**Exhibit 10.5**

 

**CREDIT AGREEMENT**

 

Dated as of March 31, 2006

 

Among

 

**TC PIPELINES, LP**

 

**as**Borrower

 

**(By itsGeneral Partner TC PipeLines GP, Inc.)**

and

 

**THE INITIAL LENDERS NAMED HEREIN**

 

asInitialLenders

 

and

 

**CITICORP NORTH AMERICA, INC.**

 

asAdministrativeAgent

 

and

 

**MIZUHO CORPORATE BANK, LTD.**

 

and

 

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

 

asCo-DocumentationAgents

 

and

 

**CITICORP NORTH AMERICA, INC.**

 

asAdministrativeAgent

 

and

 

**CITIGROUP GLOBAL MARKETS INC.**

 

and

 

**UBS LOAN FINANCE LLC**

 

asJointLeadArrangersandJointBookManagers

 

----

 

**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     |

 

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| 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, financialinstitutions 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), agreeas follows:

 

ARTICLE I

 

DEFINITIONS AND ACCOUNTINGTERMS

 

SECTION 1.01.  CertainDefined Terms.  As used in thisAgreement, the following terms shall have the following meanings (such meaningsto be equally applicable to both the singular and plural forms of the termsdefined):

 

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

 

“AdjustedCash Flow” means, with reference to any period (i) the net income (or loss)of the Borrower and its consolidated Subsidiaries for such period calculated ona 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 ordinarycourse of business, *minus* (iii) tothe 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 determiningsuch net income (or loss), equity earnings of any Person in which the Borroweror any of its consolidated Subsidiaries has an interest (which interest doesnot cause the net income of such Person to be consolidated with the net incomeof the Borrower and its consolidated Subsidiaries in accordance with GAAP), *plus* (v) the aggregate amount of all cash dividends andother distributions of cash actually received by the Borrower or any of itsconsolidated Subsidiaries during such period from any Person in which theBorrower or any of its consolidated Subsidiaries has an interest (whichinterest does not cause the net income of such other Person to be consolidatedwith the net income of the Borrower and its consolidated Subsidiaries inaccordance with GAAP).

 

“Advance”means an advance by a Lender to the Borrower as part of a Borrowing underSection 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 adirector or officer of such Person. For purposes of this definition the term “control”(including the terms “controlling”, “controlled by” and “under common controlwith”) of a Person means the possession, direct or indirect, of the power todirect or cause the direction of the management and policies of such Person, whetherthrough the ownership of Voting Stock, by contract or otherwise, provided,that, for purposes of Section 5.01(h), each of Northern Border and Tuscarorashall be deemed to be an Affiliate of the Borrower as long as it qualifies as aSignificant Subsidiary.

 

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

 

----

 

“Agent’sAccount” means the account of the Agent maintained by the Agent at Citibankat its office at 388 Greenwich Street, New York, New York 10013, AccountNo. 36852248, Attention:  Bank LoanSyndications.

 

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

 

“ApplicableMargin” means as of any date, a percentage per annum determined byreference 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 theApplicable Margin will be increased by 0.125% per annum on the date that is 12months after the Effective Date and will be further increased by 0.25% perannum on the date that is 18 months after the Effective Date. The ApplicableMargin shall be determined by reference to the Leverage Ratio in effect fromtime to time; provided, that no reduction in the Applicable Margin shallbe effective until three Business Days after the date on which the Agentreceives the financial statements required to be delivered pursuant to Section5.01(i)(i) or (ii), as the case may be, and a certificate of the ChiefFinancial Officer or Controller of the General Partner of the Borrowerdemonstrating such ratio.

 

“ApplicablePercentage” means, as of any date, a percentage per annum determined byreference 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 byreference to the Leverage Ratio in effect from time to time; provided,that no reduction in the Applicable Percentage shall be effective until threeBusiness Days after the date on which the Agent receives the financialstatements required to be delivered pursuant to Section 5.01(i)(i) or (ii), asthe case may be, and a certificate of the Chief Financial Officer of theBorrower demonstrating such ratio.

 

“Assignmentand Acceptance” means an assignment and acceptance entered into by a Lenderand an Eligible Assignee, and accepted by the Agent, in substantially the formof Exhibit C hereto.

 

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

 

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

 

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(b)           1⁄2of one percent per annum above the Federal Funds Rate.

 

“Base RateAdvance” means an Advance that bears interest as provided inSection 2.06(a)(i).

 

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

 

“BorrowerInformation” has the meaning specified in Section 8.08.

 

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

 

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

 

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

 

“Citibank”means Citibank, N.A.

 

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

 

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

 

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

 

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

 

“Debt”of any Person means, without duplication, (a) all indebtedness of suchPerson for borrowed money, (b) all obligations of such Person for thedeferred purchase price of property or services (other than trade payablesincurred in the ordinary course of such Person’s business), (c) allobligations of such Person evidenced by notes, bonds, debentures or othersimilar instruments, (d) all obligations of such Person created or arisingunder any conditional sale or other title retention agreement with respect toproperty acquired by such Person (even though the rights and remedies of theseller or lender under such agreement in the event of default are limited torepossession or sale of such property), (e) all obligations of such Personas 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 similarextensions of credit, (g) all Debt of others referred to inclauses (a) through (f) above or clause (h) below and other paymentobligations (collectively, “Guaranteed Debt”) guaranteed directly orindirectly in any manner by such Person, or in effect guaranteed directly orindirectly by such Person through an agreement (1) to pay or purchase suchGuaranteed Debt or to advance or supply funds for the payment or purchase ofsuch Guaranteed Debt, (2) to purchase, sell or lease (as lessee or lessor)property, or to purchase or sell services, primarily for the purpose ofenabling the debtor to make payment of such Guaranteed Debt or to assure theholder of such Guaranteed Debt against loss, (3) to supply funds to or inany other manner invest in the debtor (including any agreement to pay forproperty or services irrespective of whether such property is received or suchservices are rendered) or (4) otherwise to assure a creditor against loss,and (h) all Debt referred to in clauses (a) through (g) above (includingGuaranteed Debt)

 

----

 

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

 

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

 

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

 

“DomesticLending Office” means, with respect to any Lender, the office of suchLender specified as its “Domestic Lending Office” opposite its name onSchedule I hereto or in the Assignment and Acceptance pursuant to which itbecame a Lender, or such other office of such Lender as such Lender may fromtime to time specify to the Borrower and the Agent.

 

“EffectiveDate” has the meaning specified in Section 3.01.

 

“EligibleAssignee” means (i) a Lender; (ii) an Affiliate of a Lender; and(iii) any other Person approved by the Agent and, unless an Event ofDefault has occurred and is continuing at the time any assignment is effectedin accordance with Section 8.07, the Borrower, such approval not to be unreasonablywithheld or delayed; provided, however, that neither the Borrowernor an Affiliate of the Borrower shall qualify as an Eligible Assignee.

 

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

 

“EnvironmentalLaw” means any federal, state, local or foreign statute, law, ordinance,rule, regulation, code, order, judgment, decree or judicial or agencyinterpretation, policy or guidance relating to pollution or protection of theenvironment, health, safety or natural resources, including, withoutlimitation, those relating to the use, handling, transportation, treatment,storage, disposal, release or discharge of Hazardous Materials.

 

“EnvironmentalPermit” means any permit, approval, identification number, license or otherauthorization required under any Environmental Law.

 

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

 

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

 

“ERISAEvent” means (a) (i) the occurrence of a reportable event, within themeaning of Section 4043 of ERISA, with respect to any Plan unless the 30-daynotice 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 (withoutregard to subsection (2) of such Section) are met with respect to acontributing sponsor, as

 

----

 

defined in Section 4001(a)(13) of ERISA, of aPlan, and an event described in paragraph (9), (10), (11), (12) or (13) ofSection 4043(c) of ERISA is reasonably expected to occur with respect to suchPlan within the following 30 days; (b) the application for a minimumfunding waiver with respect to a Plan; (c) the provision by theadministrator of any Plan of a notice of intent to terminate such Plan pursuantto Section 4041(a)(2) of ERISA (including any such notice with respect toa plan amendment referred to in Section 4041(e) of ERISA); (d) thecessation of operations at a facility of the Borrower or any ERISA Affiliate inthe circumstances described in Section 4062(e) of ERISA; (e) thewithdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Planduring a plan year for which it was a substantial employer, as defined inSection 4001(a)(2) of ERISA; (f)  the conditions for the impositionof a lien under Section 302(f) of ERISA shall have been met with respectto any Plan; (g) the adoption of an amendment to a Plan requiring theprovision of security to such Plan pursuant to Section 307 of ERISA; or(h) the institution by the PBGC of proceedings to terminate a Planpursuant to Section 4042 of ERISA, or the occurrence of any event orcondition described in Section 4042 of ERISA that constitutes grounds forthe termination of, or the appointment of a trustee to administer, a Plan.

 

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

 

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

 

“EurodollarRate” means, for any Interest Period for each Eurodollar Rate Advancecomprising part of the same Borrowing, an interest rate per annum equal to therate per annum obtained by dividing (a) the rate per annum (rounded upward tothe nearest whole multiple of 1/16 of 1% per annum) appearing on MoneylineTelerate Markets Page 3750 (or any successor page) as the London interbankoffered rate for deposits in U.S. dollars at approximately 11:00 A.M. (Londontime) two Business Days prior to the first day of such Interest Period for aterm comparable to such Interest Period or, if for any reason such rate is notavailable, the average (rounded upward to the nearest whole multiple of1/16 of 1% per annum, if such average is not such a multiple) of the rate perannum at which deposits in U.S. dollars are offered by the principal office ofeach of the Reference Banks in London, England to prime banks in the Londoninterbank market at 11:00 A.M. (London time) two Business Days before thefirst day of such Interest Period in an amount substantially equal to suchReference Bank’s Eurodollar Rate Advance comprising part of such Borrowing tobe outstanding during such Interest Period and for a period equal to suchInterest Period by (b) a percentage equal to 100% minus the EurodollarRate Reserve Percentage for such Interest Period. If the Moneyline TelerateMarkets Page 3750 (or any successor page) is unavailable, the Eurodollar Ratefor any Interest Period for each Eurodollar Rate Advance comprising part of thesame Borrowing shall be determined by the Agent on the basis of applicable ratesfurnished to and received by the Agent from the Reference Banks two BusinessDays before the first day of such Interest Period, subject, however,to the provisions of Section 2.07.

 

“EurodollarRate Advance” means an Advance that bears interest as provided inSection 2.06(a)(ii).

 

“EurodollarRate Reserve Percentage” for any Interest Period for all Eurodollar RateAdvances comprising part of the same Borrowing means the reserve percentageapplicable two Business Days before the first day of such Interest Period underregulations issued from time to time by the Board of Governors of the FederalReserve System (or any successor) for determining the maximum reserverequirement (including, without limitation, any emergency, supplemental orother marginal reserve requirement) for a member bank of the Federal ReserveSystem in New York City with respect to liabilities or assets consistingof or including Eurocurrency Liabilities (or with respect to any other categoryof liabilities that

 

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

 

“Events ofDefault” has the meaning specified in Section 6.01.

 

“FederalFunds Rate” means, for any period, a fluctuating interest rate per annumequal for each day during such period to the weighted average of the rates onovernight Federal funds transactions with members of the Federal Reserve Systemarranged by Federal funds brokers, as published for such day (or, if such dayis not a Business Day, for the next preceding Business Day) by the FederalReserve Bank of New York, or, if such rate is not so published for any daythat is a Business Day, the average of the quotations for such day on suchtransactions received by the Agent from three Federal funds brokers ofrecognized standing selected by it.

 

“GAAP”has the meaning specified in Section 1.03.

 

“GeneralPartner” means TC PipeLines GP, Inc.

 

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

 

“HedgeAgreements” means interest rate swap, cap or collar agreements, interestrate future or option contracts, currency swap agreements, currency future oroption contracts and other similar agreements.

 

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

 

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

 

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

 

“InterestExpense” means, for any period, total interest expense determined inaccordance with GAAP.

 

“InterestPeriod” means, for each Eurodollar Rate Advance comprising part of the sameBorrowing, the period commencing on the date of such Eurodollar Rate Advance orthe date of the Conversion of any Base Rate Advance into such Eurodollar RateAdvance and ending on the last day of the period selected by the Borrowerpursuant to the provisions below and, thereafter, each subsequent periodcommencing on the last day of the immediately preceding Interest Period andending on the last day of the period selected by the Borrower pursuant to theprovisions 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 ortwelve months, as the Borrower may, upon notice received by the Agent not laterthan 11:00 A.M. (New York City time) on the third Business Day priorto the first day of such Interest Period, select; provided, however,that:

 

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(a)           theBorrower may not select any Interest Period that ends after the TerminationDate;

 

(b)           InterestPeriods commencing on the same date for Eurodollar Rate Advances comprisingpart of the same Borrowing shall be of the same duration;

 

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

 

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

 

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

 

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

 

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

 

“LeverageRatio” means, as of any date, the ratio of Covenant Indebtedness of theBorrower on such date to Adjusted Cash Flow of the Borrower for the period offour 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.

 

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

 

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

 

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

 

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

 

“MultipleEmployer Plan” means a single employer plan, as defined inSection 4001(a)(15) of ERISA, that (a) is maintained for employees ofthe Borrower or any ERISA Affiliate and at least one Person other than theBorrower and the ERISA Affiliates or (b) was so maintained and in respectof which the Borrower or any ERISA Affiliate could have liability underSection 4064 or 4069 of ERISA in the event such plan has been or were tobe terminated.

 

“Net CashProceeds” means, with respect to any sale, lease, transfer or otherdisposition of any asset or the incurrence or issuance of any Debt or the saleor issuance of any equity by the Borrower, the aggregate amount of cashreceived from time to time (whether as initial consideration or through paymentor disposition of deferred consideration) by or on behalf of such Person inconnection with such transaction after deducting therefrom only (withoutduplication) (a) reasonable and customary brokerage commissions,underwriting fees and discounts, legal and accounting fees, filing fees, finder’sfees and other similar fees and commissions, (b) the amount of taxesestimated in good faith by the Borrower to be payable by the Borrower or any ofits 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 thecase of any receipt of proceeds by a Subsidiary of the Borrower, any amountrequired to be distributed to the holders of any minority equity interest inthe respective Subsidiary (or in any other Subsidiary which directly orindirectly holds capital stock or equivalent interests in such Subsidiary), and(e) with respect to any sale, lease, transfer or other disposition of anyasset, any amount of such Net Cash Proceeds set aside as a reserve establishedin good faith by the Borrower or such Subsidiary for indemnity or otherpotential claims in connection therewith until any unused reserves are no longermaintained in connection therewith, in each case to the extent, but only to theextent, 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 areproperly attributable to such transaction or to the asset that is the subjectthereof, provided, that for purposes of determining the date of receiptof Net Cash Proceeds from the sale, lease, transfer or other disposition of anyasset, such Net Cash Proceeds shall be deemed to have been received on the datethat is six months after the date of such disposition.

 

“NorthernBorder” means Northern Border Pipeline Company, a Texas generalpartnership.

 

“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 insubstantially the form of Exhibit A hereto, evidencing the aggregateindebtedness of the Borrower to such Lender resulting from the Advance made bysuch Lender.

 

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

 

“PatriotAct” means the Uniting and Strengthening America by Providing AppropriateTools 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).

 

“PermittedLiens” 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 governmentalcharges or levies to the extent not required to be paid underSection 5.01(b) hereof; (b) Liens imposed by law, such as materialmen’s,mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liensarising in the ordinary course of business securing obligations that are notoverdue for a period of more than 30 days unless being contested in good faith,provided that adequate reserves for the payment thereof have been establishedin accordance with GAAP and no property of the Borrower or any Subsidiary issubject to impending risk of loss or forfeiture by reason of nonpayment of theobligations

 

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secured by such Liens; (c) pledges ordeposits to secure obligations under workers’ compensation laws or similarlegislation or to secure public or statutory obligations; and(d) easements, rights of way and other encumbrances on title to realproperty that do not render title to the property encumbered therebyunmarketable or materially adversely affect the use of such property for itspresent purposes.

 

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

 

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

 

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

 

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

 

“RequiredLenders” means at any time Lenders owed or holding at least a majority ininterest of the Advances outstanding at such time or, if no Advances are thenoutstanding, Lenders holding at least a majority of the Commitments at suchtime.

 

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

 

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

 

“SingleEmployer Plan” means a single employer plan, as defined inSection 4001(a)(15) of ERISA, that (a) is maintained for employees ofthe Borrower or any  ERISA Affiliate andno Person other than the Borrower and the ERISA Affiliates or (b) was somaintained and in respect of which the Borrower or any ERISA Affiliate couldhave liability under Section 4069 of ERISA in the event such plan has beenor 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 thetotal amount of liabilities, including, without limitation, contingentliabilities, of such Person, (b) the present fair salable value of theassets of such Person is not less than the amount that will be required to paythe probable liability of such Person on its debts as they become absolute andmatured, (c) such Person does not intend to, and does not believe that itwill, incur debts or liabilities beyond such Person’s ability to pay such debtsand liabilities as they mature and (d) such Person is not engaged inbusiness 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 theamount that, in the light of all the facts and circumstances existing at suchtime, represents the amount that can reasonably be expected to become an actualor matured liability.

 

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

 

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

 

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

 

“VotingStock” means capital stock issued by a corporation, or equivalent interestsin any other Person, the holders of which are ordinarily, in the absence ofcontingencies, entitled to vote for the election of directors (or personsperforming similar functions) of such Person, even if the right so to vote hasbeen suspended by the happening of such a contingency.

 

SECTION 1.02.  Computationof Time Periods.  In this Agreementin the computation of periods of time from a specified date to a laterspecified date, the word “from” means “from and including” and the words “to”and “until” each mean “to but excluding”.

 

SECTION 1.03.  AccountingTerms.  All accounting terms notspecifically defined herein shall be construed in accordance with generallyaccepted accounting principles consistent with those applied in the preparationof the financial statements referred to in Section 4.01(e) (“GAAP”).In the event that any Change in Accounting Principles shall occur and suchchange 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 orthe Required Lenders, the Borrower and the Agent agree to enter intonegotiations in order to amend such provisions of this Agreement so as toreflect equitably such Change in Accounting Principles with the desired resultthat the criteria for evaluating the Borrower’s financial condition shall bethe same after such Change in Accounting Principles as if such Change inAccounting Principles had not been made. Until such time as such an amendmentshall have been executed and delivered by the Borrower, the Agent and theRequired Lenders, all financial covenants, standards and terms in thisAgreement shall continue to be calculated or construed as if such Change inAccounting Principles had not occurred.

 

ARTICLE II

 

AMOUNTS AND TERMS OF THEADVANCES

 

SECTION 2.01.  TheAdvances.  Each Lender severallyagrees, 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’sCommitment at such time. The Borrowing shall consist of Advances madesimultaneously by the Lenders ratably according to their Commitments. Amountsborrowed under this Section 2.01 and repaid or prepaid may not bereborrowed.

 

SECTION 2.02.  Makingthe Advances.  (a)  Each Borrowing shall be made on notice, givennot later than (x) 11:00 A.M. (New York City time) on the thirdBusiness Day prior to the date of the proposed Borrowing in the case of aBorrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New YorkCity time) on the date of the proposed Borrowing in the case of a Borrowingconsisting of Base Rate Advances, by the Borrower to the Agent, which shallgive to each Lender prompt notice thereof by telecopier. Each such notice of aBorrowing (a “Notice of Borrowing”) shall be by telephone, confirmedpromptly in writing, or telecopier in substantially the form of Exhibit Bhereto, specifying therein the requested (i) date of such Borrowing,(ii) Type of Advances comprising such Borrowing, (iii) aggregateamount of such Borrowing, and (iv) in the case of a Borrowing consistingof Eurodollar Rate Advances, initial Interest Period for each such Advance. EachLender shall, before 1:00 P.M. (New York City time) on the date ofsuch Borrowing, make available for the account of its Applicable Lending Officeto the Agent at the Agent’s Account, in same day funds, such Lender’s ratableportion of such Borrowing. After the Agent’s receipt of such funds and uponfulfillment of the applicable conditions set forth in Article III, theAgent will make such funds available to the Borrower at the Agent’s addressreferred to in Section 8.02.

 

(b)           Anythingin subsection (a) above to the contrary notwithstanding, (i) theBorrower may not select Eurodollar Rate Advances for any Borrowing if theaggregate amount of such Borrowing is less than $5,000,000 or if the obligationof the Lenders to make Eurodollar Rate Advances shall then be suspendedpursuant

 

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to Section 2.07 or2.11 and (ii) the Eurodollar Rate Advances may not be outstanding as partof more than six separate Borrowings.

 

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

 

(d)           Unless theAgent shall have received notice from a Lender prior to the time of anyBorrowing that such Lender will not make available to the Agent such Lender’sratable portion of such Borrowing, the Agent may assume that such Lender hasmade such portion available to the Agent on the date of such Borrowing inaccordance with subsection (a) of this Section 2.02 and the Agentmay, in reliance upon such assumption, make available to the Borrower on suchdate a corresponding amount. If and to the extent that such Lender shall nothave so made such ratable portion available to the Agent, such Lender and theBorrower severally agree to repay to the Agent forthwith on demand suchcorresponding amount together with interest thereon, for each day from the datesuch amount is made available to the Borrower until the date such amount isrepaid to the Agent, at (i) in the case of the Borrower, the interest rateapplicable at the time to Advances comprising such Borrowing and (ii) inthe case of such Lender, the Federal Funds Rate. If such Lender shall repay tothe Agent such corresponding amount, such amount so repaid shall constitutesuch Lender’s Advance as part of such Borrowing for purposes of this Agreement.

 

(e)           Thefailure of any Lender to make the Advance to be made by it as part of anyBorrowing shall not relieve any other Lender of its obligation, if any,hereunder to make its Advance on the date of such Borrowing, but no Lendershall be responsible for the failure of any other Lender to make the Advance tobe 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 theaccount of each Lender a commitment fee on the aggregate amount of such Lender’sunused Commitment from the date hereof until the Effective Date at a rate perannum equal to the Applicable Percentage in effect from time to time, payablein arrears quarterly on the last day of each March, June, September andDecember, commencing June 30, 2006, and on the Effective Date.

 

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

 

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

 

(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 aggregateCommitments shall be automatically and permanently reduced, on a pro ratabasis, by an amount equal to the amount by which (i) the aggregate Commitmentsimmediately prior to such reduction exceed (ii) the aggregate unpaid principalamount of the Advances then outstanding.

 

SECTION 2.05.  Repayment. The Borrower shall repay to the Agentfor the ratable account of the Lenders on the Maturity Date the aggregateprincipal amount of the Advances then outstanding.

 

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

 

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(i)            BaseRate 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 ineffect from time to time plus (y) the Applicable Margin in effectfrom 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 RateAdvance shall be Converted or paid in full.

 

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

 

(b)           Default Interest. Upon the occurrence and during thecontinuance 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 payinterest (“Default Interest”) on (i) the unpaid principal amount ofeach Advance owing to each Lender, payable in arrears on the dates referred toin clause (a)(i) or (a)(ii) above, at a rate per annum equal at all timesto 2% per annum above the rate per annum required to be paid on such Advancepursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullestextent permitted by law, the amount of any interest, fee or other amountpayable hereunder that is not paid when due, from the date such amount shall bedue until such amount shall be paid in full, payable in arrears on the datesuch amount shall be paid in full and on demand, at a rate per annum equal atall times to 2% per annum above the rate per annum required to be paid on BaseRate Advances pursuant to clause (a)(i) above, provided, however,that following acceleration of the Advances pursuant to Section 6.01, DefaultInterest shall accrue and be payable hereunder whether or not previouslyrequired by the Agent.

 

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

 

(b)           If, withrespect to any Eurodollar Rate Advances, the Required Lenders notify the Agentthat the Eurodollar Rate for any Interest Period for such Advances will notadequately reflect the cost to such Required Lenders of making, funding ormaintaining 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 thenexisting Interest Period therefor, Convert into a Base Rate Advance, and (ii)the obligation of the Lenders to make, or to Convert Advances into, EurodollarRate Advances shall be suspended until the Agent shall notify the Borrower thatsuch Lenders have determined that the circumstances causing such suspension nolonger exist.

 

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

 

(d)           On thedate on which the aggregate unpaid principal amount of Eurodollar Rate Advancescomprising any Borrowing shall be reduced, by payment or prepayment orotherwise, to less than $1,000,000, such Advances shall automatically Convertinto Base Rate Advances.

 

(e)           Upon theoccurrence and during the continuance of any Event of Default, (i) eachEurodollar Rate Advance will automatically, on the last day of the thenexisting Interest Period therefor, Convert

 

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

 

(f)            IfMoneyline Telerate Markets Page 3750 is unavailable and fewer than twoReference Banks furnish timely information to the Agent for determining theEurodollar Rate for any Eurodollar Rate Advances,

 

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

 

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

 

(iii)          theobligation of the Lenders to make Eurodollar Rate Advances or to ConvertAdvances into Eurodollar Rate Advances shall be suspended until the Agent shallnotify the Borrower and the Lenders that the circumstances causing suchsuspension no longer exist.

 

SECTION 2.08.  OptionalConversion of Advances.  The Borrowermay on any Business Day, upon notice given to the Agent not later than11:00 A.M. (New York City time) on the third Business Day prior tothe date of the proposed Conversion and subject to the provisions ofSections 2.07 and 2.11, Convert all or any portion of Advances of one Typecomprising the same Borrowing into Advances of the other Type; provided,however, that any Conversion of Base Rate Advances into Eurodollar RateAdvances shall be in an amount not less than the minimum amount specified inSection 2.02(b), no Conversion of any Advances shall result in moreseparate Borrowings than permitted under Section 2.02(b) and eachConversion of Advances comprising part of the same Borrowing shall be maderatably among the Lenders in accordance with their Commitments and provided,further that for any Conversion of Eurodollar Rate Advances into BaseRate Advances made other than on the last day of an Interest Period for suchEurodollar Rate Advances the Borrower shall be obligated to reimburse theLenders in respect thereof pursuant to Section 8.04(c). Each such notice of aConversion shall, within the restrictions specified above, specify (i) thedate of such Conversion, (ii) the Advances to be Converted, and(iii) if such Conversion is into Eurodollar Rate Advances, the duration ofthe initial Interest Period for each such Advance. Each notice of Conversion shallbe irrevocable and binding on the Borrower.

 

SECTION 2.09.  Prepaymentsof Advances.  The Borrower may, uponnotice at least two Business Days’ prior to the date of such prepayment, in thecase of Eurodollar Rate Advances, and not later than 11:00 A.M. (New York Citytime) on the date of such prepayment, in the case of Base Rate Advances, to theAgent stating the proposed date and aggregate principal amount of theprepayment, and if such notice is given the Borrower shall, prepay theoutstanding principal amount of the Advances comprising part of the sameBorrowing in whole or ratably in part, together with accrued interest to thedate 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 suchprepayment of a Eurodollar Rate Advance made other than on the last day of an InterestPeriod for such Eurodollar Rate Advances, the Borrower shall be obligated toreimburse the Lenders in respect thereof pursuant to Section 8.04(c).

 

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

 

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

 

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

 

SECTION 2.10.  IncreasedCosts.  (a)  If, due to either (i) the introductionof or any change in or in the interpretation of any law or regulation after theEffective Date or (ii) the compliance with any guideline or requestadopted after the Effective Date from any central bank or other governmentalauthority (whether or not having the force of law), there shall be any increasein the cost to any Lender of agreeing to make or making, funding or maintainingEurodollar Rate Advances (excluding for purposes of this Section 2.10 any  such increased costs resulting from (i) Taxesor Other Taxes (as to which Section 2.13 shall govern) and (ii) changes in thebasis of taxation of overall net income or overall gross income by the UnitedStates or by the foreign jurisdiction or state under the laws of which suchLender is organized or has its Applicable Lending Office or any politicalsubdivision thereof), then the Borrower shall from time to time, upon demand bysuch Lender (with a copy of such demand to the Agent), pay to the Agent for theaccount of such Lender additional amounts sufficient to compensate such Lenderfor 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 andbinding for all purposes, absent manifest error.

 

(b)           If anyLender determines that compliance with any law or regulation or any guidelineor request from any central bank or other governmental authority (whether ornot having the force of law) adopted or issued after the Effective Date affectsor would affect the amount of capital required or expected to be maintained bysuch Lender or any corporation controlling such Lender and that the amount ofsuch capital is increased by or based upon the existence of such Lender’s commitmentto lend hereunder and other commitments of this type, then, upon demand by suchLender (with a copy of such demand to the Agent), the Borrower shall pay to theAgent for the account of such Lender, from time to time as specified by suchLender, additional amounts sufficient to compensate such Lender or suchcorporation in the light of such circumstances, to the extent that such Lenderreasonably determines such increase in capital to be allocable to the existenceof such Lender’s commitment to lend hereunder. A certificate as to such amountssubmitted to the Borrower and the Agent by such Lender shall be conclusive andbinding for all purposes, absent manifest error.

 

(c)           Notwithstandinganything to the contrary in this Section 2.10, the Borrower shall not berequired to compensate a Lender pursuant to this Section 2.10 for any amountsincurred more than six months prior to the date that such Lender notifies theBorrower of such Lender’s intention to claim compensation therefor; providedthat, 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 suchretroactive effect.

 

SECTION 2.11.  Illegality. Notwithstanding any other provision ofthis Agreement, if any Lender shall notify the Agent that the introduction ofor any change in or in the interpretation of any law or regulation makes itunlawful, or any central bank or other governmental authority asserts that itis unlawful, for any Lender or its Eurodollar Lending Office to perform itsobligations hereunder to make Eurodollar Rate Advances or to fund or maintainEurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance willautomatically, upon the last day of the applicable Interest Period or, if requiredby applicable law, immediately upon such demand, Convert into a Base RateAdvance and (b) the obligation of the Lenders to make Eurodollar RateAdvances or to Convert Advances into Eurodollar Rate Advances shall besuspended until the Agent shall notify the Borrower that such Lender hasdetermined that the circumstances causing such suspension no longer exist.

 

SECTION 2.12.  Paymentsand Computations.  (a)  The Borrower shall make each paymenthereunder, irrespective of any right of counterclaim or set-off,  not later than 11:00 A.M. (New York Citytime) on the day when due in U.S. dollars to the Agent at the Agent’s Accountin same day funds. The Agent will promptly thereafter cause to be distributedlike 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)) tothe Lenders for the account of their respective Applicable Lending Offices, andlike funds relating to the payment of any other amount payable to any Lender to

 

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

 

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

 

(c)           Allcomputations of interest based on the Base Rate shall be made by the Agent onthe basis of a year of 365 or 366 days, as the case may be, and allcomputations of interest based on the Eurodollar Rate or the Federal Funds Rateand of fees shall be made by the Agent on the basis of a year of 360 days, in eachcase for the actual number of days (including the first day but excluding thelast day) occurring in the period for which such interest or fees are payable. Eachdetermination by the Agent of an interest rate hereunder shall be conclusiveand binding for all purposes, absent manifest error.

 

(d)           Wheneverany payment hereunder or under the Notes shall be stated to be due on a dayother than a Business Day, such payment shall be made on the next succeedingBusiness Day, and such extension of time shall in such case be included in thecomputation of payment of interest or fee, as the case may be; provided,however, that, if such extension would cause payment of interest on orprincipal of Eurodollar Rate Advances to be made in the next following calendarmonth, such payment shall be made on the next preceding Business Day.

 

(e)           Unless theAgent shall have received notice from the Borrower prior to the date on whichany payment is due to the Lenders hereunder that the Borrower will not makesuch payment in full, the Agent may assume that the Borrower has made suchpayment in full to the Agent on such date and the Agent may, in reliance uponsuch assumption, cause to be distributed to each Lender on such due date anamount equal to the amount then due such Lender. If and to the extent theBorrower shall not have so made such payment in full to the Agent, each Lendershall repay to the Agent forthwith on demand such amount distributed to suchLender together with interest thereon, for each day from the date such amountis distributed to such Lender until the date such Lender repays such amount tothe 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 Lenderor the Agent hereunder or under the Notes or any other documents to bedelivered hereunder shall be made, in accordance with Section 2.12 or theapplicable provisions of such other documents, free and clear of and withoutdeduction 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 theUnited States and taxes imposed on its overall net income, and franchise taxesimposed on it in lieu of net income taxes, by the jurisdiction under the lawsof which such Lender or the Agent (as the case may be) is organized or anypolitical subdivision thereof and, in the case of each Lender, taxes imposed onits overall net income, and franchise taxes imposed on it in lieu of net incometaxes, by the jurisdiction of such Lender’s Applicable Lending Office or anypolitical subdivision thereof (all such non-excluded taxes, levies, imposts,deductions, charges, withholdings and liabilities in respect of paymentshereunder or under the Notes being hereinafter referred to as “Taxes”). Ifthe Borrower shall be required by law to deduct any Taxes from or in respect ofany sum payable hereunder or under any Note or any other documents to be deliveredhereunder to any Lender or the Agent, (i) the sum payable shall beincreased as may be necessary so that after making all required deductions(including deductions applicable to additional sums payable under thisSection 2.13) such Lender or the Agent (as the case may be) receives anamount equal to the sum it would have received had no such deductions beenmade, (ii) the Borrower shall make such deductions and (iii) theBorrower shall pay the full amount deducted to the relevant taxation authority orother authority in accordance with applicable law.

 

(b)           Inaddition, the Borrower shall pay any present or future stamp or documentarytaxes or any other excise or property taxes, charges or similar levies thatarise from any payment made hereunder or under the Notes or any other documentsto be delivered hereunder or from the execution, delivery or registration of,

 

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

 

(c)           TheBorrower shall indemnify each Lender and the Agent for and hold it harmlessagainst the full amount of Taxes or Other Taxes (including, without limitation,taxes of any kind imposed or asserted by any jurisdiction on amounts payableunder 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 andexpenses) arising therefrom or with respect thereto. This indemnification shallbe made within 30 days from the date such Lender or the Agent (as the case maybe) makes written demand therefor.

 

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

 

(e)           EachLender organized under the laws of a jurisdiction outside the United States, onor prior to the date of its execution and delivery of this Agreement in thecase of each Initial Lender and on the date of the Assignment and Acceptancepursuant to which it becomes a Lender in the case of each other Lender, andfrom 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 provideeach of the Agent and the Borrower with two original Internal Revenue ServiceForms W-8BEN or W-8ECI, as appropriate, or any successor or other formprescribed by the Internal Revenue Service, certifying that such Lender isexempt from or entitled to a reduced rate of United States withholding tax onpayments pursuant to this Agreement or the Notes and, in the case of any Lenderclaiming the benefits of the exemption for portfolio interest under section881(c) of the Internal Revenue Code, a certificate to the effect that suchLender is not (A) a “bank” described in section 881(c)(3)(A) of the InternalRevenue Code, (B) a “10 percent shareholder” of the Borrower described insection 881(c)(3)(B) of the Internal Revenue Code, or (C) a “controlled foreigncorporation” described in section 881(c)(3)(C) of the Internal Revenue Code. Eachsuch Lender shall promptly notify the Borrower at any time it determines thatit is no longer in a position to provide any previously delivered certificateto the Borrower (or any other form of certification adopted by the U.S. taxingauthorities for such purpose). If the form provided by a Lender at the timesuch Lender first becomes a party to this Agreement indicates a United Statesinterest withholding tax rate in excess of zero, withholding tax at such rateshall be considered excluded from Taxes unless and until such Lender providesthe appropriate forms certifying that a lesser rate applies, whereuponwithholding tax at such lesser rate only shall be considered excluded fromTaxes for periods governed by such form; provided, however, that,if at the date of the Assignment and Acceptance pursuant to which a Lenderassignee becomes a party to this Agreement, the Lender assignor was entitled topayments under subsection (a) in respect of United States withholding taxwith respect to interest paid at such date, then, to such extent, the termTaxes shall include (in addition to withholding taxes that may be imposed inthe future or other amounts otherwise includable in Taxes) United Stateswithholding tax, if any, applicable with respect to the Lender assignee on suchdate. If any form or document referred to in this subsection (e) requiresthe disclosure of information, other than information necessary to compute thetax payable and information required on the date hereof by Internal RevenueService Form W-8BEN or W-8ECI, that the Lender reasonably considers to beconfidential, the Lender shall give notice thereof to the Borrower and shallnot be obligated to include in such form or document such confidentialinformation. If requested by the Borrower in order to obtain an exemption fromor reduction from non-U.S. withholding taxes, a Lender shall deliver to theBorrower (with a copy to the Agent) at the time or times prescribed byapplicable law, such properly completed and executed documentation prescribedby applicable law as will permit such payments to be made without withholdingor at a reduced rate, provided that such Lender is legally entitled tocomplete, execute and deliver such documentation and in such Lender’s judgmentsuch completion, execution or submission would not materially prejudice thelegal position of such Lender.

 

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(f)            For anyperiod with respect to which a Lender has failed to provide the Borrower withthe appropriate form, certificate or other document described inSection 2.13(e) (otherthan if such failure is due to achange in law, or in the interpretation or application thereof, occurringsubsequent to the date on which a form, certificate or other documentoriginally was required to be provided, or if such form, certificate or otherdocument otherwise is not required under subsection (e) above), suchLender shall not be entitled to the additional payment or indemnification underSection 2.13(a) or (c) with respect to Taxes imposed by the United Statesby reason of such failure; provided, however, that should aLender become subject to Taxes because of its failure to deliver a form,certificate or other document required hereunder, the Borrower shall take suchsteps as the Lender shall reasonably request to assist the Lender to recoversuch Taxes.

 

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

 

SECTION 2.14.  Sharingof Payments, Etc.  If any Lendershall obtain any payment (whether voluntary, involuntary, through the exerciseof 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 itsratable share of payments on account of the Advances obtained by all theLenders, such Lender shall forthwith purchase from the other Lenders suchparticipations in the Advances owing to them as shall be necessary to causesuch 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 thereafterrecovered from such purchasing Lender, such purchase from each Lender shall berescinded and such Lender shall repay to the purchasing Lender the purchaseprice to the extent of such recovery together with an amount equal to suchLender’s ratable share (according to the proportion of (i) the amount ofsuch Lender’s required repayment to (ii) the total amount so recoveredfrom the purchasing Lender) of any interest or other amount paid or payable bythe purchasing Lender in respect of the total amount so recovered. The Borroweragrees that any Lender so purchasing a participation from another Lenderpursuant 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) withrespect to such participation as fully as if such Lender were the directcreditor of the Borrower in the amount of such participation.

 

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

 

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

 

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(c)           Entriesmade 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 primafacie evidence of the amount of principaland 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 oraccounts, 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 oraccounts shall not limit or otherwise affect the obligations of the Borrowerunder this Agreement.

 

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

 

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

 

ARTICLE III

 

CONDITIONS TO EFFECTIVENESS ANDLENDING

 

SECTION 3.01.  ConditionsPrecedent to Effectiveness of Section 2.01.  Section 2.01 of this Agreement shallbecome effective on and as of the first date (the “Effective Date”) onwhich the following conditions precedent have been satisfied:

 

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

 

(b)           Thereshall exist no action, suit, investigation, litigation or proceeding affectingthe General Partner, the Borrower or any of its Subsidiaries pending orthreatened before any court, governmental agency or arbitrator that(i) would be reasonably likely to have a Material Adverse Effect otherthan the matters described on Schedule 3.01(b) hereto (the “DisclosedLitigation”) or (ii) purports to affect the legality, validity orenforceability of this Agreement or any Note or the consummation of thetransactions contemplated hereby, and there shall have been no adverse changein 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)           Nothingshall have come to the attention of the Lenders during the course of their duediligence investigation to lead them to believe that the Information Memorandumwas or has become misleading, incorrect or incomplete in any material respect;without limiting the generality of the foregoing, the Lenders shall have beengiven such access to the management, records, books of account, contracts and propertiesof the Borrower and its Subsidiaries as they shall have reasonably requested.

 

(d)           Allgovernmental and third party consents and approvals necessary in connectionwith the transactions contemplated hereby and the Acquisition shall have been obtained (without the imposition ofany conditions that are not acceptable to the Lenders) and shall remain ineffect, and no law or regulation shall be applicable in the reasonable judgmentof the Lenders that restrains, prevents or imposes materially adverseconditions upon the transactions contemplated hereby.

 

(e)           TheBorrower shall have notified each Lender and the Agent in writing as to theproposed Effective Date.

 

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

 

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

 

(i)            Therepresentations and warranties contained in Section 4.01 are correct onand as of the Effective Date,

 

(ii)           Noevent has occurred and is continuing that constitutes a Default,

 

(iii)          Allgovernmental and third party consents and approvals necessary in connectionwith the transactions contemplated hereby have been obtained (without theimposition of any conditions that are not acceptable to the Lenders) and shallremain in effect, all applicable waiting periods in connection with theAcquisition shall have expired without any action being taken by any competentauthority, and no law or regulation shall be applicable in the reasonablejudgment of the Lenders, in each case that restrains, prevents or imposesmaterially adverse conditions upon the transactions contemplated hereby, and

 

(iv)          Allconditions precedent to the consummation of the Acquisition (other than thepayment of cash consideration from, among other sources, the proceeds of theinitial Borrowing hereunder) have been satisfied substantially in accordancewith the terms of the Partnership Interest Purchase and Sale Agreement dated asof December 31, 2005 between Northern Border Intermediate Limited Partnership,a Delaware limited partnership, and TC PipeLines Intermediate LimitedPartnership, a Delaware limited partnership, without any waiver or amendmentnot consented to by the Required Lenders of any material term, provision orcondition set forth therein, and in compliance with all applicable laws.

 

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

 

(i)            TheNotes to the order of the Lenders to the extent requested by any Lenderpursuant to Section 2.15.

 

(ii)           Certifiedcopies of the resolutions of or on behalf of the Borrower approving thisAgreement and the Notes, and/or authorizing the General Partner or officers, asapplicable, to act on behalf of the Borrower, and of all documents evidencingother necessary action (including, without limitation, all necessary GeneralPartner, board of directors or other similar action) and governmental and otherthird party approvals and consents, if any, with respect to this Agreement andthe Notes.

 

(iii)          Acertificate of the Secretary or an Assistant Secretary of the General Partnerof the Borrower certifying the names and true signatures of the officers ofsuch Person authorized to sign this Agreement and the Notes and the otherdocuments to be delivered hereunder.

 

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

 

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(v)           Afavorable opinion of Shearman & Sterling LLP, counsel for the Agent, inform and substance satisfactory to the Agent.

 

SECTION 3.02.  ConditionsPrecedent to Each Borrowing.  Theobligation of each Lender to make an Advance on the occasion of each Borrowingshall be subject to the conditions precedent that the Effective Date shall haveoccurred and on the date of such Borrowing (a) the following statementsshall be true (and each of the giving of the applicable Notice of Borrowing andthe acceptance by the Borrower of the proceeds of such Borrowing shallconstitute a representation and warranty by the Borrower that on the date ofsuch Borrowing such statements are true):

 

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

 

(ii)           noevent has occurred and is continuing, or would result from such Borrowing orfrom the application of the proceeds therefrom, that constitutes a Default;

 

and (b) the Agent shall have received such otherapprovals, opinions or documents as any Lender through the Agent may reasonablyrequest.

 

SECTION 3.03.  DeterminationsUnder Section 3.01.  For purposes ofdetermining compliance with the conditions specified in Section 3.01, eachLender shall be deemed to have consented to, approved or accepted or to besatisfied with each document or other matter required thereunder to beconsented to or approved by or acceptable or satisfactory to the Lenders unlessan officer of the Agent responsible for the transactions contemplated by thisAgreement shall have received notice from such Lender prior to the date thatthe Borrower, by notice to the Lenders, designates as the proposed EffectiveDate, specifying its objection thereto. The Agent shall promptly notify theLenders of the occurrence of the Effective Date.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 4.01.  Representationsand Warranties of the Borrower.  TheBorrower represents and warrants as follows:

 

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

 

(b)           Theexecution, delivery and performance by the Borrower of this Agreement and theNotes to be delivered by it, and the consummation of the transactionscontemplated hereby, are within the Borrower’s partnership or the GeneralPartner’s general corporate powers, have been duly authorized by all necessaryaction by or on behalf of the General Partner or the Borrower (including,without limitation, all necessary partner, managing member or other similaraction), and do not contravene (i) the Borrower’s or the General Partner’sorganizational documents or (ii) any material law or any materialcontractual restriction binding on or affecting the Borrower.

 

(c)           Nomaterial authorization or approval or other action by, and no notice to orfiling with, any governmental authority or regulatory body or any other thirdparty is required for the due execution, delivery and performance by theBorrower or any general partner or managing member of the Borrower of thisAgreement or the Notes to be delivered by it.

 

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(d)           ThisAgreement has been, and each of the Notes to be delivered by it when deliveredhereunder will have been, duly executed and delivered by the Borrower. ThisAgreement is, and each of the Notes when delivered hereunder will be, thelegal, valid and binding obligation of the Borrower enforceable against theBorrower in accordance with their respective terms, except as enforceabilitymay be limited by applicable bankruptcy, insolvency, reorganization, moratoriumor similar laws affecting the enforcement of creditors’ rights generally and bygeneral equitable principles (whether enforcement is sought by proceedings inequity or at law).

 

(e)           TheConsolidated balance sheet of the Borrower and its Subsidiaries as atDecember 31, 2005, and the related Consolidated statements ofcomprehensive income and cash flows of the Borrower and its Subsidiaries forthe fiscal year then ended, accompanied by an opinion of KPMG LLP, independentpublic accountants, copies of which have been furnished to each Lender, fairlypresent the Consolidated financial condition of the Borrower and itsSubsidiaries as at such date and the Consolidated results of the operations ofthe Borrower and its Subsidiaries for the period ended on such date, all inaccordance with generally accepted accounting principles in the United Statesof America consistently applied.

 

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

 

(g)           Thereis no pending or, to the knowledge of the Borrower, threatened action, suit,investigation, litigation or proceeding, including, without limitation, anyEnvironmental Action, against the General Partner, the Borrower or any of itsSubsidiaries (other than the Disclosed Litigation) before any court,governmental agency or arbitrator that (i) is reasonably likely to have aMaterial Adverse Effect or (ii) purports to affect the legality, validityor enforceability of this Agreement or any Note or the consummation of thetransactions contemplated hereby.

 

(h)           TheBorrower is not engaged in the business of extending credit for the purpose ofpurchasing or carrying margin stock (within the meaning of Regulation Uissued by the Board of Governors of the Federal Reserve System), and noproceeds of any Advance will be used to purchase or carry any margin stock orto extend credit to others for the purpose of purchasing or carrying any marginstock.

 

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

 

(j)            Neitherthe Information Memorandum nor any other information, exhibit or reportfurnished by or on behalf of the Borrower to the Agent or any Lender inconnection with the negotiation and syndication of this Agreement or pursuantto the terms of this Agreement (other than projections, if any, and pro formainformation) contained any untrue statement of a material fact or omitted tostate a material fact necessary to make the statements made therein notmaterially misleading. The projections, if any, and pro forma financialinformation contained in the materials referenced above are based upon goodfaith estimates and assumptions believed by management of the Borrower to bereasonable at the time made, it being recognized by the Lenders that suchfinancial information as it relates to future events is not to be viewed asfact and that actual results during the period or periods covered by suchfinancial information may differ from the projected results set forth thereinby a material amount.

 

(k)           TheBorrower 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 remainunpaid or any Lender shall have any Commitment hereunder, the Borrower will:

 

 

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(a)           Compliancewith Laws, Etc. Comply, and cause each of its Subsidiaries to comply withall applicable laws, rules, regulations and orders, such compliance to include,without limitation, compliance with ERISA, Environmental Laws and the PatriotAct except to the extent that failure to comply therewith would not reasonablybe expected, individually or in the aggregate, to result in a Material AdverseEffect.

 

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

 

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

 

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

 

(e)           VisitationRights. At any reasonable time and from time to time and upon reasonablenotice, permit the Agent or any of its agents or representatives, to (i) permitthe Agent or any representatives thereof to examine and make copies of andabstracts from the records and books of account of, and visit the propertiesof, 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 oftheir officers or directors and (ii) use commercially reasonable efforts toprovide for the Agent or any representatives thereof (in the presence ofrepresentatives of the Borrower) to meet with the independent certified publicaccountants of the Borrower and its Subsidiaries; provided, that anysuch visits or inspections shall be subject to such conditions as the Borrowerand each of its Subsidiaries shall deem necessary based on reasonableconsiderations of safety and security; and provided, further, that neither theBorrower nor any Subsidiary shall be required to disclose to the Agent or anyrepresentatives thereof any information which is subject to the attorney-clientprivilege or attorney work-product privilege properly asserted by theapplicable Person to prevent the loss of such privilege in connection with suchinformation or which is prevented from disclosure pursuant to a confidentialityagreement with third parties.

 

(f)            Keepingof Books. Keep, and cause each of its Subsidiaries to keep, proper books ofrecord and account, in which full and correct entries shall be made of allfinancial transactions and the assets and business of the Borrower and eachsuch Subsidiary in accordance with generally accepted accounting principles ineffect from time to time.

 

(g)           Maintenanceof Properties, Etc. Maintain and preserve, and cause each of itsSubsidiaries to maintain and preserve, all of its properties that are used oruseful in the conduct of its business in good

 

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

 

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

 

(i)            ReportingRequirements. Furnish to the Lenders:

 

(i)            assoon as available and in any event within 45 days after the end of each of thefirst three quarters of each fiscal year of the Borrower, the unauditedConsolidated balance sheet of the Borrower and its Subsidiaries as of the endof such quarter and unaudited Consolidated statements of income and cash flowsof the Borrower and its Subsidiaries for the period commencing at the end ofthe previous fiscal year and ending with the end of such quarter, dulycertified (subject to year-end audit adjustments) by the chief financialofficer (or person performing similar functions) of the General Partner ashaving been prepared in accordance with generally accepted accountingprinciples and certificates of the chief executive officer, chief financialofficer or controller of the Borrower (or the General Partner) as to compliancewith the terms of this Agreement and setting forth in reasonable detail the calculationsnecessary to demonstrate compliance with Section 5.03, providedthat in the event of any change in generally accepted accounting principlesused in the preparation of such financial statements, the Borrower shall alsoprovide, if necessary for the determination of compliance withSection 5.03, a statement of reconciliation conforming such financialstatements to GAAP;

 

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

 

(iii)          assoon as possible and in any event within five Business Days after theoccurrence of each Default continuing on the date of such statement, astatement of the chief financial officer (or person performing similarfunctions) of the Borrower (or the General Partner) setting forth details ofsuch Default and the action that the Borrower has taken and proposes to takewith respect thereto;

 

(iv)          promptlyafter the sending or filing thereof, copies of all reports that the Borrowersends to any of its securityholders, and copies of all reports and registrationstatements that the Borrower or any Subsidiary files with the SEC;

 

(v)           promptlyafter the commencement thereof, notice of all actions and proceedings beforeany court, governmental agency or arbitrator affecting the General Partner, theBorrower or any of its Subsidiaries of the type described inSection 4.01(g); and

 

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

 

Notwithstanding the foregoing, the Borrower shall be deemed to havedelivered the reports and registration statements required to be deliveredpursuant to the foregoing clause (iv) upon the filing of such financialstatements, reports and registration statements by the Borrower through the SEC’sEDGAR system.

 

SECTION 5.02.  NegativeCovenants.  So long as any Advanceshall remain unpaid or any Lender shall have any Commitment hereunder, theBorrower will not:

 

(a)           Liens, Etc. Create or suffer to exist, or permitany of its Subsidiaries to create or suffer to exist, any Lien on or withrespect to any of its properties, whether now owned or hereafter acquired, orassign, or permit any of its Subsidiaries to assign, any right to receiveincome, other than:

 

(i)            PermittedLiens,

 

(ii)           purchasemoney Liens upon or in any real property or equipment acquired or held by the Borroweror any Subsidiary in the ordinary course of business to secure the purchaseprice of such property or equipment or to secure Debt incurred solely for thepurpose of financing the acquisition of such property or equipment, or Liensexisting on such property or equipment at the time of its acquisition (otherthan any such Liens created in contemplation of such acquisition that were notincurred to finance the acquisition of such property) or extensions, renewalsor 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 ofany character other than the real property or equipment being acquired, and nosuch extension, renewal or replacement shall extend to or cover any propertiesnot theretofore subject to the Lien being extended, renewed or replaced, providedfurther that the aggregate principal amount of the indebtedness securedby the Liens referred to in this clause (ii) shall not exceed $10,000,000at any time outstanding,

 

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

 

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

 

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

 

(vi)          banker’sliens, rights of setoff and similar Liens with respect to cash and cashequivalents on deposit in one or more bank accounts in the ordinary course ofbusiness,

 

(vii)         Liensin favor of collecting banks pursuant to Section 4-208 and Liens in favor of abuyer of goods arising pursuant to Section 2-711 of the applicable UniformCommercial Code,

 

(viii)        Lienssolely on any cash earnest money deposits made by the Borrower or any of itsSubsidiaries in connection with any letter of intent or purchase agreement,

 

(ix)           otherLiens securing Debt or Hedge Agreements in an aggregate principal amount not toexceed $5,000,000 at any time outstanding, and

 

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(i)            the  replacement, extension or renewal of any Lienpermitted by clause (iii) or (iv) above upon or in the same propertytheretofore subject thereto or the replacement, extension or renewal (withoutincrease in the amount or change in any direct or contingent obligor) of theDebt secured thereby.

 

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

 

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

 

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

 

(a)           CoverageRatio. Maintain as of the last day of any fiscal quarter a ratio ofAdjusted Cash Flow to Interest Expense, in each case, by the Borrower and itsSubsidiaries for the period of four fiscal quarters then ended, of not lessthan 3.50 to 1.00.

 

(b)           LeverageRatio. Maintain at all times a Leverage Ratio of not greater than 4.50 to1.00.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

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

 

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

 

(b)           Anyrepresentation or warranty made by the Borrower herein or by the Borrower (orany of its officers (or persons performing similar functions)) in connectionwith this Agreement shall prove to have been incorrect in any material respectwhen made; or

 

(c)           (i) TheBorrower shall fail to perform or observe any term, covenant or agreementcontained 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 performedor observed if such failure shall remain unremedied for 30 days after writtennotice thereof shall have been given to the Borrower by the Agent or anyLender; or

 

(d)           (i)The Borrower or any of its Significant Subsidiaries shall fail to pay anyprincipal of or premium or interest on any Debt that is outstanding in aprincipal or notional amount of at least $15,000,000 in the aggregate (butexcluding Debt outstanding hereunder) of the Borrower or such SignificantSubsidiary (as the case may be), when the same becomes due and payable (whetherby

 

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scheduled maturity, required prepayment,acceleration, demand or otherwise), and such failure shall continue after theapplicable grace period, if any, specified in the agreement or instrumentrelating to such Debt; or any other event shall occur or condition shall existunder any agreement or instrument relating to any such Debt and shall continueafter the applicable grace period, if any, specified in such agreement orinstrument, if the effect of such event or condition is to accelerate, or topermit the acceleration of, the maturity of such Debt; or any such Debt shallbe declared to be due and payable, or required to be prepaid or redeemed (otherthan by a regularly scheduled required prepayment or redemption), purchased ordefeased, or an offer to prepay, redeem, purchase or defease such Debt shall berequired 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 (asdefined in such Hedge Agreement) resulting from any event of default under suchHedge Agreement as to which the Borrower or any of its Significant Subsidiariesis the Defaulting Party (as defined in such Hedge Agreement) and the HedgeTermination Value owed by the Borrower or any of its Significant Subsidiariesas a result thereof is greater than (individually or collectively) $15,000,000,or (B) there occurs under any Hedge Agreement an Early Termination Date (asdefined in such Hedge Agreement) resulting from any Termination Event (as sodefined) under such Hedge Agreement as to which the Borrower or any of itsSignificant Subsidiaries is an Affected Party (as so defined) and the SwapTermination Value owed by the Borrower or any of its Significant Subsidiariesas a result thereof is greater than (individually or collectively) $15,000,000and such amount is not paid when due under such Hedge Agreement; or

 

(e)           TheGeneral Partner, the Borrower or any of its Significant Subsidiaries shallgenerally not pay its debts as such debts become due, or shall admit in writingits inability to pay its debts generally, or shall make a general assignmentfor the benefit of creditors; or any proceeding shall be instituted by oragainst the General Partner, the Borrower or any of its SignificantSubsidiaries seeking to adjudicate it a bankrupt or insolvent, or seekingliquidation, 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 anorder for relief or the appointment of a receiver, trustee, custodian or othersimilar official for it or for any substantial part of its property and, in thecase of any such proceeding instituted against it (but not instituted by it),either such proceeding shall remain undismissed or unstayed for a period of 60days, or the entry of an order for relief against, or the appointment of areceiver, trustee, custodian or other similar official for, it or for anysubstantial part of its property shall occur; or the General Partner, theBorrower or any of its Significant Subsidiaries shall take any corporate actionto authorize any of the actions set forth above in this subsection (e); or

 

(f)            Judgmentsor orders for the payment of money in excess of $15,000,000 in the aggregateshall be rendered against the Borrower or any of its Significant Subsidiariesand either (i) enforcement proceedings shall have been commenced by anycreditor upon such judgment or order or (ii) there shall be any period of30 consecutive days during which a stay of enforcement of such judgment ororder, 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 ofDefault under this Section 6.01(f) if and for so long as (i) theamount of such judgment or order is covered (subject to customary deductibles)by a valid and binding policy of insurance between the defendant and theinsurer covering payment thereof and (ii) such insurer, which shall berated at least “A-” by A.M. Best Company, has been notified of, and has notdenied coverage of, the amount of such judgment or order; or

 

(g)           Anynon-monetary judgment or order shall be rendered against the Borrower or any ofits Significant Subsidiaries that is reasonably expected to have a MaterialAdverse Effect, and there shall be any period of 30 consecutive days duringwhich a stay of enforcement of such judgment or order, by reason of a pendingappeal or otherwise, shall not be in effect; or

 

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

 

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more of the combined voting power of allVoting Stock of the General Partner or (B) representing the combined votingpower of all Voting Stock of the General Partner more than that owned, directlyor indirectly, by TransCanada Corporation; or (ii) any Person or two ormore Persons acting in concert (other than TransCanada Corporation or any ofits Subsidiaries or any other Person reasonably acceptable to the RequiredLenders) shall have acquired by contract or otherwise, or shall have enteredinto a contract or arrangement that, upon consummation, will result in its ortheir acquisition of the power to exercise, directly or indirectly, acontrolling influence over the management or policies of the General Partner;or (iii) the General Partner shall for any reason cease to be the managinggeneral partner of the Borrower; or

 

(i)            TheBorrower or any of its ERISA Affiliates shall incur, or shall be reasonablylikely to incur liability in excess of $15,000,000 in the aggregate as a resultof one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial orcomplete withdrawal of the Borrower or any of its ERISA Affiliates from aMultiemployer Plan; or (iii) the reorganization or termination of aMultiemployer Plan;

 

then, and in any such event, the Agent (i) shallat the request, or may with the consent, of the Required Lenders, by notice tothe Borrower, declare the obligation of each Lender to make Advances to beterminated, whereupon the same shall forthwith terminate, and (ii) shallat the request, or may with the consent, of the Required Lenders, by notice tothe Borrower, declare the Advances, all interest thereon and all other amountspayable under this Agreement to be forthwith due and payable, whereupon theAdvances, all such interest and all such amounts shall become and be forthwithdue and payable, without presentment, demand, protest or further notice of anykind, 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 forrelief with respect to the Borrower under the Federal Bankruptcy Code,(A) the obligation of each Lender to make Advances shall automatically beterminated and (B) the Advances, all such interest and all such amountsshall automatically become and be due and payable, without presentment, demand,protest or any notice of any kind, all of which are hereby expressly waived bythe Borrower.

 

ARTICLE VII

 

THE AGENT

 

SECTION 7.01.  Authorizationand Action.  Each Lender herebyappoints and authorizes the Agent to take such action as agent on its behalfand to exercise such powers and discretion under this Agreement as aredelegated to the Agent by the terms hereof, together with such powers anddiscretion as are reasonably incidental thereto. As to any matters notexpressly provided for by this Agreement (including, without limitation,enforcement or collection of the Notes), the Agent shall not be required toexercise any discretion or take any action, but shall be required to act or torefrain from acting (and shall be fully protected in so acting or refrainingfrom acting) upon the instructions of the Required Lenders, and suchinstructions shall be binding upon all Lenders and all holders of Notes; provided,however, that the Agent shall not be required to take any action thatexposes the Agent to personal liability or that is contrary to this Agreementor applicable law. The Agent agrees to give to each Lender prompt notice ofeach notice given to it by the Borrower pursuant to the terms of thisAgreement.

 

SECTION 7.02.  Agent’sReliance, Etc.  Neither the Agent norany of its directors, officers, agents or employees shall be liable for anyaction taken or omitted to be taken by it or them under or in connection withthis Agreement, except for its or their own gross negligence or willfulmisconduct. Without limitation of the generality of the foregoing, theAgent:  (i) may treat the Lenderthat made any Advance as the holder of the Debt resulting therefrom until theAgent receives and accepts an Assignment and Acceptance entered into by suchLender, 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 notbe liable for any action taken or omitted to be taken in good faith by it inaccordance with  the advice of suchcounsel, accountants or experts; (iii) makes no warranty or representationto any Lender and shall not be responsible to any Lender for any statements,warranties or representations (whether written or oral) made in or inconnection with this Agreement; (iv) shall not have any duty to ascertainor to inquire as to the performance, observance or satisfaction of any of theterms, covenants or conditions of this Agreement on the part of the Borroweror  the existence at any time of anyDefault or to inspect the property (including the books and records) of theBorrower;

 

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

 

SECTION 7.03.  CNAIand Affiliates.  With respect to itsCommitment, the Advances made by it and the Note issued to it, CNAI shall havethe same rights and powers under this Agreement as any other Lender and mayexercise the same as though it were not the Agent; and the term “Lender” or “Lenders”shall, unless otherwise expressly indicated, include CNAI in its individualcapacity. CNAI and its Affiliates may accept deposits from, lend money to, actas trustee under indentures of, accept investment banking engagements from andgenerally engage in any kind of business with, the Borrower, any of itsSubsidiaries and any Person who may do business with or own securities of theBorrower or any such Subsidiary, all as if CNAI were not the Agent and withoutany duty to account therefor to the Lenders. The Agent shall have no duty todisclose any information obtained or received by it or any of its Affiliatesrelating to the Borrower or any of its Subsidiaries to the extent suchinformation was obtained or received in any capacity other than as Agent.

 

SECTION 7.04.  LenderCredit Decision.  Each Lenderacknowledges that it has, independently and without reliance upon the Agent orany other Lender and based on the financial statements referred to inSection 4.01 and such other documents and information as it has deemedappropriate, made its own credit analysis and decision to enter into thisAgreement. Each Lender also acknowledges that it will, independently andwithout reliance upon the Agent or any other Lender and based on such documentsand information as it shall deem appropriate at the time, continue to make itsown 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’spro 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 imposedon, incurred by, or asserted against the Agent in any way relating to orarising out of this Agreement or any action taken or omitted by the Agent underthis Agreement (collectively, the “Indemnified Costs”), providedthat no Lender shall be liable for any portion of the Indemnified Costsresulting from the Agent’s gross negligence or willful misconduct. Withoutlimitation of the foregoing, each Lender agrees to reimburse the Agent promptlyupon demand for its ratable share of any out-of-pocket expenses (includingcounsel 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 legaladvice in respect of rights or responsibilities under, this Agreement, to theextent that the Agent is not reimbursed for such expenses by the Borrower. Inthe case of any investigation, litigation or proceeding giving rise to anyIndemnified Costs, this Section 7.05 applies whether any suchinvestigation, litigation or proceeding is brought by the Agent, any Lender ora third party. For purposes of this Section 7.05(a), the Lenders’ respectivepro rata shares of any amount shall be determined, at any time, according tothe aggregate principal amount of the Advances outstanding at such time andowing to the respective Lenders.

 

SECTION 7.06.  SuccessorAgent.  The Agent may resign at anytime by giving written notice thereof to the Lenders and the Borrower and maybe removed at any time with or without cause by the Required Lenders. Upon anysuch resignation or removal, the Required Lenders shall have the right toappoint a successor Agent, which successor Agent (unless an Event of Defaultshall have occurred and be continuing) shall be subject to the approval of theBorrower (which approval will not be unreasonably withheld or delayed). If nosuccessor Agent shall have been so appointed by the Required Lenders, and if nosuccessor Agent shall have accepted such appointment, within 30 days after theretiring Agent’s giving of notice of resignation or the Required Lenders’removal of the retiring Agent, then the retiring Agent may, on behalf of theLenders, appoint a successor Agent, which shall be a commercial bank organizedunder the laws of the United States of America or of any State thereof andhaving a combined capital and surplus of at least $500,000,000, which successorAgent (unless an Event of Default shall have occurred and be continuing) shallbe subject to the approval of the Borrower (which approval will not beunreasonably withheld or delayed). Upon the acceptance of any appointment asAgent hereunder by a successor Agent, such successor Agent shall thereuponsucceed to and become vested with all the rights, powers, discretion,privileges and duties of the retiring Agent, and the retiring Agent shall bedischarged from its duties and 

 

 

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

 

SECTION 7.07.  OtherAgents.  Each Lender herebyacknowledges that neither the documentation agent nor any other Lenderdesignated as any “Agent” on the signature pages hereof has any liabilityhereunder other than in its capacity as a Lender.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.  Amendments, Etc.  No amendment or waiver of anyprovision of this Agreement or the Notes, nor consent to any departure by theBorrower therefrom, shall in any event be effective unless the same shall be inwriting and signed by the Required Lenders, and then such waiver or consentshall be effective only in the specific instance and for the specific purposefor which given; provided, however, that (a) no amendment, waiveror consent shall, unless in writing and signed by all the Lenders, do any ofthe following:  (i) waive any of theconditions specified in Section 3.01, (ii) change the percentage of theCommitments or of the aggregate unpaid principal amount of the Advances, or thenumber of Lenders, that shall be required for the Lenders or any of them to takeany action hereunder or (iii) amend this Section 8.01 and (b) noamendment, waiver or consent shall, unless in writing and signed by theRequired Lenders and each Lender that is directly affected by such amendment,waiver or consent, (i) reduce the principal of, or interest on, theAdvances or any fees or other amounts payable hereunder to such Lender or(ii) postpone any date fixed for any payment of principal of, or intereston, the Advances or any fees or other amounts payable hereunder to such Lender;and providedfurther that no amendment, waiver or consent shall,unless in writing and signed by the Agent in addition to the Lenders requiredabove to take such action, affect the rights or duties of the Agent under thisAgreement or any Note.

 

SECTION 8.02.  Notices, Etc.  (a) All notices and other communications provided for hereunder shall beeither (x) in writing (including telecopier or telegraphic communication) andmailed, telecopied, telegraphed or delivered or (y) as and to the extent setforth in Section 8.02(b) and in the proviso to this Section 8.02(a), if to theBorrower, at its address at 450 - 1 Street SW, Calgary, AB  T2P 5H1, Attention: Secretary, Fax No. 403920-2467; if  to any Initial Lender, atits Domestic Lending Office specified opposite its name on Schedule Ihereto; if to any other Lender, at its Domestic Lending Office specified in theAssignment and Acceptance pursuant to which it became a Lender; and if to theAgent, 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 suchother address as shall be designated by such party in a written notice to theother parties and, as to each other party, at such other address as shall bedesignated by such party in a written notice to the Borrower and the Agent, providedthat 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 asotherwise specified to the Borrower by the Agent. All such notices andcommunications shall, when mailed, telecopied or e-mailed, be effective whendeposited in the mails, telecopied or confirmed by e-mail, respectively, exceptthat notices and communications to the Agent pursuant to Article II, IIIor VII shall not be effective until received by the Agent. Delivery bytelecopier of an executed counterpart of any amendment or waiver of anyprovision of this Agreement or the Notes or of any Exhibit hereto to beexecuted and delivered hereunder shall be effective as delivery of a manuallyexecuted counterpart thereof.

 

**(b)**           So long as CNAI or any ofits Affiliates is the Agent, materials required to be delivered pursuant toSection 5.01(i)(i), (ii) and (iv) shall be delivered to the Agent in anelectronic medium in a format acceptable to the Agent and the Lenders by e-mailat oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may makesuch materials, as well as any other written information, documents,instruments and other material relating to the Borrower, any of itsSubsidiaries or any other materials or matters relating to this Agreement, theNotes or any of the transactions contemplated hereby (collectively, the “Communications”)available to the Lenders by posting such notices on Intralinks or asubstantially similar electronic system (the “Platform”). The Borroweracknowledges that (i) the distribution of material through an electronic mediumis not necessarily secure and that there are confidentiality and other risksassociated with such distribution, (ii) the Platform is provided “as is” and “asavailable” and (iii) neither the Agent nor any of its Affiliates warrants theaccuracy, adequacy or completeness of the Communications or the Platform andeach expressly disclaims liability for errors or omissions in the

 

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

** **

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

** **

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

 

SECTION 8.04.  Costsand Expenses.  (a)  The Borrower agrees to pay on demand allreasonable costs and expenses of the Agent in connection with the preparation,execution, delivery, administration, modification and amendment of thisAgreement, 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) thereasonable fees and expenses of counsel for the Agent with respect thereto andwith respect to advising the Agent as to its rights and responsibilities underthis Agreement. The Borrower further agrees to pay on demand all reasonablecosts and expenses of the Agent and the Lenders, if any (including, withoutlimitation, reasonable counsel fees and expenses), in connection with theenforcement (whether through negotiations, legal proceedings or otherwise) ofthis Agreement, the Notes and the other documents to be delivered hereunder,including, without limitation, reasonable fees and expenses of counsel for theAgent and each Lender in connection with the enforcement of rights under thisSection 8.04(a).

 

(b)**          **The Borrower agreesto indemnify and hold harmless the Agent and each Lender and each of theirAffiliates 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, reasonablefees and expenses of counsel) incurred by or asserted or awarded against anyIndemnified Party, in each case arising out of or in connection with or byreason 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 hereinor the actual or proposed use of the proceeds of the Advances or (ii) theactual or alleged presence of Hazardous Materials on any property of theBorrower or any of its Subsidiaries or any Environmental Action relating in anyway to the Borrower or any of its Subsidiaries, except to the extent suchclaim, damage, loss, liability or expense is found in a final, non-appealablejudgment by a court of competent jurisdiction to have resulted from such IndemnifiedParty’s gross negligence or willful misconduct. In the case of aninvestigation, litigation or other proceeding to which the indemnity in thisSection 8.04(b) applies, such indemnity shall be effective whether or not suchinvestigation, litigation or proceeding is brought by the Borrower, itsdirectors, equityholders or creditors or an Indemnified Party or any otherPerson, whether or not any Indemnified Party is otherwise a party thereto andwhether or not the transactions contemplated hereby are consummated. TheBorrower also agrees not to assert any claim for special, indirect,consequential or punitive damages against the Agent, any Lender, any of theirAffiliates, or any of their respective directors, officers, employees,attorneys and agents, on any theory of liability, arising out of or otherwiserelating to the Notes, this Agreement, any of the transactions contemplatedherein or the actual or proposed use of the proceeds of the Advances.

 

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

 

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

 

(d)**          **Without prejudiceto the survival of any other agreement of the Borrower hereunder, theagreements 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 allother amounts payable hereunder and under the Notes.

 

SECTION 8.05.  Rightof Set-off.  Upon (i) theoccurrence and during the continuance of any Event of Default and (ii) themaking of the request or the granting of the consent specified bySection 6.01 to authorize the Agent to declare the Notes due and payablepursuant to the provisions of Section 6.01, each Lender and each of itsAffiliates is hereby authorized at any time and from time to time, to thefullest 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 andother indebtedness at any time owing by such Lender or such Affiliate to or forthe credit or the account of the Borrower against any and all of theobligations of the Borrower now or hereafter existing under this Agreement andthe Note held by such Lender, whether or not such Lender shall have made anydemand under this Agreement or such Note and although such obligations may beunmatured. Each Lender agrees promptly to notify the Borrower after any suchset-off and application, provided that the failure to give such noticeshall not affect the validity of such set-off and application. The rights ofeach Lender and its Affiliates under this Section are in addition to otherrights and remedies (including, without limitation, other rights of set-off)that such Lender and its Affiliates may have.

 

SECTION 8.06.  BindingEffect.  This Agreement shall becomeeffective (other than Section 2.01, which shall only become effective uponsatisfaction of the conditions precedent set forth in Section 3.01) whenit shall have been executed by the Borrower and the Agent and when the Agentshall have been notified by each Initial Lender that such Initial Lender hasexecuted it and thereafter shall be binding upon and inure to the benefit ofthe Borrower, the Agent and each Lender and their respective successors andassigns, except that the Borrower shall not have the right to assign its rightshereunder or any interest herein without the prior written consent of theLenders.

 

SECTION 8.07.  Assignmentsand 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) uponat least five Business Days’ notice to such Lender and the Agent, will assignto one or more Persons all or a portion of its rights and obligations underthis Agreement (including, without limitation, all or a portion of itsCommitment, 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, andnot a varying, percentage of all rights and obligations under this Agreement,(ii) except in the case of an assignment to a Person that, immediatelyprior to such assignment, was a Lender or an assignment of all of a Lender’srights and obligations under this Agreement, the amount of the Commitment ofthe assigning Lender being assigned pursuant to each such assignment(determined as of the date of the Assignment and Acceptance with respect tosuch assignment) shall in no event be less than $5,000,000 unless the Borrowerand the Agent otherwise agree, (iii) each such assignment shall be to anEligible Assignee, (iv) each such assignment made as a result of a demand bythe Borrower pursuant to this Section 8.07(a) shall be arranged by theBorrower after consultation with the Agent and shall be either an assignment ofall of the rights and obligations of the assigning Lender under this Agreementor an assignment of a portion of such rights and obligations made concurrentlywith another such assignment or other such assignments that together cover allof the rights and obligations of the assigning Lender under this Agreement,(v) no Lender shall be obligated to make any such assignment as a resultof a demand by the Borrower pursuant to this Section 8.07(a) unless anduntil such Lender shall have received one or more payments from either theBorrower or one or more Eligible Assignees in an aggregate amount at leastequal to the aggregate outstanding principal amount of the Advances owing tosuch Lender, together with accrued interest thereon to the date of payment ofsuch principal amount and all other amounts payable to such Lender under thisAgreement, and (vi) the parties to each such assignment shall execute anddeliver to the Agent, for its acceptance and recording in the Register, anAssignment and Acceptance, together with any Note subject to such assignmentand a processing and recordation fee of $3,500 payable by the parties to eachsuch assignment, provided, however, that in the case of each

 

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assignment made as aresult of a demand by the Borrower, such recordation fee shall be payable bythe Borrower except that no such recordation fee shall be payable in the caseof an assignment made at the request of the Borrower to an Eligible Assigneethat is an existing Lender. Upon such execution, delivery, acceptance andrecording, from and after the effective date specified in each Assignment andAcceptance, (x) the assignee thereunder shall be a party hereto and, tothe extent that rights and obligations hereunder have been assigned to itpursuant to such Assignment and Acceptance, have the rights and obligations ofa Lender hereunder and (y) the Lender assignor thereunder shall, to theextent that rights and obligations hereunder have been assigned by it pursuantto such Assignment and Acceptance, relinquish its rights (other than its rightsunder Sections 2.10, 2.13 and 8.04 to the extent any claim thereunder relatesto an event arising prior to such assignment) and be released from itsobligations under this Agreement (and, in the case of an Assignment andAcceptance covering all or the remaining portion of an assigning Lender’srights and obligations under this Agreement, such Lender shall cease to be aparty hereto).

 

(b)**          **By executing anddelivering an Assignment and Acceptance, the Lender assignor thereunder and theassignee thereunder confirm to and agree with each other and the other partieshereto as follows:  (i) other thanas provided in such Assignment and Acceptance, such assigning Lender makes norepresentation or warranty and assumes no responsibility with respect to anystatements, warranties or representations made in or in connection with thisAgreement or the execution, legality, validity, enforceability, genuineness,sufficiency or value of this Agreement or any other instrument or documentfurnished pursuant hereto; (ii) such assigning Lender makes norepresentation or warranty and assumes no responsibility with respect to thefinancial condition of the General Partner or the Borrower or the performanceor observance by the Borrower of any of its obligations under this Agreement orany other instrument or document furnished pursuant hereto; (iii) suchassignee confirms that it has received a copy of this Agreement, together withcopies of the financial statements referred to in Section 4.01 and suchother documents and information as it has deemed appropriate to make its owncredit analysis and decision to enter into such Assignment and Acceptance;(iv) such assignee will, independently and without reliance upon theAgent, such assigning Lender or any other Lender and based on such documentsand information as it shall deem appropriate at the time, continue to make itsown credit decisions in taking or not taking action under this Agreement;(v) such assignee confirms that it is an Eligible Assignee; (vi) suchassignee appoints and authorizes the Agent to take such action as agent on itsbehalf and to exercise such powers and discretion under this Agreement as aredelegated to the Agent by the terms hereof, together with such powers anddiscretion as are reasonably incidental thereto; and (vii) such assigneeagrees that it will perform in accordance with their terms all of theobligations that by the terms of this Agreement are required to be performed byit as a Lender.

 

(c)**          **Upon its receipt ofan Assignment and Acceptance executed by an assigning Lender and an assigneerepresenting that it is an Eligible Assignee, together with any Note or Notessubject to such assignment, the Agent shall, if such Assignment and Acceptancehas been completed and is in substantially the form of Exhibit C hereto,(i) accept such Assignment and Acceptance, (ii) record theinformation contained therein in the Register and (iii) give prompt noticethereof to the Borrower.

 

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

 

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

 

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therefrom, except to theextent that such amendment, waiver or consent would reduce the principal of, orinterest on, the Notes or any fees or other amounts payable hereunder, in eachcase to the extent subject to such participation, or postpone any date fixedfor any payment of principal of, or interest on, the Notes or any fees or otheramounts payable hereunder, in each case to the extent subject to suchparticipation. Notwithstanding anything to the contrary herein, a participant shallnot be entitled to receive any greater payment under Section 2.10 or 2.13 thanthe applicable Lender would have been entitled to receive with respect to theparticipation sold to such participant. Any participant that is Lenderorganized under the laws of a jurisdiction outside the United States shall notbe entitled to the benefits of Section 2.13 unless such participant complieswith Section 2.13(e).

 

(f)**           **Any Lender may, inconnection with any assignment or participation or proposed assignment or participationpursuant to this Section 8.07, disclose to the assignee or participant orproposed assignee or participant, any information relating to the Borrowerfurnished to such Lender by or on behalf of the Borrower; provided that,prior to any such disclosure, the assignee or participant or proposed assigneeor participant shall agree to preserve the confidentiality of any BorrowerInformation relating to the Borrower received by it from such Lender to thestandards set forth in Section 8.08.

 

(g)**          **Notwithstanding anyother provision set forth in this Agreement, any Lender may at any time createa 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 Notesheld by it) in favor of any Federal Reserve Bank in accordance with RegulationA of the Board of Governors of the Federal Reserve System.

 

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

 

SECTION 8.09.  GoverningLaw.  This Agreement and the Notesshall be governed by, and construed in accordance with, the laws of the Stateof New York.

 

SECTION 8.10.  Executionin Counterparts.  This Agreement maybe executed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed shall be deemed to be anoriginal and all of which taken together shall constitute one and the sameagreement. Delivery of an executed counterpart of a signature page to thisAgreement by telecopier shall be effective as delivery of a manually executedcounterpart of this Agreement.

 

SECTION 8.11.  Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocablyand unconditionally submits, for itself and its property, to the nonexclusivejurisdiction of any New York State court or federal court of the UnitedStates of America sitting in New York City, and any appellate court fromany thereof, in any action or proceeding arising out of or relating to thisAgreement or the Notes, or for recognition or enforcement of any judgment, andeach of the parties hereto hereby irrevocably and unconditionally agrees thatall claims in respect of any such action or proceeding may be heard anddetermined in any such New York State court or, to the extent permitted bylaw, in such federal court. The Borrower hereby agrees that service of processin any such

 

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action or proceeding broughtin the any such New York State court or in such federal court may be made uponCT Corporation System at its offices at 1633 Broadway, New York, New York 10019(the “Process Agent”) and the Borrower hereby irrevocably appoints theProcess Agent its authorized agent to accept such service of process, andagrees that the failure of the Process Agent to give any notice of any suchservice shall not impair or affect the validity of such service or of anyjudgment rendered in any action or proceeding based thereon. The Borrowerhereby further irrevocably consents to the service of process in any action orproceeding in such courts by the mailing thereof by any parties hereto byregistered or certified mail, postage prepaid, to the Borrower at its addressspecified pursuant to Section 8.02. Each of the parties hereto agrees that afinal judgment in any such action or proceeding shall be conclusive and may beenforced in other jurisdictions by suit on the judgment or in any other mannerprovided by law. Nothing in this Agreement shall affect any right that anyparty may otherwise have to bring any action or proceeding relating to thisAgreement or the Notes in the courts of any jurisdiction.

 

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

 

SECTION 8.12.  PatriotAct Notice.  Each Lender and theAgent (for itself and not on behalf of any Lender) hereby notifies the Borrowerthat pursuant to the requirements of the Patriot Act, it is required to obtain,verify and record information that identifies the Borrower, which informationincludes the name and address of the Borrower and other information that willallow such Lender or the Agent, as applicable, to identify the Borrower inaccordance with the Patriot Act. The Borrower shall provide, to the extentcommercially reasonable, such information and take such actions as arereasonably requested by the Agent or any Lenders in order to assist the Agentand the Lenders in maintaining compliance with the Patriot Act.

 

SECTION 8.13.  Judgment.(a)  If for the purposes of obtainingjudgment 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 extentthat they may effectively do so, that the rate of exchange used shall be thatat which in accordance with normal banking procedures the Agent could purchaseU.S. dollars with such other currency at Citibank’s principal office in Londonat 11:00 A.M. (London time) on the Business Day preceding that on which finaljudgment is given.

 

(b)**          **The obligation ofthe Borrower in respect of any sum due from it in any currency (the “PrimaryCurrency”) to any Lender or the Agent hereunder shall, notwithstanding anyjudgment in any other currency, be discharged only to the extent that on theBusiness Day following receipt by such Lender or the Agent (as the case maybe), of any sum adjudged to be so due in such other currency, such Lender orthe Agent (as the case may be) may in accordance with normal banking procedurespurchase the applicable Primary Currency with such other currency; if theamount of the applicable Primary Currency so purchased is less than such sumdue to such Lender or the Agent (as the case may be) in the applicable PrimaryCurrency, the Borrower agrees, as a separate obligation and notwithstanding anysuch 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 sopurchased 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 maybe) agrees to remit to the Borrower such excess.

 

SECTION 8.14.  Non-Recourseto the General Partner and Associated Persons.  The Agent and each Lender agrees on behalf ofitself and its successors, assigns and legal representatives, that neither theGeneral 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 orassigns, shall have any personal liability for the payment or performance ofany of the Borrower’s obligations hereunder or under any of the Notes and nomonetary or other judgment shall be sought or enforced against the GeneralPartner or any of such Associated Persons or any of their respective successorsor assigns. Notwithstanding the foregoing, neither the Agent nor any Lendershall be deemed barred by this Section 8.14 from asserting any claim againstany Person based upon an allegation of fraud or misrepresentation.

 

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

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed by their respective officers thereunto dulyauthorized, 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:                                        |
|                          |                                               |  |  |  |  |  |

 

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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 |                        |       |                          |       |   |

 

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**Schedule 3.01(b)**

 

**Disclosed Litigation**

 

On February 15, 2006, Northern Border Partners, L.P. (“Northern Border”)andONEOK, Inc. issued a joint press release announcing certain transactionsrelating to (1) the sale of certain assets by ONEOK to Northern Border, (2) theincrease 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 BorderPipeline Company to TC PipeLines Intermediate Limited Partnership (collectively,the “Transactions”).

 

On March 2, 2006, a holder of limited partnership units of NorthernBorder 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 ofa putative class of all holders of limited partnership units against NorthernBorder, ONEOK, Northern Plains Natural Gas Company, LLC, and related entitiesinvolved in the Transactions. The plaintiff claims the Transactions willconstitute a breach of Northern Border’s partnership agreement and a breach ofdefendants’ fiduciary duties. The plaintiff seeks to enjoin the Transactions orto rescind the Transactions if the Transactions are completed prior to entry ofa final judgment in the case. The plaintiff also seeks to recover on behalf ofthe class damages for the profits and any special benefits obtained by thedefendants, as well as interest, costs, and attorney and expert fees.

 

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**Schedule 5.02(a)**

 

**Existing Liens**

 

None

 

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EXHIBIT A - FORM OF

PROMISSORY NOTE

 
| $                         | Dated:                           ,  200    |
|---------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**FOR VALUE RECEIVED, the undersigned, TC PIPELINES, LP, a Delawarelimited partnership (the “Borrower”) by its General Partner TC PipeLinesGP, Inc., a Delaware corporation, HEREBY PROMISES TO PAY to                                            or its registered assigns (the “Lender”) for the account of itsApplicable Lending Office (as defined in the Credit Agreement referred tobelow) the aggregate principal amount of the Advances (as defined below) owingto the Lender by the Borrower pursuant to the Credit Agreement dated as ofMarch 31, 2006 among the Borrower, the Lender and certain other lenders partiesthereto, and Citicorp North America, Inc., as Agent for the Lender and suchother lenders (as amended or modified from time to time, the “CreditAgreement”); the terms defined therein being used herein as thereindefined) on the date specified in the Credit Agreement.**

 

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

 

**Both principal and interest are payable in lawful money of the UnitedStates of America to CNAI, as Agent, at 388 Greenwich Street, New York, NewYork 10013, in same day funds. Each Advance owing to the Lender by the Borrowerand the maturity thereof, and all payments made on account of principalthereof, 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 isentitled to the benefits of, the Credit Agreement. The Credit Agreement, amongother 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 amountfirst above mentioned, the indebtedness of the Borrower resulting from suchAdvances being evidenced by this Promissory Note, and (ii) containsprovisions for acceleration of the maturity hereof upon the happening ofcertain stated events and also for prepayments on account of principal hereofprior to the maturity hereof upon the terms and conditions therein specified. Anytransfer of all or a portion of this Promissory Note shall be made only inaccordance with the terms and conditions of Section 8.07 of the CreditAgreement and the Assignment and Acceptance attached to the Credit Agreement.**

 
|   | TC PIPELINES, LP                              |
|--------|-----------------------------------------------|
|   | By its General Partner TC PipeLines GP,  Inc. |
|   |                                          |
|   |                                          |
|   | By                                            |   |   |
|   |                                          | Title: |

 

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ADVANCES AND PAYMENTS OFPRINCIPAL

 
| **Date**   | ** ** | **Amount of  Advance** | ** ** | **Amount of  Principal Paid  or Prepaid** | ** ** | **Unpaid Principal  Balance** | ** ** | **Notation  Made By** | ** ** |
|------------|------------|------------------------|------------|-------------------------------------------|------------|-------------------------------|------------|-----------------------|------------|
| ** ** | ** ** | ** **             | ** ** | ** **                                | ** ** | ** **                    | ** ** | ** **            | ** ** |
| ** ** | ** ** | ** **             | ** ** | ** **                                | ** ** | ** **                    | ** ** | ** **            | ** ** |
| ** ** | ** ** | ** **             | ** ** | ** **                                | ** ** | ** **                    | ** ** | ** **            | ** ** |

 

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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 itsGeneral Partner TC PipeLines GP, Inc., refers to the Credit Agreement, dated asof March 31, 2006 (as amended or modified from time to time, the “CreditAgreement”, the terms defined therein being used herein as thereindefined), among the undersigned, certain Lenders parties thereto and  Citicorp North America, Inc., as Agent forsaid Lenders, and hereby gives you notice, irrevocably, pursuant toSection 2.02 of the Credit Agreement that the undersigned hereby requestsa Borrowing under the Credit Agreement, and in that connection sets forth belowthe information relating to such Borrowing (the “Proposed Borrowing”) asrequired by Section 2.02(a) of the Credit Agreement:

 

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

 

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

 

(iii)          Theaggregate amount of the Proposed Borrowing is $                              .

 

[(iv)         Theinitial Interest Period for each Eurodollar Rate Advance made as part of theProposed Borrowing is                  month[s].]

 

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

 

(A)          therepresentations and warranties contained in Section 4.01 of the CreditAgreement are correct, before and after giving effect to the Proposed Borrowingand to the application of the proceeds therefrom, as though made on and as ofsuch date; and

 

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(B)           noevent has occurred and is continuing, or would result from such ProposedBorrowing or from the application of the proceeds therefrom, that constitutes aDefault.

 
|   | Very truly yours,                             |
|--------|-----------------------------------------------|
|   |                                          |
|   | TC PIPELINES, LP                              |
|   | By its General Partner TC PipeLines GP,  Inc. |
|   |                                          |
|   |                                          |
|   | By                                            |   |   |
|   |                                          | Title:. |
|        |                                               |  |  |  |

 

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EXHIBIT C - FORM OF

ASSIGNMENT AND ACCEPTANCE

 

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

 

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

 

1.             TheAssignor hereby sells and assigns to the Assignee, and the Assignee hereby purchasesand assumes from the Assignor, an interest in and to the Assignor’s rights andobligations under the Credit Agreement as of the date hereof equal to thepercentage interest specified on Schedule 1 hereto of all outstanding rightsand obligations under the Credit Agreement. After giving effect to such saleand assignment, the Assignee’s Commitments and the amount of the Advances owingto the Assignee will be as set forth on Schedule 1 hereto.

 

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

 

3.             TheAssignee (i) confirms that it has received a copy of the Credit Agreement,together with copies of the financial statements referred to inSection 4.01 thereof and such other documents and information as it hasdeemed appropriate to make its own credit analysis and decision to enter intothis Assignment and Acceptance; (ii) agrees that it will, independentlyand without reliance upon the Agent, the Assignor or any other Lender and basedon 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 underthe Credit Agreement; (iii) confirms that it is an Eligible Assignee;(iv) appoints and authorizes the Agent to take such action as agent on itsbehalf and to exercise such powers and discretion under the Credit Agreement asare delegated to the Agent by the terms thereof, together with such powers anddiscretion as are reasonably incidental thereto; (v) agrees that it willperform in accordance with their terms all of the obligations that by the termsof the Credit Agreement are required to be performed by it as a Lender; and(vi) attaches any U.S. Internal Revenue Service forms required underSection 2.13 of the Credit Agreement.

 

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

 

5.             Uponsuch acceptance and recording by the Agent in the Register and, if applicableissuance of a new Note to the Assignee pursuant to Section 2 hereof, as of theEffective Date, (i) the Assignee shall be a party to the Credit Agreementand, to the extent provided in this Assignment and Acceptance, have the rights

 

----

 

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

 

6.             Uponsuch 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 inrespect of the interest assigned hereby (including, without limitation, allpayments of principal, interest and fees with respect thereto) to the Assignee.The Assignor and Assignee shall make all appropriate adjustments in paymentsunder the Credit Agreement and the Notes for periods prior to the EffectiveDate directly between themselves.

 

7.             ThisAssignment and Acceptance shall be governed by, and construed in accordancewith, the laws of the State of New York.

 

8.             ThisAssignment and Acceptance may be executed in any number of counterparts and bydifferent parties hereto in separate counterparts, each of which when soexecuted shall be deemed to be an original and all of which taken togethershall constitute one and the same agreement. Delivery of an executed counterpartof Schedule 1 to this Assignment and Acceptance by telecopier shall beeffective as delivery of a manually executed counterpart of this Assignment andAcceptance.

 

IN WITNESS WHEREOF, the Assignor and theAssignee have caused Schedule 1 to this Assignment and Acceptance to beexecuted by their officers thereunto duly authorized as of the date specifiedthereon.

 

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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]                                                                                                                                                                                                      |
|        |                                                                                                                                                                                                                |  |  |  |  |

 

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*              Thisdate should be no earlier than five Business Days after the delivery of thisAssignment and Acceptance to the Agent.

 

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| 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:                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                            |  |  |  |

 

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| ** | 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”. |

 

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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 toSection 3.01(h)(iv) of the Credit Agreement, dated as of April     , 2006 (the “Credit Agreement”), among TCPipelines, 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 usedherein as therein defined.

 

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

 

Documents Reviewed

 

In that connection, we have examined:

 

(1)           TheCredit Agreement.

 

(2)           Thedocuments furnished by the Borrower pursuant to Article III of the CreditAgreement.

 

(3)           TheCertificate of Limited Partnership and Amended and Restated Limited PartnershipAgreement of the Borrower and all amendments thereto (the “Charter”).

 

(4)           Acertificate of the Secretary of State of Delaware, dated April     , 2006, attesting to the continued partnershipexistence and good standing of the Borrower in that State (the “GoodStanding Certificate”).

 

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

 

----

 

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

 

Opinion

 

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

 

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

 

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

 

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

 

4.             TheCredit Agreement is, and after giving effect to the initial Borrowing, theNotes will be, valid and binding obligations of the Borrower enforceableagainst the Borrower in accordance with their respective terms.

 

Negative Assurance

 

In addition, we advise you supplementally asa matter of fact and not opinion that based solely upon certificationscontained in the Certificate, except to the extent set forth in theCertificate, to our knowledge, there are no pending or overtly threatenedactions or proceedings against the Borrower or any of its Subsidiaries beforeany court, governmental agency or arbitrator that purport to affect thelegality, validity, binding effect or enforceability of the Credit Agreement orany of the Notes or the consummation of the transactions contemplated therebyor that are likely to have a materially adverse effect upon the financialcondition or operations of the Borrower or any of its Subsidiaries.

 

Assumptions, Qualifications and Exceptions

 

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

 

----

 

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

 

Certain Limitations and Qualifications

 

Whenever a statement herein is qualified bythe phrases “known to us” or “to our knowledge,” it is intended to indicatethat, during the course of our representation on behalf of the Borrower in thistransaction, no information that would give us current actual knowledge of theinaccuracy of such statement has come to the attention of the attorneyspresently in the firm who have rendered legal service in connection with ourrepresentation of the Borrower in this transaction. However, we have notundertaken any independent investigation or review to determine the accuracy ofany such statement, and any limited inquiry undertaken by us during thepreparation of this opinion letter should not be regarded as such aninvestigation or review; no inference as to our knowledge of any mattersbearing on the accuracy of any such statement should be drawn from the fact ofour representation on behalf of the Borrower in this transaction.

 

Our opinions are limited to the laws of theState of New York, the Delaware Revised Uniform Partnership Act and the federallaws of the United States. We express no opinion as to whether the laws of anyparticular jurisdiction apply, and no opinion to the extent that the laws ofany jurisdiction other than those identified above are applicable to the CreditAgreement 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 opinionsherein with respect to the partnership law of Delaware are based solely on ourreview of the Delaware Revised Uniform Partnership Act as found in a standardcompilation 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)           limitationsimposed by bankruptcy, insolvency, reorganization, arrangement, fraudulentconveyance, moratorium, or other laws relating to or affecting the rights ofcreditors generally;

 

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

 

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

 

Use of Opinion

 

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

 

Very truly yours,

ORRICK, HERRINGTON & SUTCLIFFE LLP

 

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