Exhibit 10.1

 

CONTRIBUTION AGREEMENT

 

This CONTRIBUTION AGREEMENT (this “Agreement”), dated as of April 1, 2015 (the
“Effective Date”), by and among TC PipeLines, LP, a Delaware limited partnership
(the “Partnership”), TC PipeLines GP, Inc., a Delaware corporation, and (the
“General Partner”) TC PipeLines Intermediate Limited Partnership, a Delaware
limited partnership (the “ILP”) (each of the foregoing parties, individually, a
“Party,” and collectively, the “Parties”), is entered into with reference to the
following:

 

RECITALS

 

A.        The Partnership owns a 30% membership interest (the “Interest”) in Gas
Transmission Northwest LLC, a Delaware limited liability company (“GTN”).  The
Interest was acquired on the Effective Date effective 12:01 am Pacific Standard
Time in consideration of a purchase price (the “Purchase Price”) comprised of
(i) a closing payment of $262,635,353, which is subject to a further 90-day
Purchase Price adjustment in respect of working capital, and (ii) Class B Units
having an agreed fair market value of $95,000,000.  In addition, the Partnership
incurred transaction costs such as, but not limited to, fees paid for fairness
opinions and legal fees (“Transaction Costs”) in connection with the acquisition
of the Interest.  The ILP owns a 70% membership interest in GTN.

 

B.        The Partnership desires to transfer the Interest to the ILP in part as
a $95,000,000 contribution to the capital of the ILP and in part in
consideration of inter-partnership indebtedness payable by the ILP to the
Partnership (the “Debt”) in an amount equal to the Purchase Price, plus the
Transaction Costs, less the $95,000,000 value of the Class B Units.  The agreed
fair market value of the Interest is the Purchase Price plus the Transaction
Costs.

 

C.        Pursuant to the Amended and Restated Agreement of Limited Partnership
of the ILP dated as of May 28, 1999, the General Partner is required to make a
capital contribution contemporaneously with the Partnership’s capital
contribution of the Interest in exchange for Class B referred to in Recital A. 
The General Partner desires to make a cash capital contribution of $969,387
(1.0101/98.9899ths of $95,000,000) to the ILP pursuant to this requirement.  In
addition, the General Partner has contributed to the Partnership $959,596
(1/99th of 95,000,000), as required by the Partnership’s Third Amended and
Restated Partnership Agreement, and the Partnership desires to contribute this
$959,596 to the ILP as a capital contribution. With respect to this additional
Partnership contribution to the ILP, the General Partner desires to make an
additional contemporaneous capital contribution to the ILP of $9,792
(1.0101/98.9899ths of 959,596).

 

D.        The ILP is willing to accept the transfer of the Interest by the
Partnership and the cash capital contribution by the General Partner and to be
obligated to pay the Debt.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, the Parties, intending to be bound legally hereby,
covenant and agree as follows:

 

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1.         Definitions.  As used herein, the following terms shall have the
following meanings unless otherwise indicated:

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Encumbrance” means any (a) mortgage, pledge, lien, security interest, charge,
hypothecation, right of setoff, right of counterclaim, right of recoupment, or
other encumbrance, security agreement, security arrangement, assignment,
assignment in trust, conditional sale, title retention agreement or adverse
claim of any kind, (b) purchase or option agreement or put arrangement,
(c) subordination agreement or arrangement or (d) agreement to create or effect
any of the foregoing.

 

“Governmental Agency” means the government of any federal, state, municipal or
other political subdivision, including all agencies and instrumentalities of
such governments.

 

“Material Adverse Effect” means a material adverse effect on (a) the ability of
the Partnership or the ILP, as the case may be, to perform its obligations under
this Agreement, (b) the legality, validity or enforceability of this Agreement,
or (c) the interest of ILP in the Interest, taken as a whole.

 

“Person” means any individual, corporation, company, voluntary association,
partnership, limited liability company, joint venture, trust, unincorporated
organization or Governmental Agency.

 

2.         Transfer of Interest; Cash Contribution.  The Partnership hereby
transfers all of its right, title and interest in the Interest to the ILP and
agrees to make a cash capital contribution to the ILP in the amount of
$959,596.  This transfer shall be effective on the Effective Date immediately
after the Partnership’s acquisition of the Interest, as referred to in Recital
A.  The Partnership shall execute any and all forms and certificates as may be
necessary to effect such transfer.

 

3.         General Partner Approval; Cash Contribution.  The General Partner
hereby consents to the Partnership’s contribution of the Interest to the ILP and
agrees to make a cash capital contribution to the ILP in the amount of $979,179
as of the Effective Date.

 

4.         Inter-Partnership Debt.  The ILP shall be obligated to pay the Debt
to the Partnership.  For any period when there is a balance due on the Debt, the
ILP shall be responsible for paying all interest and fees incurred by the
Partnership in connection with indebtedness incurred by the Partnership to
acquire the Interest.  The amount of the Debt shall be adjusted for any
post-closing adjustments or indemnity payments in connection with the
Partnership’s acquisition of the Interest as referred to in Recital A.  The
terms of the Debt, including

 

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repayment, adjustments, interest and fees, shall be as mutually agreed from time
to time by the Partnership and the ILP.

 

5.         Acknowledgments Regarding Tax Matters.  The Parties agree to treat
the contributions of the Interest by the Partnership as a transaction governed
by Section 1.708-1(c)(3)(i) of the Treasury Regulations (assets – over merger),
to the extent allowable by law, with the transfer of the portion of the Interest
by the Partnership in exchange for the Debt being treated as a sale of such
portion of the Interest as permitted by Section 1.708-1(c)(3)(ii) of the
Treasury Regulations.  The Parties agree to treat the cash contribution by the
General Partner to the ILP as a transaction governed by Section 721 of the
Code.  The Parties shall cooperate on the tax reporting of the transaction,
which shall be consistent with the tax reporting of the Partnership’s
acquisition of the Interest to the extent pertinent.

 

6.         Representations and Warranties.  The Partnership represents and
warrants to the ILP as of the Effective Date that:

 

(a)                               Powers.  The Partnership has full power and
authority to execute, deliver, and perform its obligations under this Agreement.

 

(b)                              No Conflict or Violation.  The Partnership’s
execution, delivery of and performance of this Agreement will not result in a
breach of, or conflict with, any provision of (a) any statute, law, writ, order,
rule, or regulation of any Governmental Agency applicable to the Partnership,
(b) any judgment, injunction, decree or determination applicable to the
Partnership or (c) any contract, indenture, mortgage, loan agreement, note,
lease or other instrument by which the Partnership may be bound or to which any
of the assets of the Partnership are subject.

 

(c)                               Authorization; Enforceability. This Agreement
(a) has been duly and validly executed and delivered by the Partnership and
(b) is a legal, valid, and binding obligation of the Partnership, enforceable
against the Partnership in accordance with its terms, except as such
enforceability may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors’ rights and (y) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).  The transfer of the Interest pursuant to this Agreement is
effective and enforceable against the Partnership as of the Effective Date in
accordance with the terms of this Agreement.

 

(d)                             Consents and Approvals.   No notice to,
registration with, consent or approval of, or any other action by, any
Governmental Agency or other Person is or will be required for the Partnership
to execute, deliver, and perform its obligations under this Agreement other than
such notices, registrations, consents and approvals which have been duly
obtained or made, or, if not duly obtained or made, would not have a Material
Adverse Effect.

 

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(e)                               Good Title.   Immediately prior to the
transfer by the Partnership of the Interest pursuant to this Agreement, the
Partnership was the sole legal and beneficial owner of, and had good title to,
the Interest, free and clear of any Encumbrance, and the Interest was not
subject to any prior sale, transfer, assignment, options or participation by the
Partnership or any agreement to assign, convey, transfer, or participate, in
whole or in part, other than this Agreement.

 

(f)                                Litigation.  No proceedings are pending or,
to the knowledge of the Partnership, threatened against the Partnership before
any Governmental Agency that, individually or in the aggregate, would have a
Material Adverse Effect.  Without limiting the foregoing, neither the
Partnership nor any of its Affiliates has received notice of any such
proceedings.

 

(g)                              Liabilities.  There are no liabilities,
obligations or Encumbrances of any kind (whether fixed, contingent, conditional,
or otherwise) with respect to the Interest.

 

(h)                              Brokers.  No broker, finder, or other Person
acting under the Partnership’s authority is entitled to any broker’s commission
or other fee in connection with the transactions contemplated by this Agreement
for which ILP could be responsible.

 

7.         Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to any
conflict-of-law provisions.

 

8.         Captions.  The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.

 

9.         Severability.  If any provision hereof is invalid and unenforceable
in any jurisdiction, then, to the fullest extent permitted by law, (a) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be construed in order to carry out the intentions of the Parties as nearly
as may be possible and (b) the invalidity or unenforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction.

 

10.       Entire Agreement.  This Agreement constitutes the entire agreement of
the Parties about the subject matter hereof, and supersedes all previous and
contemporaneous negotiations, promises, covenants, agreements, understandings,
and representations on such subject matter, all of which have become merged and
finally integrated into this Agreement.

 

11.       Further Assurances.  Each Party agrees (a) to execute and deliver, or
to cause to be executed and delivered, all such instruments, and (b) to take all
such actions as the other Party may reasonably request, to effectuate the intent
and purposes, and to carry out the terms, of this Agreement, including the
procurement of any third-party consents.

 

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12.       Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original for all purposes but all
of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Contribution Agreement to be
executed as of the day and year first above written.

 

 

TC PIPELINES, LP

 

 

 

 

 

 

 

 

By:

/s/ Jon A. Dobson

 

 

 

 

Name: Jon A. Dobson

 

 

 

Title: Corporate Secretary

 

 

 

TC PIPELINES GP, INC.

 

 

 

 

 

 

 

By:

/s/ Jon A. Dobson

 

 

 

 

Name: Jon A. Dobson

 

 

 

Title: Corporate Secretary

 

 

 

TC PIPELINES INTERMEDIATE LIMITED PARTNERSHIP

 

 

 

 

 

 

 

By:

/s/ Jon A. Dobson

 

 

 

 

Name: Jon A. Dobson

 

 

 

Title: Corporate Secretary

 

[SIGNATURE PAGE – CONTRIBUTION AGREEMENT]

 

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