not otherwise
constitute a Subsidiary of the Borrower, each of Northern Border and Tuscarora
shall be deemed to be a Significant Subsidiary of the Borrower if it would
otherwise qualify as a Significant Subsidiary under Article 1, Rule 1-02(w) of
Regulation S-X as of the Effective Date.

 

“Single Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any  ERISA Affiliate and no Person other than the Borrower and the
ERISA Affiliates or (b) was so maintained and in respect of which the Borrower
or any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.

 

“Solvent” and “Solvency” mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture,
limited liability company, trust or estate of which (or in which) more than 50%
of (a) the issued and outstanding capital stock having ordinary voting power to
elect a majority of the Board of Directors of such corporation (irrespective of
whether at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

--------------------------------------------------------------------------------

 

“Termination Date” means the earlier of (a) March 31, 2008 and (b) the date of
termination in whole of the Commitments pursuant to Section 2.04 or 6.01.

 

“Tuscarora” means Tuscarora Gas Transmission Company, a Nevada general
partnership.

 

“Voting Stock” means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.

 

SECTION 1.02.  Computation of Time Periods.  In this Agreement 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 words “to” and “until” each
mean “to but excluding”.

 

SECTION 1.03.  Accounting Terms.  All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 4.01(e) (“GAAP”). In the event that any Change
in Accounting Principles shall occur and such change results in a change in the
method of calculation of financial covenants, standards or terms in this
Agreement, then, upon the request of the Borrower or the Required Lenders, the
Borrower and the Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to reflect equitably such Change in
Accounting Principles with the desired result that the criteria for evaluating
the Borrower’s financial condition shall be the same after such Change in
Accounting Principles as if such Change in Accounting Principles had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Change in Accounting Principles had not occurred.

 

ARTICLE II

 

AMOUNTS AND TERMS OF THE ADVANCES

 

SECTION 2.01.  The Advances.  Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make an advance (its “Advance”) to the
Borrower on the Effective Date in an amount not to exceed such Lender’s
Commitment at such time. The Borrowing shall consist of Advances made
simultaneously by the Lenders ratably according to their Commitments. Amounts
borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed.

 

SECTION 2.02.  Making the Advances.  (a)  Each Borrowing shall be made on
notice, given not later than (x) 11:00 A.M. (New York City time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York
City time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Agent, which shall give
to each Lender prompt notice thereof by telecopier. Each such notice of a
Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed promptly in
writing, or telecopier in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Type of Advances
comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Lender shall, before 1:00 P.M. (New York City
time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Agent at the Agent’s Account, in same day
funds, such Lender’s ratable portion of such Borrowing. After the Agent’s
receipt of such funds and upon fulfillment of the applicable conditions set
forth in Article III, the Agent will make such funds available to the Borrower
at the Agent’s address referred to in Section 8.02.

 

(b)           Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if
the aggregate amount of such Borrowing is less than $5,000,000 or if the
obligation of the Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant

 

--------------------------------------------------------------------------------

 

to Section 2.07 or 2.11 and (ii) the Eurodollar Rate Advances may not be
outstanding as part of more than six separate Borrowings.

 

(c)           Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Lender as a result of any failure to fulfill on or before the
date specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other acquired by such Lender to
fund the Advance to be made by such Lender as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date.

 

(d)           Unless the Agent shall have received notice from a Lender prior to
the time of any Borrowing that such Lender will not make available to the Agent
such Lender’s ratable portion of such Borrowing, the Agent may assume that such
Lender has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Agent, such Lender and the
Borrower severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to Advances comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Lender’s Advance as part of such Borrowing for purposes of this Agreement.

 

(e)           The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.

 

SECTION 2.03.  Fees.  (a)  Commitment Fee. The Borrower agrees to pay to the
Agent for the account of each Lender a commitment fee on the aggregate amount of
such Lender’s unused Commitment from the date hereof until the Effective Date at
a rate per annum equal to the Applicable Percentage in effect from time to time,
payable in arrears quarterly on the last day of each March, June, September and
December, commencing June 30, 2006, and on the Effective Date.

 

(b)           Agent’s Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.

 

SECTION 2.04.  Termination or Reduction of the Commitments.  (a)  Optional. The
Borrower shall have the right, upon at least three Business Days’ notice to the
Agent, to terminate in whole or permanently reduce ratably in part the unused
portions of the Commitments, provided that each partial reduction shall be in
the aggregate amount of $1,000,000 or an integral multiple of $1,000,000 in
excess thereof .

 

(b)           Mandatory. On the Effective Date, after giving effect to any
Borrowing made on such date, and from time to time thereafter upon prepayment of
the Advances, the aggregate Commitments shall be automatically and permanently
reduced, on a pro rata basis, by an amount equal to the amount by which (i) the
aggregate Commitments immediately prior to such reduction exceed (ii) the
aggregate unpaid principal amount of the Advances then outstanding.

 

SECTION 2.05.  Repayment.  The Borrower shall repay to the Agent for the ratable
account of the Lenders on the Maturity Date the aggregate principal amount of
the Advances then outstanding.

 

SECTION 2.06.  Interest on Advances.  (a)  Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:

 

--------------------------------------------------------------------------------

 

(i)            Base Rate Advances. During such periods as such Advance is a Base
Rate Advance, a rate per annum equal at all times to the sum of (x) the Base
Rate in effect from time to time plus (y) the Applicable Margin in effect from
time to time, payable in arrears quarterly on the last day of each March, June,
September and December during such periods and on the date such Base Rate
Advance shall be Converted or paid in full.

 

(ii)           Eurodollar Rate Advances. During such periods as such Advance is
a Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such
Interest Period for such Advance plus (y) the Applicable Margin in effect from
time to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full.

 

(b)           Default Interest. Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), the Agent may, and upon the
request of the Required Lenders shall, require the Borrower to pay interest
(“Default Interest”) on (i) the unpaid principal amount of each Advance owing to
each Lender, payable in arrears on the dates referred to in clause (a)(i) or
(a)(ii) above, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on such Advance pursuant to clause (a)(i) or
(a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, from
the date such amount shall be due until such amount shall be paid in full,
payable in arrears on the date such amount shall be paid in full and on demand,
at a rate per annum equal at all times to 2% per annum above the rate per annum
required to be paid on Base Rate Advances pursuant to clause (a)(i) above,
provided, however, that following acceleration of the Advances pursuant to
Section 6.01, Default Interest shall accrue and be payable hereunder whether or
not previously required by the Agent.

 

SECTION 2.07.  Interest Rate Determination.  (a)  Each Reference Bank agrees to
furnish to the Agent timely information for the purpose of determining each
Eurodollar Rate. If any one or more of the Reference Banks shall not furnish
such timely information to the Agent for the purpose of determining any such
interest rate, the Agent shall determine such interest rate on the basis of
timely information furnished by the remaining Reference Banks. The Agent shall
give prompt notice to the Borrower and the Lenders of the applicable interest
rate determined by the Agent for purposes of Section 2.06(a)(i) or (ii), and the
rate, if any, furnished by each Reference Bank for the purpose of determining
the interest rate under Section 2.06(a)(ii).

 

(b)           If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower that such Lenders have determined that the circumstances causing
such suspension no longer exist.

 

(c)           If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of “Interest Period” in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Eurodollar Rate Borrowing having an Interest Period of one month.

 

(d)           On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.

 

(e)           Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert

 

--------------------------------------------------------------------------------

 

into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended.

 

(f)            If Moneyline Telerate Markets Page 3750 is unavailable and fewer
than two Reference Banks furnish timely information to the Agent for determining
the Eurodollar Rate for any Eurodollar Rate Advances,

 

(i)            the Agent shall forthwith notify the Borrower and the Lenders
that the interest rate cannot be determined for such Eurodollar Rate Advances,

 

(ii)           each such Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance (or if such
Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

 

(iii)          the obligation of the Lenders to make Eurodollar Rate Advances or
to Convert Advances into Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

 

SECTION 2.08.  Optional Conversion of Advances.  The Borrower may on any
Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York
City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.07 and 2.11, Convert all
or any portion of Advances of one Type comprising the same Borrowing into
Advances of the other Type; provided, however, that any Conversion of Base Rate
Advances into Eurodollar Rate Advances shall be in an amount not less than the
minimum amount specified in Section 2.02(b), no Conversion of any Advances shall
result in more separate Borrowings than permitted under Section 2.02(b) and each
Conversion of Advances comprising part of the same Borrowing shall be made
ratably among the Lenders in accordance with their Commitments and provided,
further that for any Conversion of Eurodollar Rate Advances into Base Rate
Advances made other than on the last day of an Interest Period for such
Eurodollar Rate Advances the Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c). Each such notice of a
Conversion shall, within the restrictions specified above, specify (i) the date
of such Conversion, (ii) the Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

 

SECTION 2.09.  Prepayments of Advances.  The Borrower may, upon notice at least
two Business Days’ prior to the date of such prepayment, in the case of
Eurodollar Rate Advances, and not later than 11:00 A.M. (New York City time) on
the date of such prepayment, in the case of Base Rate Advances, to the Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding principal
amount of the Advances comprising part of the same Borrowing in whole or ratably
in part, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $10,000,000 or an integral multiple
of $1,000,000 in excess thereof  and (y) in the event of any such prepayment of
a Eurodollar Rate Advance made other than on the last day of an Interest Period
for such Eurodollar Rate Advances, the Borrower shall be obligated to reimburse
the Lenders in respect thereof pursuant to Section 8.04(c).

 

(b)           Mandatory. (i)  If the Borrower and its Subsidiaries shall have
received Net Cash Proceeds in excess of $10,000,000 from (A) the sale, lease,
transfer or other disposition of any assets of the Borrower (other than any
sale, lease, transfer or other disposition of assets (1) in the ordinary course
of business or (2) to the extent that the Net Cash Proceeds thereof are
reinvested in similar assets within six months after the receipt of such Net
Cash Proceeds), (B) the incurrence of or issuance by the Borrower or any of its
Subsidiaries of any indebtedness for borrowed money, including indebtedness
evidenced by notes, bonds, debentures or other similar instruments or (C) the
sale or issuance by the Borrower of any of its equity interests, the Borrower
shall be required to make a mandatory prepayment of Advances comprising a part
of the same Borrowings in an aggregate amount equal to such Net Cash Proceeds.
Any mandatory prepayment of Advances required to be made pursuant to this
Section 2.09(b) shall be made on the earlier of (1) the last day of the Interest
Period for any Advance ending after the date of receipt of such Net Cash
Proceeds (until all such Net Cash Proceeds have been prepaid) and (2) the

 

--------------------------------------------------------------------------------

 

30th calendar day after the receipt thereof; provided, that, all such Net Cash
Proceeds shall have been applied to prepay Advances not later than the 30th
calendar day after the date that such Net Cash Proceeds exceed $10,000,000.

 

(ii)           Each prepayment made pursuant to this Section 2.09(b) shall be
made together with any interest accrued to the date of such prepayment on the
principal amounts prepaid and, in the case of any prepayment of a Eurodollar
Rate Advance on a date other than the last day of an Interest Period or at its
maturity, any additional amounts which the Borrower shall be obligated to
reimburse to the Lenders in respect thereof pursuant to Section 8.04(c).

 

SECTION 2.10.  Increased Costs.  (a)  If, due to either (i) the introduction of
or any change in or in the interpretation of any law or regulation after the
Effective Date or (ii) the compliance with any guideline or request adopted
after the Effective Date from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances (excluding for purposes of this Section 2.10 any  such
increased costs resulting from (i) Taxes or Other Taxes (as to which Section
2.13 shall govern) and (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender is organized or has
its Applicable Lending Office or any political subdivision thereof), then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Agent), pay to the Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
A certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Lender, shall be conclusive and binding for all purposes,
absent manifest error.

 

(b)           If any Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) adopted or
issued after the Effective Date affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender’s commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender (with a copy of such
demand to the Agent), the Borrower shall pay to the Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender’s commitment
to lend hereunder. A certificate as to such amounts submitted to the Borrower
and the Agent by such Lender shall be conclusive and binding for all purposes,
absent manifest error.

 

(c)           Notwithstanding anything to the contrary in this Section 2.10, the
Borrower shall not be required to compensate a Lender pursuant to this Section
2.10 for any amounts incurred more than six months prior to the date that such
Lender notifies the Borrower of such Lender’s intention to claim compensation
therefor; provided that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect.

 

SECTION 2.11.  Illegality.  Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically,
upon the last day of the applicable Interest Period or, if required by
applicable law, immediately upon such demand, Convert into a Base Rate Advance
and (b) the obligation of the Lenders to make Eurodollar Rate Advances or to
Convert Advances into Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist.

 

SECTION 2.12.  Payments and Computations.  (a)  The Borrower shall make each
payment hereunder, irrespective of any right of counterclaim or set-off,  not
later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars
to the Agent at the Agent’s Account in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or fees ratably (other than amounts payable pursuant to
Section 2.10, 2.13 or 8.04(c)) to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to

 

--------------------------------------------------------------------------------

 

such Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon its acceptance of
an Assignment and Acceptance and recording of the information contained therein
in the Register pursuant to Section 8.07(c), from and after the effective date
specified in such Assignment and Acceptance, the Agent shall make all payments
hereunder and under the Notes in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.

 

(b)           The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Note
held by such Lender, to charge from time to time against any or all of the
Borrower’s accounts with such Lender any amount so due.

 

(c)           All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Eurodollar Rate or the Federal Funds
Rate and of fees shall be made by the Agent on the basis of a year of 360 days,
in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable. Each determination by the Agent of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.

 

(d)           Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be;
provided, however, that, if such extension would cause payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

 

(e)           Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.

 

SECTION 2.13.  Taxes.  (a)  Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under the Notes or any other
documents to be delivered hereunder shall be made, in accordance with
Section 2.12 or the applicable provisions of such other documents, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender and the Agent, any branch profits
tax imposed by the United States and taxes imposed on its overall net income,
and franchise taxes imposed on it in lieu of net income taxes, by the
jurisdiction under the laws of which such Lender or the Agent (as the case may
be) is organized or any political subdivision thereof and, in the case of each
Lender, taxes imposed on its overall net income, and franchise taxes imposed on
it in lieu of net income taxes, by the jurisdiction of such Lender’s Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes being hereinafter referred to
as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note or any other
documents to be delivered hereunder to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13) such Lender or the Agent (as the case may be) receives 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 taxation authority or other authority
in accordance with applicable law.

 

(b)           In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or any
other documents to be delivered hereunder or from the execution, delivery or
registration of,

 

--------------------------------------------------------------------------------

 

performing under, or otherwise with respect to, this Agreement or the Notes or
any other documents to be delivered hereunder (hereinafter referred to as “Other
Taxes”).

 

(c)           The Borrower shall indemnify each Lender and the Agent for and
hold it harmless against the full amount of Taxes or Other Taxes (including,
without limitation, taxes of any kind imposed or asserted by any jurisdiction on
amounts payable under this Section 2.13) imposed on or paid by such Lender or
the Agent (as the case may be) and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within 30 days from the date such Lender or the Agent (as the case
may be) makes written demand therefor.

 

(d)           Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing such payment to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Agent. In the case of any payment
hereunder or under the Notes or any other documents to be delivered hereunder by
or on behalf of the Borrower through an account or branch outside the United
States or by or on behalf of the Borrower by a payor that is not a United States
person, if the Borrower determines that no Taxes are payable in respect thereof,
the Borrower shall furnish, or shall cause such payor to furnish, to the Agent,
at such address, an opinion of counsel acceptable to the Agent stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e), the terms “United States” and “United States person” shall have the
meanings specified in Section 7701 of the Internal Revenue Code.

 

(e)           Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Initial Lender and on the date of the Assignment
and Acceptance pursuant to which it becomes a Lender in the case of each other
Lender, and from time to time thereafter as reasonably requested in writing by
the Borrower (but only so long as such Lender remains lawfully able to do so),
shall provide each of the Agent and the Borrower with two original Internal
Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such
Lender is exempt from or entitled to a reduced rate of United States withholding
tax on payments pursuant to this Agreement or the Notes and, in the case of any
Lender claiming the benefits of the exemption for portfolio interest under
section 881(c) of the Internal Revenue Code, a certificate to the effect that
such Lender is not (A) a “bank” described in section 881(c)(3)(A) of the
Internal Revenue Code, (B) a “10 percent shareholder” of the Borrower described
in section 881(c)(3)(B) of the Internal Revenue Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Internal Revenue
Code. Each such Lender shall promptly notify the Borrower at any time 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 U.S. taxing authorities for such purpose). If the form provided
by a Lender at the time such Lender first becomes a party to this Agreement
indicates a United States interest withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender provides the appropriate forms certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender
assignee becomes a party to this Agreement, the Lender assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender assignee on such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service Form W-8BEN
or W-8ECI, that the Lender reasonably considers to be confidential, the Lender
shall give notice thereof to the Borrower and shall not be obligated to include
in such form or document such confidential information. If requested by the
Borrower in order to obtain an exemption from or reduction from non-U.S.
withholding taxes, a Lender shall deliver to the Borrower (with a copy to the
Agent) at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate, provided that
such Lender is legally entitled to complete, execute and deliver such
documentation and in such Lender’s judgment such completion, execution or
submission would not materially prejudice the legal position of such Lender.

 

--------------------------------------------------------------------------------

 

(f)            For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form, certificate or other document
described in Section 2.13(e) (other than if such failure is due to a change in
law, or in the interpretation or application thereof, occurring subsequent to
the date on which a form, certificate or other document originally was required
to be provided, or if such form, certificate or other document otherwise is not
required under subsection (e) above), such Lender shall not be entitled to the
additional payment or indemnification under Section 2.13(a) or (c) with respect
to Taxes imposed by the United States by reason of such failure; provided,
however, that should a Lender become subject to Taxes because of its failure to
deliver a form, certificate or other document required hereunder, the Borrower
shall take such steps as the Lender shall reasonably request to assist the
Lender to recover such Taxes.

 

(g)           If the Agent or any Lender determines, in its sole discretion,
that it has received a refund of any Taxes or Other Taxes as to which it has
been indemnified by the Borrower or with respect to which the Borrower has paid
amounts pursuant to this Section 2.13, it shall pay over such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.13 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Agent or such Lender and without interest (other than any interest paid by
the relevant governmental authority with respect to such refund); provided, that
the Borrower, upon the request of the Agent or such Lender, agrees to repay the
amount paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant governmental authority) to the Agent or such Lender in
the event the Agent or such Lender is required to repay such refund to such
governmental authority. This paragraph shall not be construed to require the
Agent or any Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the Borrower or any other
Person.

 

SECTION 2.14.  Sharing of Payments, Etc.  If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances owing to it (other than pursuant to
Section 2.10, 2.13 or 8.04(c)) in excess of its ratable share of payments on
account of the Advances obtained by all the Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Advances owing to
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender’s ratable share (according to the proportion
of (i) the amount of such Lender’s required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.14 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.

 

SECTION 2.15.  Evidence of Debt.  (a)  Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from each Advance owing to such Lender
from time to time, including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder in respect of Advances. The
Borrower agrees that upon notice by any Lender to the Borrower (with a copy of
such notice to the Agent) to the effect that a Note is required or appropriate
in order for such Lender to evidence (whether for purposes of pledge,
enforcement or otherwise) the Advances owing to, or to be made by, such Lender,
the Borrower shall promptly execute and deliver to such Lender a Note, in
substantially the form of Exhibit A hereto, respectively, payable to the order
of such Lender in a principal amount equal to the Commitment of such Lender.

 

(b)           The Register maintained by the Agent pursuant to Section 8.07(d)
shall include a control account, and a subsidiary account for each Lender, in
which accounts (taken together) shall be recorded (i) the date and amount of
each Borrowing made hereunder, the Type of Advances comprising such Borrowing
and, if appropriate, the Interest Period applicable thereto, (ii) the terms of
each Assignment and Acceptance delivered to and accepted by it, (iii) the amount
of any principal or interest due and payable or to become due and payable from
the Borrower to each Lender hereunder and (iv) the amount of any sum received by
the Agent from the Borrower hereunder and each Lender’s share thereof.

 

--------------------------------------------------------------------------------

 

(c)           Entries made in good faith by the Agent in the Register pursuant
to subsection (b) above, and by each Lender in its account or accounts pursuant
to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Agent or such Lender to make an
entry, or any finding that an entry is incorrect, in the Register or such
account or accounts shall not limit or otherwise affect the obligations of the
Borrower under this Agreement.

 

SECTION 2.16.  Use of Proceeds.  The proceeds of the Advances shall be available
(and the Borrower agrees that it shall use such proceeds) solely for payment of
the cash consideration of the Acquisition and the transaction fee related to the
Acquisition.

 

SECTION 2.17  Change of Lending Office.  Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.10 or 2.13(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate another lending office for any Advances affected by
such event with the object of avoiding the consequences of such event; provided,
that such designation would not, in the reasonable judgment of such Lender, be
otherwise disadvantageous to such Lender, and provided, further, that nothing in
this Section 2.18 shall affect or postpone any of the obligations of the
Borrower or the rights of any Lender pursuant to Section 2.10 or 2.13(a).

 

ARTICLE III

 

CONDITIONS TO EFFECTIVENESS AND LENDING

 

SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01.
 Section 2.01 of this Agreement shall become effective on and as of the first
date (the “Effective Date”) on which the following conditions precedent have
been satisfied:

 

(a)           There shall have occurred no Material Adverse Change since
December 31, 2005.

 

(b)           There shall exist no action, suit, investigation, litigation or
proceeding affecting the General Partner, the Borrower or any of its
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) would be reasonably likely to have a Material Adverse Effect
other than the matters described on Schedule 3.01(b) hereto (the “Disclosed
Litigation”) or (ii) purports to affect the legality, validity or enforceability
of this Agreement or any Note or the consummation of the transactions
contemplated hereby, and there shall have been no adverse change in the status,
or financial effect on the Borrower or any of its Subsidiaries, of the Disclosed
Litigation from that described on Schedule 3.01(b) hereto.

 

(c)           Nothing shall have come to the attention of the Lenders during the
course of their due diligence investigation to lead them to believe that the
Information Memorandum was or has become misleading, incorrect or incomplete in
any material respect; without limiting the generality of the foregoing, the
Lenders shall have been given such access to the management, records, books of
account, contracts and properties of the Borrower and its Subsidiaries as they
shall have reasonably requested.

 

(d)           All governmental and third party consents and approvals necessary
in connection with the transactions contemplated hereby  and the Acquisition
shall have been obtained (without the imposition of any conditions that are not
acceptable to the Lenders) and shall remain in effect, and no law or regulation
shall be applicable in the reasonable judgment of the Lenders that restrains,
prevents or imposes materially adverse conditions upon the transactions
contemplated hereby.

 

(e)           The Borrower shall have notified each Lender and the Agent in
writing as to the proposed Effective Date.

 

--------------------------------------------------------------------------------

 

(f)            The Borrower shall have paid all accrued fees and expenses of the
Agent and the Lenders (including the accrued reasonable  fees and expenses of
counsel to the Agent).

 

(g)           On the Effective Date, the following statements shall be true and
the Agent shall have received for the account of each Lender a certificate of
the Borrower, or on its behalf by the General Partner of the Borrower, signed on
behalf of such Person by its President or a Vice President and its Secretary or
any Assistant Secretary (or persons performing similar functions), dated the
Effective Date, stating that:

 

(i)            The representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date,

 

(ii)           No event has occurred and is continuing that constitutes a
Default,

 

(iii)          All governmental and third party consents and approvals necessary
in connection with the transactions contemplated hereby have been obtained
(without the imposition of any conditions that are not acceptable to the
Lenders) and shall remain in effect, all applicable waiting periods in
connection with the Acquisition shall have expired without any action being
taken by any competent authority, and no law or regulation shall be applicable
in the reasonable judgment of the Lenders, in each case that restrains, prevents
or imposes materially adverse conditions upon the transactions contemplated
hereby, and

 

(iv)          All conditions precedent to the consummation of the Acquisition
(other than the payment of cash consideration from, among other sources, the
proceeds of the initial Borrowing hereunder) have been satisfied substantially
in accordance with the terms of the Partnership Interest Purchase and Sale
Agreement dated as of December 31, 2005 between Northern Border Intermediate
Limited Partnership, a Delaware limited partnership, and TC PipeLines
Intermediate Limited Partnership, a Delaware limited partnership, without any
waiver or amendment not consented to by the Required Lenders of any material
term, provision or condition set forth therein, and in compliance with all
applicable laws.

 

(h)           The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the Agent
and (except for the Notes) in sufficient copies for each Lender:

 

(i)            The Notes to the order of the Lenders to the extent requested by
any Lender pursuant to Section 2.15.

 

(ii)           Certified copies of the resolutions of or on behalf of the
Borrower approving this Agreement and the Notes, and/or authorizing the General
Partner or officers, as applicable, to act on behalf of the Borrower, and of all
documents evidencing other necessary action (including, without limitation, all
necessary General Partner, board of directors or other similar action) and
governmental and other third party approvals and consents, if any, with respect
to this Agreement and the Notes.

 

(iii)          A certificate of the Secretary or an Assistant Secretary of the
General Partner of the Borrower certifying the names and true signatures of the
officers of such Person authorized to sign this Agreement and the Notes and the
other documents to be delivered hereunder.

 

(iv)          A favorable opinion of Orrick, Herrington & Sutcliffe LLP, counsel
for the Borrower, substantially in the form of Exhibit D hereto and as to such
other matters as any Lender through the Agent may reasonably request.

 

--------------------------------------------------------------------------------

 

(v)           A favorable opinion of Shearman & Sterling LLP, counsel for the
Agent, in form and substance satisfactory to the Agent.

 

SECTION 3.02.  Conditions Precedent to Each Borrowing.  The obligation of each
Lender to make an Advance on the occasion of each Borrowing shall be subject to
the conditions precedent that the Effective Date shall have occurred and on the
date of such Borrowing (a) the following statements shall be true (and each of
the giving of the applicable Notice of Borrowing and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing such statements are
true):

 

(i)            the representations and warranties contained in Section 4.01
(other than the representation set forth in Section 4.01(f)) are correct on and
as of such date, before and after giving effect to such Borrowing, and to the
application of the proceeds therefrom, as though made on and as of such date,
and

 

(ii)           no event has occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom, that
constitutes a Default;

 

and (b) the Agent shall have received such other approvals, opinions or
documents as any Lender through the Agent may reasonably request.

 

SECTION 3.03.  Determinations Under Section 3.01.  For purposes of determining
compliance with the conditions specified in Section 3.01, each Lender shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by this Agreement shall have
received notice from such Lender prior to the date that the Borrower, by notice
to the Lenders, designates as the proposed Effective Date, specifying its
objection thereto. The Agent shall promptly notify the Lenders of the occurrence
of the Effective Date.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01.  Representations and Warranties of the Borrower.  The Borrower
represents and warrants as follows:

 

(a)           The Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
General Partner is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.

 

(b)           The execution, delivery and performance by the Borrower of this
Agreement and the Notes to be delivered by it, and the consummation of the
transactions contemplated hereby, are within the Borrower’s partnership or the
General Partner’s general corporate powers, have been duly authorized by all
necessary action by or on behalf of the General Partner or the Borrower
(including, without limitation, all necessary partner, managing member or other
similar action), and do not contravene (i) the Borrower’s or the General
Partner’s organizational documents or (ii) any material law or any material
contractual restriction binding on or affecting the Borrower.

 

(c)           No material authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or any
other third party is required for the due execution, delivery and performance by
the Borrower or any general partner or managing member of the Borrower of this
Agreement or the Notes to be delivered by it.

 

--------------------------------------------------------------------------------

 

(d)           This Agreement has been, and each of the Notes to be delivered by
it when delivered hereunder will have been, duly executed and delivered by the
Borrower. This Agreement is, and each of the Notes when delivered hereunder will
be, the legal, valid and binding obligation of the Borrower enforceable against
the Borrower in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

 

(e)           The Consolidated balance sheet of the Borrower and its
Subsidiaries as at December 31, 2005, and the related Consolidated statements of
comprehensive income and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, accompanied by an opinion of KPMG LLP, independent
public accountants, copies of which have been furnished to each Lender, fairly
present the Consolidated financial condition of the Borrower and its
Subsidiaries as at such date and the Consolidated results of the operations of
the Borrower and its Subsidiaries for the period ended on such date, all in
accordance with generally accepted accounting principles in the United States of
America consistently applied.

 

(f)            Since December 31, 2005, there has been no Material Adverse
Change.

 

(g)           There is no pending or, to the knowledge of the Borrower,
threatened action, suit, investigation, litigation or proceeding, including,
without limitation, any Environmental Action, against the General Partner, the
Borrower or any of its Subsidiaries (other than the Disclosed Litigation) before
any court, governmental agency or arbitrator that (i) is reasonably likely to
have a Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of this Agreement or any Note or the consummation of the
transactions contemplated hereby.

 

(h)           The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.

 

(i)            The Borrower is not an “investment company”, or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.

 

(j)            Neither the Information Memorandum nor any other information,
exhibit or report furnished by or on behalf of the Borrower to the Agent or any
Lender in connection with the negotiation and syndication of this Agreement or
pursuant to the terms of this Agreement (other than projections, if any, and pro
forma information) contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements made therein not
materially misleading. The projections, if any, and pro forma financial
information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount.

 

(k)           The Borrower is, individually and together with its Subsidiaries,
Solvent.

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

SECTION 5.01.  Affirmative Covenants.  So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will:

 

 

--------------------------------------------------------------------------------

 

(a)           Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply with all applicable laws, rules, regulations and orders,
such compliance to include, without limitation, compliance with ERISA,
Environmental Laws and the Patriot Act except to the extent that failure to
comply therewith would not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

 

(b)           Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon it or
upon its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that neither the Borrower
nor any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim if (i) it is being contested in good faith and by
proper proceedings and as to which appropriate reserves are being maintained or
(ii) the nonpayment of all such taxes, assessments, charges or claims in the
aggregate would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.

 

(c)           Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies of comparable size and financial strength engaged in
similar businesses and owning similar properties in the same general areas in
which the Borrower or such Subsidiary operates, which may include
self-insurance, if determined by the Borrower to be reasonably prudent and
consistent with business practices as in effect on the date hereof.

 

(d)           Preservation of Existence, Etc. Preserve and maintain, and cause
each of its Subsidiaries to preserve and maintain, its (i) legal existence;
provided, however, that the Borrower and its Subsidiaries may consummate any
merger or consolidation permitted under Section 5.02(b) and (ii) rights (charter
and statutory) and franchises; provided further that neither the Borrower nor
any of its Subsidiaries shall be required to preserve any right or franchise if
the Board of Directors (or persons performing similar functions) of or on behalf
of the Borrower or such Subsidiary shall determine that the preservation thereof
is no longer desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not reasonably
likely to have a Material Adverse Effect.

 

(e)           Visitation Rights. At any reasonable time and from time to time
and upon reasonable notice, permit the Agent or any of its agents or
representatives, to (i) permit the Agent or any representatives thereof to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and (ii) use commercially
reasonable efforts to provide for the Agent or any representatives thereof (in
the presence of representatives of the Borrower) to meet with the independent
certified public accountants of the Borrower and its Subsidiaries; provided,
that any such visits or inspections shall be subject to such conditions as the
Borrower and each of its Subsidiaries shall deem necessary based on reasonable
considerations of safety and security; and provided, further, that neither the
Borrower nor any Subsidiary shall be required to disclose to the Agent or any
representatives thereof any information which is subject to the attorney-client
privilege or attorney work-product privilege properly asserted by the applicable
Person to prevent the loss of such privilege in connection with such information
or which is prevented from disclosure pursuant to a confidentiality agreement
with third parties.

 

(f)            Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Borrower and each such Subsidiary in accordance with generally accepted
accounting principles in effect from time to time.

 

(g)           Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties that
are used or useful in the conduct of its business in good

 

--------------------------------------------------------------------------------

 

working order and condition, ordinary wear and tear excepted, except to the
extent that failure to do so would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

(h)           Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under this
Agreement with any of their Affiliates on terms that are fair and reasonable and
no less favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

(i)            Reporting Requirements. Furnish to the Lenders:

 

(i)            as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Borrower, the
unaudited Consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and unaudited Consolidated statements of income and cash
flows of the Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, duly
certified (subject to year-end audit adjustments) by the chief financial officer
(or person performing similar functions) of the General Partner as having been
prepared in accordance with generally accepted accounting principles and
certificates of the chief executive officer, chief financial officer or
controller of the Borrower (or the General Partner) as to compliance with the
terms of this Agreement and setting forth in reasonable detail the calculations
necessary to demonstrate compliance with Section 5.03, provided that in the
event of any change in generally accepted accounting principles used in the
preparation of such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Section 5.03, a statement of
reconciliation conforming such financial statements to GAAP;

 

(ii)           as soon as available and in any event within 105 days after the
end of each fiscal year of the Borrower, a copy of the annual audit report for
such year for the Borrower and its Subsidiaries, containing the Consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal
year and Consolidated statements of income and cash flows of the Borrower and
its Subsidiaries for such fiscal year, in each case accompanied by an opinion,
without a “going concern” or like qualification or exception, or qualification
arising out of the scope of the audit, by KPMG LLP or other independent public
accountants of nationally recognized standing and certificates of the chief
financial officer (or person performing similar functions) of the Borrower (or
the General Partner) as to compliance with the terms of this Agreement and
setting forth in reasonable detail the calculations necessary to demonstrate
compliance with Section 5.03, provided that in the event of any change in
generally accepted accounting principles used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for the
determination of compliance with Section 5.03, a statement of reconciliation
conforming such financial statements to GAAP;

 

(iii)          as soon as possible and in any event within five Business Days
after the occurrence of each Default continuing on the date of such statement, a
statement of the chief financial officer (or person performing similar
functions) of the Borrower (or the General Partner) setting forth details of
such Default and the action that the Borrower has taken and proposes to take
with respect thereto;

 

(iv)          promptly after the sending or filing thereof, copies of all
reports that the Borrower sends to any of its securityholders, and copies of all
reports and registration statements that the Borrower or any Subsidiary files
with the SEC;

 

(v)           promptly after the commencement thereof, notice of all actions and
proceedings before any court, governmental agency or arbitrator affecting the
General Partner, the Borrower or any of its Subsidiaries of the type described
in Section 4.01(g); and

 

--------------------------------------------------------------------------------

 

(vi)          such other information respecting the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time reasonably
request.

 

Notwithstanding the foregoing, the Borrower shall be deemed to have delivered
the reports and registration statements required to be delivered pursuant to the
foregoing clause (iv) upon the filing of such financial statements, reports and
registration statements by the Borrower through the SEC’s EDGAR system.

 

SECTION 5.02.  Negative Covenants.  So long as any Advance shall remain unpaid
or any Lender shall have any Commitment hereunder, the Borrower will not:

 

(a)           Liens, Etc. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien on or with respect to any of
its properties, whether now owned or hereafter acquired, or assign, or permit
any of its Subsidiaries to assign, any right to receive income, other than:

 

(i)            Permitted Liens,

 

(ii)           purchase money Liens upon or in any real property or equipment
acquired or held by the Borrower or any Subsidiary in the ordinary course of
business to secure the purchase price of such property or equipment or to secure
Debt incurred solely for the purpose of financing the acquisition of such
property or equipment, or Liens existing on such property or equipment at the
time of its acquisition (other than any such Liens created in contemplation of
such acquisition that were not incurred to finance the acquisition of such
property) or extensions, renewals or replacements of any of the foregoing for
the same or a lesser amount, provided, however, that no such Lien shall extend
to or cover any properties of any character other than the real property or
equipment being acquired, and no such extension, renewal or replacement shall
extend to or cover any properties not theretofore subject to the Lien being
extended, renewed or replaced, provided further that the aggregate principal
amount of the indebtedness secured by the Liens referred to in this clause (ii)
shall not exceed $10,000,000 at any time outstanding,

 

(iii)          the Liens existing on the Effective Date and described on
Schedule 5.02(a) hereto,

 

(iv)          Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Borrower or any Subsidiary of the Borrower
or becomes a Subsidiary of the Borrower; provided that such Liens were not
created in contemplation of such merger, consolidation or acquisition and do not
extend to any assets other than those of the Person so merged into or
consolidated with the Borrower or such Subsidiary or acquired by the Borrower or
such Subsidiary,

 

(v)           attachment or judgment Liens not constituting an Event of Default,

 

(vi)          banker’s liens, rights of setoff and similar Liens with respect to
cash and cash equivalents on deposit in one or more bank accounts in the
ordinary course of business,

 

(vii)         Liens in favor of collecting banks pursuant to Section 4-208 and
Liens in favor of a buyer of goods arising pursuant to Section 2-711 of the
applicable Uniform Commercial Code,

 

(viii)        Liens solely on any cash earnest money deposits made by the
Borrower or any of its Subsidiaries in connection with any letter of intent or
purchase agreement,

 

(ix)           other Liens securing Debt or Hedge Agreements in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding, and

 

--------------------------------------------------------------------------------

 

(i)            the  replacement, extension or renewal of any Lien permitted by
clause (iii) or (iv) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the amount
or change in any direct or contingent obligor) of the Debt secured thereby.

 

(b)           Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries
to do so, except that any Subsidiary of the Borrower may merge or consolidate
with or into, or dispose of assets to, any other Subsidiary of the Borrower, and
except that any Subsidiary of the Borrower may merge into or dispose of assets
to the Borrower and the Borrower may merge with any other Person so long as the
Borrower is the surviving corporation, provided, in each case, that no Default
shall have occurred and be continuing at the time of such proposed transaction
or would result therefrom.

 

(c)           Change in Nature of Business. Engage, or permit any of its
Subsidiaries to engage, in any business other than those businesses in which the
Borrower and its Subsidiaries are engaged on the Effective Date or a business
reasonably related thereto or such other lines of business as may be consented
to by the Required Lenders.

 

SECTION 5.03.  Financial Covenants.  So long as any Advance shall remain unpaid
or any Lender shall have any Commitment hereunder, the Borrower will:

 

(a)           Coverage Ratio. Maintain as of the last day of any fiscal quarter
a ratio of Adjusted Cash Flow to Interest Expense, in each case, by the Borrower
and its Subsidiaries for the period of four fiscal quarters then ended, of not
less than 3.50 to 1.00.

 

(b)           Leverage Ratio. Maintain at all times a Leverage Ratio of not
greater than 4.50 to 1.00.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

SECTION 6.01.  Events of Default.  If any of the following events (“Events of
Default”) shall occur and be continuing:

 

(a)           The Borrower shall fail to pay any principal of any Advance when
the same becomes due and payable; or the Borrower shall fail to pay any interest
on any Advance or make any other payment of fees or other amounts payable under
this Agreement or any Note within five Business Days after the same becomes due
and payable; or

 

(b)           Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers (or persons performing similar functions))
in connection with this Agreement shall prove to have been incorrect in any
material respect when made; or

 

(c)           (i) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 5.01(d)(i), (e) or (i), 5.02 or 5.03,
or (ii) the Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement on its part to be performed or observed
if such failure shall remain unremedied for 30 days after written notice thereof
shall have been given to the Borrower by the Agent or any Lender; or

 

(d)           (i) The Borrower or any of its Significant Subsidiaries shall fail
to pay any principal of or premium or interest on any Debt that is outstanding
in a principal or notional amount of at least $15,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of the Borrower or such Significant
Subsidiary (as the case may be), when the same becomes due and payable (whether
by

 

--------------------------------------------------------------------------------

 

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 relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Debt 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 to permit the acceleration of, the maturity of
such Debt; or any such Debt 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 an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof; or (ii) (A) there occurs under any Hedge
Agreement an Early Termination Date (as defined in such Hedge Agreement)
resulting from any event of default under such Hedge Agreement as to which the
Borrower or any of its Significant Subsidiaries is the Defaulting Party (as
defined in such Hedge Agreement) and the Hedge Termination Value owed by the
Borrower or any of its Significant Subsidiaries as a result thereof is greater
than (individually or collectively) $15,000,000, or (B) there occurs under any
Hedge Agreement an Early Termination Date (as defined in such Hedge Agreement)
resulting from any Termination Event (as so defined) under such Hedge Agreement
as to which the Borrower or any of its Significant Subsidiaries is an Affected
Party (as so defined) and the Swap Termination Value owed by the Borrower or any
of its Significant Subsidiaries as a result thereof is greater than
(individually or collectively) $15,000,000 and such amount is not paid when due
under such Hedge Agreement; or

 

(e)           The General Partner, the Borrower or any of its Significant
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the General Partner, the Borrower or any of its
Significant Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it), either such proceeding shall remain undismissed or unstayed
for a period of 60 days, or the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official for, it
or for any substantial part of its property shall occur; or the General Partner,
the Borrower or any of its Significant Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this subsection (e);
or

 

(f)            Judgments or orders for the payment of money in excess of
$15,000,000 in the aggregate shall be rendered against the Borrower or any of
its Significant Subsidiaries and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or (ii) there shall
be any 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; provided, however, that any such judgment or order shall not be an Event
of Default under this Section 6.01(f) if and for so long as (i) the amount of
such judgment or order is covered (subject to customary deductibles) by a valid
and binding policy of insurance between the defendant and the insurer covering
payment thereof and (ii) such insurer, which shall be rated at least “A-” by
A.M. Best Company, has been notified of, and has not denied coverage of, the
amount of such judgment or order; or

 

(g)           Any non-monetary judgment or order shall be rendered against the
Borrower or any of its Significant Subsidiaries that is reasonably expected to
have a Material Adverse Effect, and there shall be any 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

 

(h)           (i) Any Person or two or more Persons acting in concert (other
than TransCanada Corporation or any of its Subsidiaries) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the
General Partner (or other securities convertible into such Voting Stock) (A)
representing 50% or

 

--------------------------------------------------------------------------------

 

more of the combined voting power of all Voting Stock of the General Partner or
(B) representing the combined voting power of all Voting Stock of the General
Partner more than that owned, directly or indirectly, by TransCanada
Corporation; or (ii) any Person or two or more Persons acting in concert (other
than TransCanada Corporation or any of its Subsidiaries or any other Person
reasonably acceptable to the Required Lenders) shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of the General Partner; or (iii) the General Partner shall for any reason cease
to be the managing general partner of the Borrower; or

 

(i)            The Borrower or any of its ERISA Affiliates shall incur, or shall
be reasonably likely to incur liability in excess of $15,000,000 in the
aggregate as a result of one or more of the following:  (i) the occurrence of
any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any
of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization
or termination of a Multiemployer Plan;

 

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Advances, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

 

ARTICLE VII

 

THE AGENT

 

SECTION 7.01.  Authorization and Action.  Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent by
the terms hereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

 

SECTION 7.02.  Agent’s Reliance, Etc.  Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent:  (i) may treat the
Lender that made any Advance as the holder of the Debt resulting therefrom until
the Agent receives and accepts an Assignment and Acceptance entered into by such
Lender, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (ii) 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 omitted to be taken in good faith by
it in accordance with  the advice of such counsel, accountants or experts;
(iii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement;
(iv) shall not have any duty to ascertain or to inquire as to the performance,
observance or satisfaction of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or  the existence at any time of any
Default or to inspect the property (including the books and records) of the
Borrower;

 

--------------------------------------------------------------------------------

 

(v) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; and (vi) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier)
believed by it to be genuine and signed or sent by the proper party or parties.

 

SECTION 7.03.  CNAI and Affiliates.  With respect to its Commitment, the
Advances made by it and the Note issued to it, CNAI shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not the Agent; and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated, include CNAI in its individual capacity. CNAI and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, the Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of the Borrower or any such
Subsidiary, all as if CNAI were not the Agent and without any duty to account
therefor to the Lenders. The Agent shall have no duty to disclose any
information obtained or received by it or any of its Affiliates relating to the
Borrower or any of its Subsidiaries to the extent such information was obtained
or received in any capacity other than as Agent.

 

SECTION 7.04.  Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

 

SECTION 7.05.  Indemnification.  The Lenders agree to indemnify the Agent (to
the extent not reimbursed by the Borrower), from and against such Lender’s pro
rata share (determined as provided below) of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement (collectively, the “Indemnified Costs”), provided that no Lender shall
be liable for any portion of the Indemnified Costs resulting from the Agent’s
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Agent is not
reimbursed for such expenses by the Borrower. In the case of any investigation,
litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05
applies whether any such investigation, litigation or proceeding is brought by
the Agent, any Lender or a third party. For purposes of this Section 7.05(a),
the Lenders’ respective pro rata shares of any amount shall be determined, at
any time, according to the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lenders.

 

SECTION 7.06.  Successor Agent.  The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor Agent,
which successor Agent (unless an Event of Default shall have occurred and be
continuing) shall be subject to the approval of the Borrower (which approval
will not be unreasonably withheld or delayed). If no successor Agent shall have
been so appointed by the Required Lenders, and if no successor Agent shall have
accepted such appointment, within 30 days after the retiring Agent’s giving of
notice of resignation or the Required Lenders’ removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000, which successor Agent (unless an Event of
Default shall have occurred and be continuing) shall be subject to the approval
of the Borrower (which approval will not be unreasonably withheld or delayed).
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and

 

 

--------------------------------------------------------------------------------

 

obligations under this Agreement. After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

 

SECTION 7.07.  Other Agents.  Each Lender hereby acknowledges that neither the
documentation agent nor any other Lender designated as any “Agent” on the
signature pages hereof has any liability hereunder other than in its capacity as
a Lender.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that (a) no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following:  (i) waive any of the
conditions specified in Section 3.01, (ii) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Advances, or the
number of Lenders, that shall be required for the Lenders or any of them to take
any action hereunder or (iii) amend this Section 8.01 and (b) no amendment,
waiver or consent shall, unless in writing and signed by the Required Lenders
and each Lender that is directly affected by such amendment, waiver or consent,
(i) reduce the principal of, or interest on, the Advances or any fees or other
amounts payable hereunder to such Lender or (ii) postpone any date fixed for any
payment of principal of, or interest on, the Advances or any fees or other
amounts payable hereunder to such Lender; and provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agent under this Agreement or any Note.

 

SECTION 8.02.  Notices, Etc.  (a)  All notices and other communications provided
for hereunder shall be either (x) in writing (including telecopier or
telegraphic communication) and mailed, telecopied, telegraphed or delivered or
(y) as and to the extent set forth in Section 8.02(b) and in the proviso to this
Section 8.02(a), if to the Borrower, at its address at 450 - 1 Street SW,
Calgary, AB  T2P 5H1, Attention: Secretary, Fax No. 403 920-2467; if  to any
Initial Lender, at its Domestic Lending Office specified opposite its name on
Schedule I hereto; if to any other Lender, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became a Lender;
and if to the Agent, at its address at Two Penns Way, New Castle, Delaware
19720, Attention: Bank Loan Syndications Department; or, as to the Borrower or
the Agent, at such other address as shall be designated by such party in a
written notice to the other parties and, as to each other party, at such other
address as shall be designated by such party in a written notice to the Borrower
and the Agent, provided that materials required to be delivered pursuant to
Section 5.01(i)(i), (ii) or (iv) shall be delivered to the Agent as specified in
Section 8.02(b) or as otherwise specified to the Borrower by the Agent. All such
notices and communications shall, when mailed, telecopied or e-mailed, be
effective when deposited in the mails, telecopied or confirmed by e-mail,
respectively, except that notices and communications to the Agent pursuant to
Article II, III or VII shall not be effective until received by the Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or the Notes or of any Exhibit hereto to be
executed and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.

 

(b)           So long as CNAI or any of its Affiliates is the Agent, materials
required to be delivered pursuant to Section 5.01(i)(i), (ii) and (iv) shall be
delivered to the Agent in an electronic medium in a format acceptable to the
Agent and the Lenders by e-mail at oploanswebadmin@citigroup.com. The Borrower
agrees that the Agent may make such materials, as well as any other written
information, documents, instruments and other material relating to the Borrower,
any of its Subsidiaries or any other materials or matters relating to this
Agreement, the Notes or any of the transactions contemplated hereby
(collectively, the “Communications”) available to the Lenders by posting such
notices on Intralinks or a substantially similar electronic system (the
“Platform”). The Borrower acknowledges that (i) the distribution of material
through an electronic medium is not necessarily secure and that there are
confidentiality and other risks associated with such distribution, (ii) the
Platform is provided “as is” and “as available” and (iii) neither the Agent nor
any of its Affiliates warrants the accuracy, adequacy or completeness of the
Communications or the Platform and each expressly disclaims liability for errors
or omissions in the

 

--------------------------------------------------------------------------------

 

Communications or the Platform. No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Agent or any of its
Affiliates in connection with the Platform.

 

(c)           Each Lender agrees that notice to it (as provided in the next
sentence) (a “Notice”) specifying that any Communications have been posted to
the Platform shall constitute effective delivery of such information, documents
or other materials to such Lender for purposes of this Agreement; provided that
if requested by any Lender the Agent shall deliver a copy of the Communications
to such Lender by email or telecopier. Each Lender agrees (i) to notify the
Agent in writing of such Lender’s e-mail address to which a Notice may be sent
by electronic transmission (including by electronic communication) on or before
the date such Lender becomes a party to this Agreement (and from time to time
thereafter to ensure that the Agent has on record an effective e-mail address
for such Lender) and (ii) that any Notice may be sent to such e-mail address.

 

SECTION 8.03.  No Waiver; Remedies.  No failure on the part of any Lender or the
Agent to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

 

SECTION 8.04.  Costs and Expenses.  (a)  The Borrower agrees to pay on demand
all reasonable costs and expenses of the Agent in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all reasonable costs and
expenses of the Agent and the Lenders, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, reasonable fees and expenses of counsel for the
Agent and each Lender in connection with the enforcement of rights under this
Section 8.04(a).

 

(b)           The Borrower agrees to indemnify and hold harmless the Agent and
each Lender and each of their Affiliates and their officers, directors,
employees, agents and advisors (each, an “Indemnified Party”) from and against
any and all claims, damages, losses, liabilities and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) (i) the Notes, this Agreement, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Advances or (ii) the actual or alleged presence of Hazardous Materials on
any property of the Borrower or any of its Subsidiaries or any Environmental
Action relating in any way to the Borrower or any of its Subsidiaries, except to
the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party’s gross negligence or willful misconduct. In the
case of an investigation, litigation or other proceeding to which the indemnity
in this Section 8.04(b) applies, such indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by the Borrower, its
directors, equityholders or creditors or an Indemnified Party or any other
Person, whether or not any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated. The
Borrower also agrees not to assert any claim for special, indirect,
consequential or punitive damages against the Agent, any Lender, any of their
Affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability, arising out of or otherwise relating to
the Notes, this Agreement, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Advances.

 

(c)           If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender other
than on the last day of the Interest Period for such Advance, as a result of a
payment or Conversion pursuant to Section 2.07(d) or (e), 2.09 or 2.11,
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, or by an Eligible Assignee to a Lender other than on

 

--------------------------------------------------------------------------------

 

the last day of the Interest Period for such Advance upon an assignment of
rights and obligations under this Agreement pursuant to Section 8.07 as a result
of a demand by the Borrower pursuant to Section 8.07(a), the Borrower shall,
upon demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.

 

(d)           Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
Sections 2.10, 2.13 and 8.04 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the Notes.

 

SECTION 8.05.  Right of Set-off.  Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 6.01,
each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the obligations of the Borrower now or hereafter existing under this
Agreement and the Note held by such Lender, whether or not such Lender shall
have made any demand under this Agreement or such Note and although such
obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such set-off and application, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender and its Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender and its Affiliates may have.

 

SECTION 8.06.  Binding Effect.  This Agreement shall become effective (other
than Section 2.01, which shall only become effective upon satisfaction of the
conditions precedent set forth in Section 3.01) when it shall have been executed
by the Borrower and the Agent and when the Agent shall have been notified by
each Initial Lender that such Initial Lender has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Agent and
each Lender and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Lenders.

 

SECTION 8.07.  Assignments and Participations.  (a)  Each Lender may and, if
demanded by the Borrower (following a demand by such Lender pursuant to
Section 2.10 or 2.13) upon at least five Business Days’ notice to such Lender
and the Agent, will assign to one or more Persons all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under this
Agreement, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all of a
Lender’s rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 unless the
Borrower and the Agent otherwise agree, (iii) each such assignment shall be to
an Eligible Assignee, (iv) each such assignment made as a result of a demand by
the Borrower pursuant to this Section 8.07(a) shall be arranged by the Borrower
after consultation with the Agent and shall be either an assignment of all of
the rights and obligations of the assigning Lender under this Agreement or an
assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of the
rights and obligations of the assigning Lender under this Agreement, (v) no
Lender shall be obligated to make any such assignment as a result of a demand by
the Borrower pursuant to this Section 8.07(a) unless and until such Lender shall
have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, and (vi) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note subject to such assignment and a processing and recordation fee of
$3,500 payable by the parties to each such assignment, provided, however, that
in the case of each

 

--------------------------------------------------------------------------------

 

assignment made as a result of a demand by the Borrower, such recordation fee
shall be payable by the Borrower except that no such recordation fee shall be
payable in the case of an assignment made at the request of the Borrower to an
Eligible Assignee that is an existing Lender. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights (other than its rights
under Sections 2.10, 2.13 and 8.04 to the extent any claim thereunder relates to
an event arising prior to such assignment) and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).

 

(b)           By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows:  (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the General
Partner or the Borrower or the performance or observance by the Borrower of any
of its obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.

 

(c)           Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with any Note or Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower.

 

(d)           The Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Advances owing to,
each Lender from time to time (the “Register”). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

 

(e)           Each Lender may sell participations to one or more banks or other
entities (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Advances owing to it and any
Note or Notes held by it); provided, however, that (i) such Lender’s obligations
under this Agreement (including, without limitation, its Commitment to the
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (iv) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of this Agreement or any Note, or any consent to any
departure by the Borrower

 

--------------------------------------------------------------------------------

 

therefrom, except to the extent that such amendment, waiver or consent would
reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, in each case to the extent subject to such participation, or
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent
subject to such participation. Notwithstanding anything to the contrary herein,
a participant shall not be entitled to receive any greater payment under Section
2.10 or 2.13 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such participant. Any participant that is
Lender organized under the laws of a jurisdiction outside the United States
shall not be entitled to the benefits of Section 2.13 unless such participant
complies with Section 2.13(e).

 

(f)            Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
the assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any Borrower Information relating to the
Borrower received by it from such Lender to the standards set forth in Section
8.08.

 

(g)           Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.

 

SECTION 8.08.  Confidentiality.  Neither the Agent nor any Lender may disclose
to any Person any confidential, proprietary or non-public information of the
Borrower furnished to the Agent or the Lenders by the Borrower (such information
being referred to collectively herein as the “Borrower Information”), except
that each of the Agent and each of the Lenders may disclose Borrower Information
(i) to its and its affiliates’ employees, officers, directors, agents and
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Borrower Information and
instructed to keep such Borrower Information confidential on substantially the
same terms as provided herein), (ii) to the extent requested by any regulatory
authority, (iii) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (iv) to any other party to this
Agreement, (v) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this Section 8.08, to any assignee,
participant or swap counterparty or prospective assignee, participant or swap
counterparty, (vii) to the extent such Borrower Information (A) is or becomes
generally available to the public on a non-confidential basis other than as a
result of a breach of this Section 8.08 by the Agent or such Lender, or (B) is
or becomes available to the Agent or such Lender on a nonconfidential basis from
a source other than the Borrower and (viii) with the consent of the Borrower;
provided that, in the case of clauses (ii) or (iii), with the exception of
disclosure to bank regulatory authorities, the Agent and each Lender agree, to
the extent  practicable and legally permissible, to give the Borrower prompt
prior notice so that it may seek a protective order or other appropriate remedy.

 

SECTION 8.09.  Governing Law.  This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.

 

SECTION 8.10.  Execution in Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.

 

SECTION 8.11.  Jurisdiction, Etc.  (a)  Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the Notes, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. The Borrower hereby agrees that service of process in any
such

 

--------------------------------------------------------------------------------

 

action or proceeding brought in the any such New York State court or in such
federal court may be made upon CT Corporation System at its offices at 1633
Broadway, New York, New York 10019 (the “Process Agent”) and the Borrower hereby
irrevocably appoints the Process Agent its authorized agent to accept such
service of process, and agrees that the failure of the Process Agent to give any
notice of any such service shall not impair or affect the validity of such
service or of any judgment rendered in any action or proceeding based thereon.
The Borrower hereby further irrevocably consents to the service of process in
any action or proceeding in such courts by the mailing thereof by any parties
hereto by registered or certified mail, postage prepaid, to the Borrower at its
address specified pursuant to Section 8.02. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
any party may otherwise have to bring any action or proceeding relating to this
Agreement or the Notes in the courts of any jurisdiction.

 

(b)           Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Notes in any
New York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

SECTION 8.12.  Patriot Act Notice.  Each Lender and the Agent (for itself and
not on behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Agent, as applicable, to identify the Borrower in accordance with the
Patriot Act. The Borrower shall provide, to the extent commercially reasonable,
such information and take such actions as are reasonably requested by the Agent
or any Lenders in order to assist the Agent and the Lenders in maintaining
compliance with the Patriot Act.

 

SECTION 8.13.  Judgment. (a)  If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due hereunder in U.S. dollars into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Agent could purchase U.S. dollars
with such other currency at Citibank’s principal office in London at 11:00 A.M.
(London time) on the Business Day preceding that on which final judgment is
given.

 

(b)           The obligation of the Borrower in respect of any sum due from it
in any currency (the “Primary Currency”) to any Lender or the Agent hereunder
shall, notwithstanding any judgment in any other currency, be discharged only to
the extent that on the Business Day following receipt by such Lender or the
Agent (as the case may be), of any sum adjudged to be so due in such other
currency, such Lender or the Agent (as the case may be) may in accordance with
normal banking procedures purchase the applicable Primary Currency with such
other currency; if the amount of the applicable Primary Currency so purchased is
less than such sum due to such Lender or the Agent (as the case may be) in the
applicable Primary Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be) against such loss, and if the amount of the applicable Primary
Currency so purchased exceeds such sum due to any Lender or the Agent (as the
case may be) in the applicable Primary Currency, such Lender or the Agent (as
the case may be) agrees to remit to the Borrower such excess.

 

SECTION 8.14.  Non-Recourse to the General Partner and Associated Persons.  The
Agent and each Lender agrees on behalf of itself and its successors, assigns and
legal representatives, that neither the General Partner nor any Person which is
a partner, shareholder, member, owner, officer, director, supervisor, trustee or
other principal (collectively, “Associated Persons”) of the Borrower, the
General Partner, or any of their respective successors or assigns, shall have
any personal liability for the payment or performance of any of the Borrower’s
obligations hereunder or under any of the Notes and no monetary or other
judgment shall be sought or enforced against the General Partner or any of such
Associated Persons or any of their respective successors or assigns.
Notwithstanding the foregoing, neither the Agent nor any Lender shall be deemed
barred by this Section 8.14 from asserting any claim against any Person based
upon an allegation of fraud or misrepresentation.

 

--------------------------------------------------------------------------------

 

SECTION 8.15.  Waiver of Jury Trial.  Each of the Borrower, the Agent and the
Lenders hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Notes or the actions of the
Agent or any Lender in the negotiation, administration, performance or
enforcement thereof.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

 

TC PIPELINES, LP

 

By its General Partner TC PipeLines GP, Inc.

 

 

 

By

 

 

 

Title:

 

 

 

CITICORP NORTH AMERICA, INC.,

 

as Agent

 

 

 

By

 

 

 

Title:

 

 

Syndication Agent

 

 

 

UBS LOAN FINANCE LLC

 

 

 

By

 

 

 

Title:

 

 

 

By

 

 

 

Title:

 

 

Co-Documentation Agents

 

 

 

MIZUHO CORPORATE BANK, LTD.

 

 

 

By

 

 

 

Title:

 

 

 

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

 

HOUSTON AGENCY

 

 

 

By

 

 

 

Title:

 

 

Lender

 

 

 

SUNTRUST BANK

 

 

 

By

 

 

 

Title:

 

--------------------------------------------------------------------------------

 

SCHEDULE I

TC PIPELINES, LP

CREDIT AGREEMENT

APPLICABLE LENDING OFFICES

 

Name of Initial Lender

 

Commitment

 

Domestic Lending Office

 

Eurodollar Lending Office

 

 

 

 

 

 

 

 

 

Citicorp North America, Inc.

 

$

95,000,000

 

 

 

 

 

The Bank of Tokyo-Mitsubishi UFJ, Ltd., Houston Agency

 

$

40,000,000

 

 

 

 

 

Mizuho Corporate Bank, Ltd.

 

$

40,000,000

 

 

 

 

 

Suntrust Bank

 

$

40,000,000

 

 

 

 

 

UBS Loan Finance LLC

 

$

95,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total:

 

$

310,000,000

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule 3.01(b)

 

Disclosed Litigation

 

On February 15, 2006, Northern Border Partners, L.P. (“Northern Border”)and
ONEOK, Inc. issued a joint press release announcing certain transactions
relating to (1) the sale of certain assets by ONEOK to Northern Border, (2) the
increase of ONEOK’s general partnership interest in Northern Border to 100% and
(3) the sale by Northern Border of 20% of its interest in Northern Border
Pipeline Company to TC PipeLines Intermediate Limited Partnership (collectively,
the “Transactions”).

 

On March 2, 2006, a holder of limited partnership units of Northern Border filed
a class action and derivative complaint, Civil Action No. 1973-N, in the New
Castle County Chancery Court in the State of Delaware, on behalf of a putative
class of all holders of limited partnership units against Northern Border,
ONEOK, Northern Plains Natural Gas Company, LLC, and related entities involved
in the Transactions. The plaintiff claims the Transactions will constitute a
breach of Northern Border’s partnership agreement and a breach of defendants’
fiduciary duties. The plaintiff seeks to enjoin the Transactions or to rescind
the Transactions if the Transactions are completed prior to entry of a final
judgment in the case. The plaintiff also seeks to recover on behalf of the class
damages for the profits and any special benefits obtained by the defendants, as
well as interest, costs, and attorney and expert fees.

 

--------------------------------------------------------------------------------

 

Schedule 5.02(a)

 

Existing Liens

 

None

 

--------------------------------------------------------------------------------

 

EXHIBIT A - FORM OF

PROMISSORY NOTE

 

$                        

Dated:                          , 200   

 

FOR VALUE RECEIVED, the undersigned, TC PIPELINES, LP, a Delaware limited
partnership (the “Borrower”) by its General Partner TC PipeLines GP, Inc., a
Delaware corporation, HEREBY PROMISES TO PAY to
                                            or its registered assigns (the
“Lender”) for the account of its Applicable Lending Office (as defined in the
Credit Agreement referred to below) the aggregate principal amount of the
Advances (as defined below) owing to the Lender by the Borrower pursuant to the
Credit Agreement dated as of March 31, 2006 among the Borrower, the Lender and
certain other lenders parties thereto, and Citicorp North America, Inc., as
Agent for the Lender and such other lenders (as amended or modified from time to
time, the “Credit Agreement”); the terms defined therein being used herein as
therein defined) on the date specified in the Credit Agreement.

 

The Borrower promises to pay interest on the unpaid principal amount of each
Advance from the date of such Advance until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.

 

Both principal and interest are payable in lawful money of the United States of
America to CNAI, as Agent, at 388 Greenwich Street, New York, New York 10013, in
same day funds. Each Advance owing to the Lender by the Borrower and the
maturity thereof, and all payments made on account of principal thereof, shall
be recorded by the Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto, which is part of this Promissory Note.

 

This Promissory Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the “Advances”) by the Lender to the
Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Advances being
evidenced by this Promissory Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. Any transfer of all or a portion of this
Promissory Note shall be made only in accordance with the terms and conditions
of Section 8.07 of the Credit Agreement and the Assignment and Acceptance
attached to the Credit Agreement.

 

 

TC PIPELINES, LP

 

By its General Partner TC PipeLines GP, Inc.

 

 

 

 

 

By

 

 

 

 

Title:

 

--------------------------------------------------------------------------------

 

ADVANCES AND PAYMENTS OF PRINCIPAL

 

Date

 

Amount of
Advance

 

Amount of
Principal Paid
or Prepaid

 

Unpaid Principal
Balance

 

Notation
Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT B - FORM OF NOTICE OF

BORROWING

 

Citicorp North America, Inc., as Agent

for the Lenders parties

to the Credit Agreement

referred to below

Two Penns Way

New Castle, Delaware 19720

 

[Date]

 

Attention: Bank Loan Syndications Department

 

Ladies and Gentlemen:

 

The undersigned, TC Pipelines, LP, by its General Partner TC PipeLines GP, Inc.,
refers to the Credit Agreement, dated as of March 31, 2006 (as amended or
modified from time to time, the “Credit Agreement”, the terms defined therein
being used herein as therein defined), among the undersigned, certain Lenders
parties thereto and  Citicorp North America, Inc., as Agent for said Lenders,
and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit
Agreement that the undersigned hereby requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the
Credit Agreement:

 

(i)            The Business Day of the Proposed Borrowing is
                            , 200   .

 

(ii)           The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].

 

(iii)          The aggregate amount of the Proposed Borrowing is
$                              .

 

[(iv)         The initial Interest Period for each Eurodollar Rate Advance made
as part of the Proposed Borrowing is                   month[s].]

 

The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:

 

(A)          the representations and warranties contained in Section 4.01 of the
Credit Agreement are correct, before and after giving effect to the Proposed
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date; and

 

--------------------------------------------------------------------------------

 

(B)           no event has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default.

 

 

Very truly yours,

 

 

 

TC PIPELINES, LP

 

By its General Partner TC PipeLines GP, Inc.

 

 

 

 

 

By

 

 

 

 

Title:.

 

--------------------------------------------------------------------------------

 

EXHIBIT C - FORM OF

ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Credit Agreement dated as of March 31, 2006 (as amended
or modified from time to time, the “Credit Agreement”) among TC Pipelines, LP, a
Delaware limited partnership (the “Borrower”) by its General Partner TC
PipeLines GP, Inc., the Lenders (as defined in the Credit Agreement) and
Citicorp North America, Inc., as agent for the Lenders (the “Agent”). Terms
defined in the Credit Agreement are used herein with the same meaning.

 

The “Assignor” and the “Assignee” referred to on Schedule I hereto agree as
follows:

 

1.             The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor’s rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement. After giving
effect to such sale and assignment, the Assignee’s Commitments and the amount of
the Advances owing to the Assignee will be as set forth on Schedule 1 hereto.

 

2.             The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note, if any held by the Assignor and requests that the
Agent exchange such Note for a new Note payable to the order of the Assignee in
an amount equal to the Commitment assumed by the Assignee pursuant hereto or new
Notes payable to the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and the Assignor in an amount equal to
the Commitment retained by the Assignor under the Credit Agreement,
respectively, as specified on Schedule 1 hereto.

 

3.             The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 4.01 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Credit Agreement as
are delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (v) agrees that it will perform
in accordance with their terms all of the obligations that by the terms of the
Credit Agreement are required to be performed by it as a Lender; and
(vi) attaches any U.S. Internal Revenue Service forms required under
Section 2.13 of the Credit Agreement.

 

4.             Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the “Effective Date”) shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1 hereto.

 

5.             Upon such acceptance and recording by the Agent in the Register
and, if applicable issuance of a new Note to the Assignee pursuant to Section 2
hereof, as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights

 

--------------------------------------------------------------------------------

 

and obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

 

6.             Upon such acceptance and recording by the Agent, from and after
the Effective Date, the Agent shall make all payments under the Credit Agreement
and the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and fees with respect thereto)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.

 

7.             This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.

 

8.             This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

 

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this
Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

 

--------------------------------------------------------------------------------

 

Schedule 1

to

Assignment and Acceptance

 

Percentage interest assigned:

 

%

 

 

 

Assignee’s Commitment:

$

 

 

 

 

 

Aggregate outstanding principal amount of Advances assigned:

$

 

 

 

 

 

Principal amount of Note payable to Assignee:

$

 

 

 

 

 

Principal amount of Note payable to Assignor:

$

 

 

 

 

 

Effective Date*:                        , 200   

 

 

 

 

[NAME OF ASSIGNOR], as Assignor

 

 

 

By

 

 

 

Title:

 

 

 

 

 

Dated:                              , 200   

 

 

 

 

 

[NAME OF ASSIGNEE], as Assignee

 

 

 

By

 

 

 

Title:

 

 

 

Dated:                              , 200   

 

 

 

Domestic Lending Office:

 

[Address]

 

 

 

Eurodollar Lending Office:

 

[Address]

 

--------------------------------------------------------------------------------

*              This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to the Agent.

 

--------------------------------------------------------------------------------

 

Accepted [and Approved]** this

                      day of                        , 200   

 

CITICORP NORTH AMERICA, INC., as Agent

 

By

 

 

Title:

 

[Approved this                   day

of                        , 200   

 

TC PIPELINES, LP

By its General Partner TC PipeLines GP, Inc.

 

By

 

]*

Title:

 

--------------------------------------------------------------------------------

**

Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of “Eligible Assignee”.

*

Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of “Eligible Assignee”.

 

--------------------------------------------------------------------------------

 

EXHIBIT D - FORM OF

OPINION OF COUNSEL

FOR THE BORROWER

 

[Effective Date]

 

To each of the Lenders parties

to the Credit Agreement dated

as of March 31, 2006

among TC Pipelines, LP,

said Lenders and Citicorp North America, Inc.,

as Agent for said Lenders, and

to Citicorp North America, Inc., as Agent

 

TC Pipelines, LP

 

Ladies and Gentlemen:

 

Representation

 

This opinion is furnished to you pursuant to Section 3.01(h)(iv) of the Credit
Agreement, dated as of April      , 2006 (the “Credit Agreement”), among TC
Pipelines, LP (the “Borrower”) by its General Partner TC PipeLines GP, Inc. (the
“GP”), the Lenders parties thereto and Citicorp North America, Inc., as Agent
for said Lenders. Terms defined in the Credit Agreement are used herein as
therein defined.

 

We have acted as special counsel for the Borrower in connection with the
preparation, execution and delivery of the Credit Agreement.

 

Documents Reviewed

 

In that connection, we have examined:

 

(1)           The Credit Agreement.

 

(2)           The documents furnished by the Borrower pursuant to Article III of
the Credit Agreement.

 

(3)           The Certificate of Limited Partnership and Amended and Restated
Limited Partnership Agreement of the Borrower and all amendments thereto (the
“Charter”).

 

(4)           A certificate of the Secretary of State of Delaware, dated April
     , 2006, attesting to the continued partnership existence and good standing
of the Borrower in that State (the “Good Standing Certificate”).

 

We have also examined the originals, or copies certified to our satisfaction, of
the documents listed in a certificate of the President of the GP on behalf of
the Borrower, dated the date hereof (the “Certificate”), certifying, among other
things, that the documents listed in such certificate are all of the indentures,
loan or credit agreements, leases, guarantees, mortgages, security agreements,
bonds, notes and other agreements or instruments, and all of the orders, writs,
judgments, awards, injunctions and decrees, that affect or purport to affect the
Borrower’s right to borrow

 

--------------------------------------------------------------------------------

 

money or the Borrower’s obligations under the Credit Agreement or the Notes. In
addition, we have examined the originals, or copies certified to our
satisfaction, of such other partnership records of the Borrower, certificates of
public officials and of officers of the Borrower, and agreements, instruments
and other documents, as we have deemed necessary as a basis for the opinions
expressed below. As to questions of fact material to such opinions, we have
relied upon certificates of the Borrower or its officers or of public officials.

 

Opinion

 

Based on the foregoing, having regard for the legal considerations that we deem
relevant, and subject to the qualifications, assumptions and exceptions stated
herein, we are of the following opinion:

 

1.             The Borrower is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. The
Borrower has taken all necessary partnership action to authorize the execution,
delivery and performance by the Borrower of the Credit Agreement and the Notes
(collectively, the “Credit Documents”).

 

2.             The execution, delivery and performance by the Borrower of the
Credit Documents, and the consummation of the transactions contemplated thereby,
are within the Borrower’s partnership powers, have been duly authorized by all
necessary partnership action, and do not violate (i) the Charter or
(ii) assuming that the proceeds of extensions of credit will be used in
accordance with the terms of the Credit Agreement, any United States federal or
State of New York law, rule or regulation applicable to the Borrower (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or (iii) any contractual or legal restriction contained in any
document listed in the Certificate.

 

3.             No authorization, approval or other action by, and no notice to
or filing with, any United States federal or State of New York governmental
authority or regulatory body is required for the due execution, delivery and
performance by the Borrower of the Credit Documents.

 

4.             The Credit Agreement is, and after giving effect to the initial
Borrowing, the Notes will be, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.

 

Negative Assurance

 

In addition, we advise you supplementally as a matter of fact and not opinion
that based solely upon certifications contained in the Certificate, except to
the extent set forth in the Certificate, to our knowledge, there are no pending
or overtly threatened actions or proceedings against the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator that purport to
affect the legality, validity, binding effect or enforceability of the Credit
Agreement or any of the Notes or the consummation of the transactions
contemplated thereby or that are likely to have a materially adverse effect upon
the financial condition or operations of the Borrower or any of its
Subsidiaries.

 

Assumptions, Qualifications and Exceptions

 

In rendering these opinions, we have, with your permission, assumed the
following: (i) the authenticity of original documents and the genuineness of all
signatures, and the conformity to the originals of all documents submitted to us
as copies; (ii) the truth, accuracy and completeness of the information,
representations and warranties contained in the records, documents, instruments
and certificates we have reviewed; (iii) your due organization, valid existence
and good standing; (iv) your due authorization, execution and delivery of the
Credit Agreement; (v) the valid and binding effect of the Credit Agreement on,
and the enforceability of the Credit Agreement against, you; (vi) the absence of
any evidence extrinsic to the provisions of the written agreements among the
parties that the parties intended a meaning contrary to that expressed by those
provisions; and (vii) there has not been any mutual mistake of fact, fraud,
duress or undue influence.

 

--------------------------------------------------------------------------------

 

Our opinion in paragraph 1 that the Borrower is in good standing is based solely
upon our review of the Good Standing Certificate. In rendering our opinions with
respect to contractual obligations, we have assumed that the governing law of
each contractual obligation is New York; and we have not reviewed the covenants
in the contractual obligations that contain financial ratios or other similar
financial restrictions, and no opinion is provided with respect thereto.

 

Certain Limitations and Qualifications

 

Whenever a statement herein is qualified by the phrases “known to us” or “to our
knowledge,” it is intended to indicate that, during the course of our
representation on behalf of the Borrower in this transaction, no information
that would give us current actual knowledge of the inaccuracy of such statement
has come to the attention of the attorneys presently in the firm who have
rendered legal service in connection with our representation of the Borrower in
this transaction. However, we have not undertaken any independent investigation
or review to determine the accuracy of any such statement, and any limited
inquiry undertaken by us during the preparation of this opinion letter should
not be regarded as such an investigation or review; no inference as to our
knowledge of any matters bearing on the accuracy of any such statement should be
drawn from the fact of our representation on behalf of the Borrower in this
transaction.

 

Our opinions are limited to the laws of the State of New York, the Delaware
Revised Uniform Partnership Act and the federal laws of the United States. We
express no opinion as to whether the laws of any particular jurisdiction apply,
and no opinion to the extent that the laws of any jurisdiction other than those
identified above are applicable to the Credit Agreement or the Notes or the
transactions contemplated thereby. As you know, we are not licensed to practice
law in the State of Delaware, and our opinions herein with respect to the
partnership law of Delaware are based solely on our review of the Delaware
Revised Uniform Partnership Act as found in a standard compilation of the
official statutes of the State of Delaware.

 

Our opinion that any document is valid, binding or enforceable in accordance
with its terms is qualified as to:

 

(a)           limitations imposed by bankruptcy, insolvency, reorganization,
arrangement, fraudulent conveyance, moratorium, or other laws relating to or
affecting the rights of creditors generally;

 

(b)           the unenforceability under certain circumstances of provisions
imposing penalties, forfeiture, late payment charges, or an increase in interest
rate upon delinquency in payment or the occurrence of any event of default; and

 

(c)           general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether such enforceability is considered in a proceeding in equity or at
law.

 

Use of Opinion

 

This opinion letter is rendered to you solely for your benefit and the benefit
of your permitted successors and assigns pursuant to the Credit Agreement in
connection with the transaction covered in the first paragraph of this opinion
letter and may not be relied upon or used by, circulated, quoted or referred to,
nor may copies hereof be delivered to, any other person without our prior
written approval, except that copies of this opinion letter may be furnished to
your independent auditors and legal counsel in connection with their providing
advice to you regarding such transaction and to your appropriate regulatory
authorities or pursuant to an order or legal process of any relevant
governmental authority and to your permitted successors and assigns and
prospective successors and assigns. We disclaim any obligation to update this
opinion letter for events occurring or coming to our attention after the date
hereof.

 

Very truly yours,

ORRICK, HERRINGTON & SUTCLIFFE LLP

 

--------------------------------------------------------------------------------