Exhibit 10.2

 

GUARANTY

 

This Guaranty (“Guaranty”), dated as of April 26, 2011, is made by TransCanada
PipeLine USA Ltd., a Nevada corporation (“Guarantor”), in favor of TC PipeLines
Intermediate Limited Partnership, a Delaware limited partnership (“Buyer”) and
its successors and assigns.

 

RECITALS

 

A.            TC Continental Pipeline Holdings Inc., a Delaware corporation
(“Seller”) is a wholly-owned direct subsidiary of Guarantor.

 

B             Pursuant to a Purchase and Sale Agreement, dated as of April 26,
2011 (the “Purchase Agreement”), between Seller and Buyer, Seller has agreed to
sell, and Buyer has agreed to purchase, the Bison Interest (as defined in the
Purchase Agreement).

 

C.            Guarantor is familiar with the Purchase Agreement and has
determined that the guaranty provided in this Guaranty is necessary or
convenient to the conduct, promotion, or attainment of the business of
Guarantor, may reasonably be expected to benefit, directly or indirectly,
Guarantor, and is in the best interests of  Guarantor.

 

NOW, THEREFORE, in consideration of the premises and as a material inducement to
Buyer to enter into the Purchase Agreement, Guarantor hereby agrees as follows:

 

ARTICLE I
DEFINITIONS AND CONSTRUCTION

 

1.1           Definitions.  Capitalized terms used herein without definition
that are defined in the Purchase Agreement and have the respective meanings
assigned to such terms in the Purchase Agreement.  Additionally, the following
terms have the meanings set forth below:

 

“Buyer” has the meaning set forth in the introductory paragraph of this
Guaranty.

 

“Guaranteed Obligations” means all obligations of Seller of whatsoever nature
and howsoever evidenced, due or to become due, now existing or hereafter
arising, whether direct or indirect, absolute or contingent, which may arise
under, out of or in connection with the Transaction Agreements and any
amendment, restatement or modification thereof, up to a maximum amount equal to
the Purchase Price.

 

“Proceeding” means any action or proceeding before any court, arbitrator or
Governmental Authority acting in an adjudicative capacity.

 

“Purchase Agreement” has the meaning set forth in the recitals.

 

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1.2           Construction.  The principles of construction set forth in
Section 9.12 of the Purchase Agreements are incorporated herein mutatis
mutandis.

 

ARTICLE II
GUARANTY

 

2.1           Guaranty.  Guarantor irrevocably and unconditionally guarantees
the full, complete and timely payment and performance by Seller of the
Guaranteed Obligations.

 

2.2           Guaranty Unconditional.  This Guaranty is a guaranty of payment
and performance and not of collection.  There are no conditions precedent to the
enforcement of this Guaranty.   The obligations of Guarantor hereunder shall be
continuing, absolute and unconditional and, without limiting the generality of
the foregoing, shall not be released, discharged or otherwise affected by:

 

(a)           any invalidity, illegality or unenforceability against Seller of
any Transaction Agreement;

 

(b)           any modification, amendment, restatement, waiver or rescission of,
or any consent to the departure from, any of the terms of the Transaction
Agreements;

 

(c)           any exercise or non-exercise by Buyer of any right or privilege
under any Transaction Agreement and any notice of such exercise or non-exercise;

 

(d)           any extension, renewal, settlement, compromise, waiver or release
in respect of any Guaranteed Obligation, by operation of law or otherwise, or
any assignment of any Guaranteed Obligation by a Buyer;

 

(e)           any change in the corporate existence, structure or ownership of
Seller;

 

(f)            any insolvency, bankruptcy, reorganization or other similar
proceeding affecting Seller or its assets or any resulting release or discharge
of any Guaranteed Obligation;

 

(g)           any requirement that Buyer exhaust any right or remedy or take any
action against Seller or any other Person before seeking to enforce the
obligations of Guarantor under this Guaranty;

 

(h)           the existence of any defense, set-off or other rights (other than
a defense of indefeasible payment and performance in full of the Guaranteed
Obligations) that Guarantor may have at any time against Seller, Buyer or any
other Person, whether in connection herewith or any unrelated transactions,
provided that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;

 

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(i)            any other act or failure to act or delay of any kind by either
Seller, Buyer or any other Person; or

 

(j)            any other circumstance whatsoever that might, but for the
provisions of this Section 2.2, constitute a legal or equitable discharge of the
Guaranteed Obligations or the obligations of a Guarantor hereunder, including
but not limited to all defenses of a surety (except for indefeasible payment and
performance in full of the Guaranteed Obligations);

 

provided that Guarantor may interpose and assert as defense to payment or
performance hereunder any defense that Seller is or would have been entitled to
arising out of the breach or nonperformance by Buyer of its obligations under
the Transaction Agreements.

 

2.3           Termination and Reinstatement. Guarantor’s obligations hereunder
shall remain in full force and effect for a period of six (6) years from the
date hereof. If at any time any payment with respect to the Guaranteed
Obligations is rescinded or must be otherwise restored or returned as a result
of any fraudulent conveyance or the insolvency, bankruptcy or reorganization of
Seller or otherwise, Guarantor’s obligations hereunder with respect to such
payment shall be reinstated at such time as though such payment had been due but
not made at such time.

 

2.4           Waivers.  Guarantor irrevocably waives

 

(a)           notice of acceptance of this Guaranty and notice of any obligation
or liability to which it may apply;

 

(b)           any diligence, promptness, presentment, demand, performance,
protest, demand for payment, notice of non-payment as the same pertains to
Seller, suit or the taking of other action by Buyer against, and any other
notice to, either Seller, Guarantor or others;

 

(c)           any right to require Buyer to proceed against Seller or to exhaust
any security held by Buyer or to pursue any other remedy;

 

(d)           any defense based upon an election of remedies by Buyer, unless
the same would excuse performance by a Seller under the Transaction Agreements;

 

(e)           any duty of Buyer to advise Guarantor of any information known to
Buyer regarding a Seller or its ability to perform under the Transaction
Agreements; and

 

(f)            any right to require a Proceeding against Seller or any right to
have Seller joined as a party to any Proceeding to enforce this Guaranty.

 

2.5           Subrogation.  Guarantor shall be subrogated to all rights of Buyer
against Seller in respect of any amounts paid by Guarantor pursuant to the
provisions of this

 

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Guaranty; provided, however, that Guarantor shall not be entitled to enforce or
to receive any payments arising out of or based upon such right of subrogation
if any Guaranteed Obligations then due have not been satisfied.  If any amount
is paid to Guarantor on account of subrogation rights under this Guaranty in
violation of this Section 2.5, such amount shall be held in trust for the
benefit of Buyer and shall be promptly paid to Buyer to be credited and applied
to the Guaranteed Obligations, whether matured or unmatured or absolute or
contingent, in accordance with the terms of the Transaction Agreements.

 

ARTICLE III
GUARANTOR’S REPRESENTATIONS

 

Guarantor represents and warrants to Buyer, as of the date hereof and as of the
Closing Date, as follows:

 

3.1           Existence.  Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of formation
and has all requisite power to execute and deliver this Guaranty and to perform
its obligations hereunder.

 

3.2           Due Authorization.  The execution and delivery of this Guaranty
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Guarantor.  This
Guaranty has been duly executed and delivered by Guarantor and constitutes its
legal, valid and binding obligation, enforceable against Guarantor in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights and remedies generally
and to the effect of general principles of equity (regardless of whether
enforcement is considered in a proceeding at law or in equity).

 

3.3           Consents.  All consents, licenses, clearances, authorizations, and
approvals of, and registrations and declarations with, any Governmental
Authority necessary for the due execution, delivery and performance of this
Guaranty have been obtained and remain in full force and effect and all
conditions thereof have been duly complied with, and no other action by, and no
notice to or filing with, any Governmental Authority is required in connection
with the execution, delivery or performance of this Guaranty.

 

3.4           No Conflict.  The execution, delivery and performance of this
Guaranty by Guarantor does not, and the consummation of the transactions
contemplated hereby will not,

 

(i)            result in a breach of the Articles of Incorporation or bylaws of
Guarantor or any resolution adopted by its Board of Directors;

 

(ii)           result in, or constitute an event that, with the passage of time
or giving of notice or both, would be, a breach, violation or default (or give
rise to any right of termination, cancellation, prepayment or acceleration)
under any agreement to which Guarantor is a party or by which its properties or
assets may be bound that could reasonably be expected to materially adversely
affect the ability of Guarantor to perform its obligations under this Guaranty;
or

 

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(iii)          violate any Applicable Law binding upon Guarantor or its assets
or properties.

 

3.5           Litigation.  There is no Proceeding pending against Guarantor or
any of its subsidiaries, or to the knowledge of Guarantor threatened against
Guarantor or any of its subsidiaries, in which there is a reasonable possibility
of an adverse decision that could reasonably be expected to materially adversely
affect the ability of Guarantor to perform its obligations under this Guaranty
or which in any manner draws into question the validity of this Guaranty.

 

ARTICLE IV
OTHER PROVISIONS

 

4.1           Notices.  All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by Guarantor or Buyer (each
a “Notice”) shall be in writing and shall be deemed to have been duly given or
made if (i) delivered personally, (ii) transmitted by first class registered or
certified mail, postage prepaid, return receipt requested, (iii) delivered by
prepaid overnight courier service, or (iv) delivered by confirmed telecopy or
facsimile transmission at the following addresses (or at such other addresses as
shall be specified by similar notice):

 

If to Buyer to:

 

TC PipeLines Intermediate Limited Partnership

 

 

c/o TC PipeLines GP, Inc.

 

 

450 — 1st Street, S.W.

 

 

Calgary, Alberta

 

 

Canada

 

 

T2P 5H1

 

 

Attention: Secretary

 

 

Fax: (403) 920-2460

 

 

 

 

 

with a copy (which shall not constitute notice) to:

 

 

 

 

 

Alan Talkington, Esq.

 

 

Orrick, Herrington & Sutcliffe LLP

 

 

405 Howard Street

 

 

San Francisco, CA 94105

 

 

 

If to Guarantor:

 

 

 

 

TransCanada PipeLines USA Ltd.

 

 

717 Texas Street, 26th Floor

 

 

Houston, TX 77002-2761

 

 

Attention: Jon A. Dobson

 

 

Corporate Secretary

 

 

Fax: (832)320-6201

 

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with a copy to:

 

 

 

 

 

TransCanada Corporation

 

 

450 — 1st Street S.W.

 

 

Calgary, Alberta T2P 5H1

 

 

Attention: Garry Lamb

 

 

Vice-President, Risk Management

 

 

Fax: (403) 920-2359

 

 

 

 

 

Mayer, Brown, Rowe & Maw LLP

 

 

71 South Wacker Drive

 

 

Chicago, IL 60606

 

 

Attention:  D. Michael Murray

 

 

Fax: (312) 701-7711

 

Notices shall be effective (i) if delivered personally or sent by courier
service, upon actual receipt by the intended recipient, (ii) if mailed, upon the
earlier of five days after deposit in the mail or the date of delivery as shown
by the return receipt therefor, or (iii) if sent by telecopy or facsimile
transmission, when the answer back is received.

 

4.2           Entire Agreement.  This Guaranty constitutes the entire agreement
between Guarantor and Buyer with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between them with respect to the subject matter hereof.  There are no
restrictions, promises, representations, warranties, covenants or undertakings
between Guarantor and Buyer other than those expressly set forth or referred to
herein.

 

4.3           Binding Effect; Assignment; No Third Party Benefit.  Subject to
the following sentence, this Guaranty shall be binding upon Guarantor and its
successors and assigns and shall inure to the benefit of Buyer and its
successors and assigns.  Neither this Guaranty nor any of the rights, interests,
or obligations hereunder shall be assigned or delegated by a party without the
prior written consent of the other party.  Except as provided herein, nothing in
this Guaranty is intended to or shall confer upon any Person other than the
parties, and their successors and assigns, any rights, benefits, or remedies of
any nature whatsoever under or by reason of this Guaranty.

 

4.4           Severability.  If any provision of this Guaranty is held to be
unenforceable, this Guaranty shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Guaranty shall remain in full force and effect.

 

4.5           Governing Law.  This Guaranty shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
regard to its conflicts of laws rules or principles.

 

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4.6           Counterparts.  This Guaranty may be executed by the parties in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same agreement.  Such execution may be
evidenced by an exchange of facsimile communications or any other rapid
transmission devise designed to produce a written record of communications
transmitted.

 

4.7           Consent to Jurisdiction.  The parties hereby irrevocably submit to
the jurisdiction of the courts of the State of New York and the federal courts
of the United States of America located in The Borough of Manhattan, New York,
New York, over any dispute arising out of or relating to this Agreement or any
of the transactions contemplated hereby, and each party irrevocably agrees that
all claims in respect of such dispute or proceeding shall be heard and
determined in such courts.  The parties hereby irrevocably waive, to the fullest
extent permitted by Applicable Law, any objection which they may now or
hereafter have to the venue of any dispute arising out of or relating to this
Guaranty or any of the transactions contemplated hereby brought in such court or
any defense of inconvenient forum for the maintenance of such dispute.  Each
party agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
Applicable Law.

 

4.8           Amendment and Waiver.  No amendment or waiver of any provision of
this Guaranty, nor consent to any departure by Guarantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Guarantor
and Buyer.  Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

4.9           No Implied Waiver.  No failure or delay in exercising any right,
power or privilege or requiring the satisfaction of any condition hereunder, and
no course of dealing between Guarantor and Buyer operates as a waiver or
estoppel of any right, remedy or condition.   No single or partial exercise of
any right or remedy under this Guaranty precludes any simultaneous or subsequent
exercise of any other right, power or privilege.  The rights and remedies set
forth in this Guaranty are not exclusive of, but are cumulative to, any rights
or remedies now or subsequently existing at law, in equity or by statute.

 

4.10         Expenses.  Guarantor shall indemnify Buyer for any and all costs
and expenses (including reasonable attorneys’ fees and expenses) incurred by
Buyer in the successful enforcement of any rights under this Guaranty.

 

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.

 

 

TRANSCANADA PIPELINE USA LTD.

 

 

 

 

 

By:

/s/ Lauri Newton

 

Name:

Lauri Newton

 

Title:

Assistant Secretary

 

 

 

 

 

By:

/s/ Jon A. Dobson

 

Name:

Jon A. Dobson

 

Title:

Corporate Secretary

 

[Signature Page to Guaranty]

 

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