**Exhibit 10.2**

 

**SECOND AMENDMENT**

 

This SecondAmendment (this “Second Amendment”) is entered into as of September 30, 2002 byand among TC PipeLines, LP, a Delaware limited partnership (the “Borrower”),the Lenders party to the Credit Agreement referred to below, and Bank One, NA,as agent for such Lenders.  The partieshereto agree as follows:

 

WHEREAS, theBorrower and Bank One, NA, individually and as Agent are parties to thatcertain Credit Agreement dated as of August 22, 2000 and amended pursuant to aFirst Amendment and Waiver dated as of April 15, 2002 (as so amended the“Agreement”), pursuant to which the Lenders party thereto agreed to makeextensions of credit available to the Borrower on the terms and conditions setforth therein; and

 

WHEREAS, theBorrower has requested an extension of the Termination Date and the Lender isprepared to agree to such an extension on the terms provided for in this SecondAmendment.

 

NOW,THEREFORE, in consideration of the undertakings set forth herein and other goodand valuable consideration, the receipt of which is hereby acknowledged, theBorrower, the Agent, and the Lenders hereby agree as follows:

 

**Section 1. Defined Terms.**  Capitalized terms used and not otherwise defined in this SecondAmendment shall have the meanings attributed to them in Article I of theAgreement.

 

**Section 2. Amendment of Agreement.**  Upon the satisfaction of the conditionsprecedent set forth in Section 4 of this Second Amendment but effective as ofthe date hereof, the Agreement shall be amended as follows:

 

(a)  Article I of the Agreement is hereby amendedby adding thereto between the existing definitions of “Cash EquivalentInvestments” and “Closing Date” the following new definition of “Cash Generatedfrom Operations”:

 

“Cash Generated from Operations” means for any period the cashgenerated from operations of the Borrower and its Subsidiaries calculated on aconsolidated basis for such period.

 

(b)  The definition of “Commitment” set forth inArticle I of the Agreement is hereby amended by deleting it in its entirety andsubstituting in lieu thereof the following new definition of “Commitment”:

 

“Commitment” means, for each Lender, the obligation of such Lender tomake Loans not exceeding the amount set forth opposite its signature to theSecond Amendment, as it may be modified as a result of any assignment that hasbecome effective pursuant to Section 12.3.2, or as otherwise modified from timeto time pursuant to the terms hereof.”

 

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(c)  The definition of “Pricing Schedule” setforth in Article I of the Agreement is hereby amended by deleting it in itsentirety and substituting in lieu thereof the following new definition of“Pricing Schedule”:

 

“Pricing Schedule” means the Schedule attached to the Second Amendmentidentified as such.”

 

(d)  Article I of the Agreement is hereby amendedby adding thereto between the existing definitions of “Schedule” and “Section”the following new definition of “Second Amendment”:

 

“Second Amendment” means that certain Second Amendment dated as of September30, 2002 among the Borrower, the Agent and the Lenders pursuant to which thisAgreement was amended as provided therein.”

 

(e)  The definition of “Termination Date” setforth in Article I of the Agreement is hereby amended by deleting it in itsentirety and substituting in lieu thereof the following new definition of“Termination Date”:

 

“Termination Date” means July 31, 2004 or any earlier date on which theAggregate Commitment is reduced to zero or otherwise terminated pursuant to theterms hereof.”

 

(f)  Section 6.15 of the Agreement is herebyamended by deleting it in its entirety and substituting in lieu thereof thefollowing new Section 6.15:

 

“6.15.  Total Debt.  The Borrower will not permit Total Debt asat the last day of any fiscal quarter to be more than the lesser of (i) 20% ofCapitalization as at the last day of such fiscal quarter, or (ii) 1.5 times theCash Generated from Operations for the period consisting of such fiscal quarterand the three immediately preceding fiscal quarters.”

 

(g)  The Pricing Schedule attached to theAgreement is hereby amended by deleting it in its entirety and substituting inlieu thereof the Pricing Schedule attached to this Second Amendment.

 

**Section 3. Representations and Warranties.**  In order to induce the Lenders to executeand deliver this Second Amendment, the Borrower hereby confirms, reaffirms andrestates as of the date hereof the representations and warranties set forth inArticle V of the Agreement provided that such representations and warranties shallbe and hereby are amended as follows: each reference therein to “thisAgreement” (including, without limitation, each such a reference included inthe term “Loan Documents” and all indirect references such as “hereby”,“herein”, “hereof” and “hereunder”) shall be deemed to be a collectivereference to the Agreement, this Second Amendment and the Agreement as amendedby this Second Amendment. A Default under and as defined in the Agreement asamended by this Second Amendment shall be deemed to have occurred if anyrepresentation or warranty made pursuant to the foregoing sentence of thisSection 3 shall be materially false as of the date on which made.

 

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**Section 4. Conditions Precedent.**This Second Amendment and the amendments provided for herein shall becomeeffective as of the date hereof on the date (the “Closing Date”) on which theAgent shall have received all of the following:

 

(a)Counterparts of this Second Amendment duly executed and delivered by the Agent,the Lender and the Borrower.

 

(b) A copy ,certified as of the Closing Date by the Secretary or an Assistant Secretary ofthe General Partner, of the Partnership Agreement, together with allamendments.

 

(c) A copy,certified as of the Closing Date by the Secretary or an Assistant Secretary ofthe General Partner, of resolutions of the General Partner’s Board of Directorsauthorizing the General Partner’s execution and delivery on behalf of theBorrower of this Second Amendment.

 

(d) An incumbencycertificate dated the Closing Date, executed by the Secretary of an AssistantSecretary of the General Partner, which shall identify by name and title andbear the signatures of the officers of the General Partner authorized to act onbehalf of the General Partner in its capacity as a general partner of theBorrower, upon which certificate the Agent and the Lenders shall be entitled torely until informed of any change in writing by the Borrower.

 

(e) A writtenopinion of counsel to the Borrower and the General Partner, dated the ClosingDate and addressed to the Lenders in substantially the form of Exhibit A tothis Second Amendment.

 

(f) TheBorrower shall have paid Bank One an extension fee equal to the greater of (i)$25,000, and (ii) 0.10% of the Aggregate Commitment in effect on the ClosingDate.

 

**Section 5. Effect on the Agreement.**  Except to the extent of the specificamendments provided for herein, all of the representations, warranties, terms,covenants and conditions of the Agreement and the other Loan Documents (i)shall remain unaltered, (ii) shall continue to be, and shall remain, in fullforce and effect in accordance with their respective terms, and (iii) arehereby ratified and confirmed in all respects. Upon the effectiveness of this Second Amendment, all references in theAgreement (including references in the Agreement as amended by this SecondAmendment) to “this Agreement” (including, without limitation, each such areference included in the term “Loan Documents” and all indirect referencessuch as “hereby”, “herein”, “hereof” and “hereunder”) shall be deemed to be acollective reference to the Agreement as amended by this Second Amendment.

 

**Section 6. Expenses.**  The Borrower shall reimburse the Agent for any and all reasonablecosts, internal charges and out-of-pocket expenses (including attorneys’ feesand time charges of attorneys for the Agent, which attorneys may be employeesof the Agent) paid or incurred by the Agent in connection with the preparation,review, execution and delivery of this Second Amendment.

 

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**Section 7. Entire Agreement.**This Second Amendment, the Agreement as amended by this Second Amendment andthe other Loan Documents embody the entire agreement and understanding betweenthe parties hereto and supersede any and all prior agreements andunderstandings between the parties hereto relating to the subject matterhereof.

 

**Section 8. Headings.**The headings, captions, and arrangements used in this Second Amendment are forconvenience only and shall not affect the interpretation of this SecondAmendment.

 

**SECTION 9. GOVERNING LAW.  THIS SECOND AMENDMENT SHALL BE CONSTRUED INACCORDANCE WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCSSECTION 105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWSPROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWSAPPLICABLE TO NATIONAL BANKS LOCATED IN ILLINOIS.**

 

**Section 10. Counterparts.**  This Second Amendment may be executed in anynumber of counterparts, all of which taken together shall constitute oneagreement, and any of the parties hereto may execute this Second Amendment bysigning any such counterpart.

 

IN WITNESSWHEREOF, the parties hereto have caused this Second Amendment to be dulyexecuted as of the date first above written.

 
|        | TC PIPELINES  LP                                  |
|-------------|---------------------------------------------------|
|        |                                              |   |
|        | By:                                               | TC Pipelines  GP. Inc., |
|        |                                              | its general  partner |
|        |                                              |   |
|        | By:                                               |   /s/ Russell K. Girling |   |
|        |                                              |
|        | Title:  Chief Financial Officer              |
|        |                                              |
|        | By:                                               |   /s/ Paul F. MacGregor |   |
|        |                                              |
|        | Title:  Vice-President, Business Development |
| Commitments |                                              |   |
|        |                                              |   |
| $20,000,000 | BANK ONE,  NA.                                    |
|        |  Individually and as Agent                   |
|        |                                              |   |
|        | By:                                               | /s/ Kenneth  J. Fatur |   |
|        |                                              |   |
|        | Title:                                            | Director,  Capital Markets |   |

 

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PRICING SCHEDULE

 

| **APPLICABLE  MARGIN** |   |
|------------------------|--------|
| **LEVEL I STATUS**     |   | 125.0 | % |
| **LEVEL II STATUS**    |   | 137.5 | % |

 

The Applicable Margin shall bedetermined in accordance with the foregoing table based on the Borrower’sStatus as reflected in the then most recent Financials.  Adjustments, if any, to the ApplicableMargin shall be effective five business days after the Agent has received theapplicable Financials.  If the Borrowerfails to deliver the Financials to the Agent at the time required pursuant tothe Credit Agreement, then the Applicable Margin shall be the highestApplicable Margin and Applicable Fee Rate set forth in the foregoing tableuntil five days after such Financials are so delivered.

 

| **APPLICABLE  FEE RATE**             |   |
|--------------------------------------|--------|
| **USAGE****£ 25%**              |   | 0.375 | % |
| **USAGE > 25% and****£ 75%** |   | 0.300 | % |
| **USAGE > 75%**                   |   | 0.250 | % |

 

The Applicable Fee Rate shallbe determined daily in accordance with the foregoing table based on the Usageon such day.

 

For the purposes of thisPricing Schedule, the following terms have the following meanings, subject tothe first paragraph of this Pricing Schedule:

 

“Financials”means the annual or quarterly financial statements of the Borrower and itsconsolidated Subsidiaries, if any, delivered pursuant to the Credit Agreement.

 

“Level IStatus” exists at any date if, as of the last day of the fiscal quarter of theBorrower referred to in the most recent Financials, Total Debt is less than 15%of Capitalization.

 

“Level IIStatus” exists at any date if, as of the last day of the fiscal quarter of theBorrower referred to in the most recent Financials, the Borrower has notqualified for Level I Status.

 

“Status” meansLevel I Status or Level II Status.

 

“Usage” means,as of any date, the percent of the Aggregate Commitment then in effectrepresented by the aggregate principal amount of all Advances then outstandingunder the Agreement.

 

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**EXHIBIT A**

**to Second Amendment**

 

FORM OF OPINION

 
|   | September       , 2002 |
|--------|-------------------------------------------------|

 

The Agent and the Lenders whoare parties to the Credit Agreement described below.

 

Ladies and Gentlemen:

 

On behalf ofTC PipeLines, LP, a Delaware limited partnership (the “Borrower”), and TCPipeLines GP, Inc., a Delaware corporation which is the general partner of theBorrower (the “General Partner”), I, Kristine L. Delkus, Vice-President, Powerand Regulatory Law, of TransCanada Pipelines Limited, licensed to practice lawin the State of New York, have agreed to provide an in-house legal opinionon certain matters pursuant to Section 4(e) of the Second Amendment dated as ofSeptember 30, 2002 (the “Second Amendment”) to that certain Credit Agreementdated as of August 22, 2000 and amended pursuant a First Amendment and Waiverdated as of April 15, 2002 (as so amended, the “Agreement”) among the Borrower,the Lenders named therein; and Bank One, NA, as Agent, which provides forAdvances in an aggregate principal amount not exceeding $20,000,000 at any onetime outstanding.  All capitalized termsused in this opinion and not otherwise defined herein shall have the meaningsattributed to them in the Agreement.

 

I am qualifiedto practice law only in the State of New York. For purposes of this opinion I have assumed that the laws of the Stateof Illinois are the same as the laws of the State of New York.  I made no investigation of the laws of anyjurisdiction other than, and the opinions herinafter expressed are confined to,the laws of the Sate of New York and the federal laws of the United States.

 

I haveexamined the Partnership Agreement, the certificate of incorporation andby-laws of the General Partner, resolutions of the Board of Directors of theGeneral Partner, the Agreement, the Second Amendment and such other matters offact and law which I have deemed necessary or relevant in order to render thisopinion.  In reviewing these documents,I have assumed, as to all parties other than the General Partner and theBorrower, the genuineness of all signatures, the legal capacity at all relevanttimes of any natural persons signing any documents, the authenticity of alldocuments submitted to me as originals, the conformity to authentic originalsof all documents submitted to me as certified or true copies or asreproductions (including documents received by facsimile machine) and theaccuracy of all certificates of public officials and corporate officers.  Based upon and subject to the foregoing, andto the qualifications hereinafter expressed, it is my opinion that:

 

1.  The Borrower is a limitedpartnership duly and properly organized, validly existing and in good standingunder the laws of the State of Delaware.

 

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2.  The Partnership Agreement isin full force and effect, and the Borrower has full power and authority underthe Partnership Agreement and the laws of the State of Delaware to own itsproperty, to conduct the business in which it is currently engaged, and toperform its obligations under the Second Amendment and the Agreement as amendedby the Second Amendment.

 

3.  The General Partner is acorporation duly and properly organized, validly existing and in good standingunder the laws of the State of Delaware.

 

4.  The General Partner has fullcorporate power and authority to be the general partner of the Borrower and toexecute and deliver the Second Amendment on behalf of the Borrower, and the executionand delivery by the General Partner on behalf of the Borrower of the SecondAmendment has been duly authorized by proper corporate proceedings on the partof the General Partner.

 

5.  The execution and deliveryby the General Partner on behalf of the Borrower of the Second Amendment andthe performance by the Borrower of its obligations under the Second Amendmentand the Agreement as amended by the Second Amendment have been duly authorizedin accordance with the Partnership Agreement and will not:

 

(a)  require any consent of theGeneral Partner’s shareholders;

 

(b)  require any consent of theBorrower’s limited partners;

 

(c)  violate (i) any law, rule,regulation, order, writ, judgment, injunction, decree or award binding on theBorrower or the General Partner, or (ii) the Partnership Agreement, or (iii)the certificate of incorporation or by-laws of the General Partner, or (iv) theprovisions of any indenture, instrument or agreement to which the Borrower orthe General Partner is a party or is subject, or by which the Borrower or theGeneral Partner, or any Property of the Borrower or the General Partner, isbound, or conflict with or constitute a default thereunder; or

 

(d)  result in, or require, thecreation or imposition of any Lien in, of or on the Property of the Borrowerpursuant to the terms of any indenture, instrument or agreement binding uponthe Borrower.

 

6.  The Second Amendment hasbeen duly executed and delivered by the General Partner on behalf of theBorrower and the Second Amendment and the Agreement as amended by the SecondAmendment constitute legal, valid and binding obligations of the Borrowerenforceable against the Borrower in accordance with their terms except to theextent the enforcement thereof may be limited by bankruptcy, insolvency orsimilar laws affecting the enforcement of creditors’ rights generally andsubject also to the availability of equitable remedies if equitable remediesare sought.

 

7.  There is no litigation,arbitration, governmental investigation, proceeding or inquiry pending or, tothe best of our knowledge after due inquiry, threatened against the

 

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Borrower orthe General Partner which, if adversely determined, could reasonably beexpected to have a Material Adverse Effect.

 

8.  No order, consent,adjudication, approval, license, authorization, or validation of, or filing,recording or registration with, or exemption by, or other action in respect ofany governmental or public body or authority, or any subdivision thereof, whichhas not been obtained by the Borrower or the General Partner, is required to beobtained by the Borrower or the General Partner in connection with theexecution and delivery of the Second Amendment, the borrowings under the Agreementas amended by the Second Amendment, the payment and performance by the Borrowerof the Obligations, or the legality, validity, binding effect or enforceabilityof the Second Amendment or the Agreement as amended by the Second Amendment.

 

This opinionmay be relied upon by the Agent, the Lenders and their participants, assigneesand other transferees, and only in connection with the transaction describedabove, and should not otherwise be referred to in any other document withoutprior written consent.

 
| Very truly yours, |
|-------------------|

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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