**Exhibit 10.4**

 

**TRANSACTIONFEE agreement**

 

**THISTRANSACTION FEE AGREEMENT**(this “**Agreement**”), datedas of April 6, 2006, is by and between TransCan Northwest Border Ltd. (“**TCNB**”), a corporation incorporated underthe laws of Delaware and TC PipeLines, LP (“**TCLP**”),a limited partnership formed under the laws of Delaware. TCNB and TCLP aresometimes referred to herein individually as a “**Party**” and, collectively, as the “**Parties**”.

 

**RECITALS**

 

**WHEREAS**:

 

A.                                   TCLP, through its intermediate limitedpartnership, TC Intermediate Limited Partnership (“**TCILP**”),has agreed to purchase from Northern Border Intermediate Limited Partnership (“**NBILP**”), and NBILP has agreed to sell to TCILP, a 20%general partnership interest in Northern Border Pipeline Company (the “**Partnership**”) upon the conditions set forth in the purchaseand sale agreement (the “**NBPC****Purchase and Sale Agreement**”) between TCILPand NBILP dated February 14, 2006;

 

B.                                     Concurrent with the above transaction, TCNB, anaffiliate of TCLP, has agreed to sell 100% of the stock in its subsidiary,Northwest Border Pipeline Company, to Northern Plains Natural Gas Company, LLC(“**Northern Plains**”), a general partner ofNBILP and the current operator of the Partnership, upon the conditions setforth in the purchase and sale agreement (the “**NWB Purchaseand Sale Agreement**”) between TCNB and Northern Plains dated February14, 2006;

 

C.                                     It is a condition to the completion of thetransactions contemplated by the NBPC Purchase and Sale Agreement that anoperating agreement be entered into by TCNB and the Partnership insubstantially the form appended as Exhibit B to the NBPC Purchase and SaleAgreement;

 

D.                                    In recognition of the benefits to TCLP of itsaffiliate, TCNB, assuming the duties and responsibilities of becoming theoperator of the Partnership, TCLP has agreed to pay TCNB a fee in connectionwith transaction costs incurred by TCNB for the assumption of operatorship (“**Transaction Fee**”) and as such the Parties desire to enter into this Agreement for the purpose of describing theterms and payment of such Transaction Fee.

 

**NOW THEREFORE**, in consideration of the mutual covenants andagreements in this Agreement and other good and valuable consideration, thesufficiency of which is hereby acknowledged, the Parties agree as follows.

 

**ARTICLE1TRANSACTION FEE**

** **

**1.1****                               Termsof Payment and Adjustment.**

 

(a)                                  Upon the Closing of the transactions under theNBPC Purchase and Sale Agreement (as such term is defined in such agreement),TCLP shall make a cash payment to TCNB of $10,000,000 (the “**Transaction Fee Estimated Payment**”).

 

(b)                                 During the period from February 14, 2006 until180 calender days from the date that TCNB or an affiliate commences itsresponsibilities as operator under the Operating Agreement (the “**Term**”), TCNB shall keep a written record of account of allcosts and expenses incurred by it in relation to the assumption of operatorshipthat would not have otherwise been incurred by TCNB had the operatorship of thePartnership not been transferred. As soon as practicable from the end of the

 

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(c)                                  Term, TCNB shall total the aggregate amount ofsuch costs and expenses (the “**Actual Transaction Fee**”)and promptly provide an itemized breakdown of such amount to TCLP.

 

(d)                                 If the Transaction Fee Estimated Paymentexceeds the aggregate amount of Actual Transaction Fee, then TCNB shallpromptly refund the difference to TCLP. To the extent that the ActualTransaction Fee exceeds the Transaction Fee Estimated Payment then no furtherpayment shall be made to or by either Party. For greater certainty, in no eventshall TCLP’s aggregate liability under this Agreement exceed $10,000,000regardless of the aggregate amount of the Actual Transaction Fee.

 

**1.2**                               **Audit Rights**

 

### **TCLP shall have the right, for ninety (90) calendardays after delivery by TCNB of the itemized breakdown of the Actual TransactionFee,  to audit (at its own expense) allitems considered by TCNB to be included in the Actual Transaction Fee and TCNBshall cooperate reasonably with the party performing such audit.**

 

**1.3****                               DisputeResolution**

 

### **At the end of the ninety (90) calendar day periodspecified in Section 1.2, in the event that there is a disagreement by TCLPregarding the determination of whether an item should be included in the ActualTransaction Fee, it shall provide written notice to TCNB setting forth thedescription of the item(s) forming the basis of the disagreement (a “Dispute”).The Parties will endeavor to reach a satisfactory solution by referring theDispute to senior management of each of the disputing Parties. The seniormanagement of the Disputing Parties will meet, and negotiate in good faith witha view to reaching a satisfactory solution of the Dispute as soon as possible,but not more than seven (7) calendar days’ following delivery of written noticeof any Dispute unless specifically agreed otherwise. Should senior managementof the disputing Parties be unable to resolve the Dispute within twenty-one(21) calender days following delivery of written notice of any Dispute, anyDisputing Party may avail itself of any other remedy or remedies available toit at law or in equity.**

 

**ARTICLE2**

 

**OTHERPROVISIONS**

 

**2.1****                               Counterparts.**

 

This Agreement may be executedand delivered (including by facsimile or otherwise) in one or morecounterparts, all of which, taken together, shall be considered one and thesame agreement, and shall become effective when one or more counterparts havebeen signed by each of the Parties and delivered to the other Party.

 

**2.2****                               GoverningLaw and Jurisdiction.**

 

This Agreement and the rightsand obligations of the parties hereunder and the transactions contemplatedhereby shall be governed by, enforced, and interpreted in accordance with thelaws of the state of Delaware, excluding (to the greatest extent permissible bylaw) any rule of law that would cause the application of the laws of anyjurisdiction other than the state of Delaware. The Parties submit to theexclusive jurisdiction of the state or federal court of Delaware.

 

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**2.3****                               EntireAgreement.**

 

This Agreement contains theentire agreement between the Parties with respect to the subject matter hereofand supersedes any prior agreements, understandings, representations orwarranties, both written and oral, between the Parties.

 

**2.4****                               Successorsand Assigns.**

 

Except for an assignment fromTCNB to an affiliate, the rights and obligations of the Parties shall not beassigned or delegated by either Party without the written consent of the otherParty. Subject to the preceding sentence, this Agreement shall be binding uponand inure to the benefit of the Parties and their successors and assigns.

 

**2.5****                               Amendmentsand Waivers.**

 

This Agreement may not bemodified or amended except by an instrument or instruments in writing signed byall Parties. A Party may, only by an instrument in writing, waive compliance bythe other Party with any term or provision of this Agreement on the part ofsuch other Party to be performed or complied with. The waiver by a Party of abreach of any term or provision of this Agreement shall not be construed as awaiver of any subsequent breach.

 

**2.6****                               Severability.**

 

If any term or other provisionof this Agreement is invalid, illegal, or incapable of being enforced by anyapplicable law or public policy, all other conditions and provisions of thisAgreement shall nevertheless remain in full force and effect so long as theeconomic or legal substance of the transactions contemplated hereby is notaffected in any manner materially adverse to a Party. Upon such determinationthat any term or other provision is invalid, illegal, or incapable of beingenforced, the Parties shall negotiate in good faith to modify this Agreement soas to give effect to the original intent of the Parties as closely as possiblein an acceptable manner to the end that the transactions contemplated herebyare fulfilled to the extent possible.

 

**IN WITNESSWHEREOF** this Agreementhas been signed by or on behalf of each of the Parties as of the day firstabove written.

 
| **TransCan  Northwest Border Ltd.** | **TC  PipeLines, LP, by its general partner, TC  PipeLines GP, Inc.** |
|-------------------------------------|-----------------------------------------------------------------------|
|                                |                                                                  |
| By:                                 | /s/ Paul E. Miller                                                    |   | By: | /s/ Max Feldman |   |
| Name:                               | Paul E. Miller                                                        | Name: | Max Feldman |
| Title:                              | President                                                             | Title: | Vice-President |
|                                |                                                                  |
| By:                                 | /s/ Rhondda E.S. Grant                                                |   | By: | /s/ Amy Leong |   |
| Name:                               | Rhondda E.S. Grant                                                    | Name: | Amy Leong |
| Title:                              | Secretary                                                             | Title: | Controller |
|                                     |                                                                       |  |  |  |  |  |  |

 

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