EXHIBIT 99.1
TRANSCANADA PIPELINE USA LTD.
May 28, 2001
TC PipeLines, LP
110 Turnpike Road, Suite 203
Westborough, Massachusetts 01581
Dear Sirs:
RE: RENEWAL OF U.S. $40,000,000 TWO YEAR REVOLVING
CREDIT FACILITY IN FAVOR OF TC PIPELINES, L.P.
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In consideration of the covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are conclusively acknowledged by each of the parties, TransCanada
PipeLine USA Ltd., a Nevada corporation (together with its successors and
permitted assigns, the "LENDER") hereby covenants and agrees with TC PipeLines,
LP, a Delaware limited partnership (together with its successors and permitted
assigns, the "BORROWER") to make available to the Borrower the credit facility
(the "CREDIT FACILITY") as more particularly described below and upon the terms
and conditions outlined in this letter agreement (as may be amended, modified,
supplemented or restated from time to time, the "AGREEMENT").
DEFINITIONS
Unless something in the subject matter or context is
inconsistent therewith, the following capitalized terms used in the Agreement
(including Schedule A to the Agreement) shall have meanings indicated below:
"BANKING DAY" means a day which is both a Business Day and a day on which
dealings in United States Dollars by and between the banks in the London,
England interbank market may be conducted.
"BUSINESS DAY" means a day on which banks are open for business in New York, New
York but does not in any event include a Saturday or a Sunday.
"COMPLIANCE CERTIFICATE" means a certificate of the Borrower signed on its
behalf by the General Partner, substantially in the form attached hereto as
Schedule A.
"CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT" means the Contribution,
Conveyance and Assumption Agreement dated May 28, 1999 between TransCanada
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Border PipeLine Ltd., TransCan Northern Ltd., TransCanada PipeLines Limited, the
Borrower, the General Partner and the Intermediate Partnership.
"DEBT" means, without duplication, with respect to any person, all obligations,
liabilities and indebtedness of such person with respect to:
i) indebtedness for borrowed money;
ii) obligations arising pursuant to commercial paper programs or letters of
credit or indemnities issued in connection therewith;
iii) obligations under guarantees, indemnities, assurances, legally binding
comfort letters or other contingent obligations relating to the
indebtedness for borrowed money of any other person and all other
obligations incurred for the purpose of or having the effect of
providing financial assistance to another person, including, without
limitation, endorsements of bills of exchange (other than for
collection or deposit in the ordinary course of business); and
iv) all other financing indebtedness, including monetary obligations of
such person created or arising under any capital lease or other lease
financing.
"DRAWDOWN" means, individually or collectively, as the context may require, an
advance of funds made by the Lender to the Borrower pursuant to this Agreement.
"DRAWDOWN DATE" means the date on which an advance of funds is made by the
Lender to a Borrower pursuant to the provisions hereof.
"DRAWDOWN NOTICE" means a written notice given by the Borrower to the Lender of
a Drawdown.
"EVENT OF DEFAULT" has the meaning ascribed thereto in Section 7.01;
"GENERAL PARTNER" means TC PipeLines GP, Inc., a Delaware corporation, and any
successor thereto.
"GOVERNMENTAL AUTHORITY" means any federal, state, provincial, regional,
municipal or local government or any department, agency, board, tribunal or
authority thereof or other political subdivision thereof and any entity or
person exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government or the operation thereof.
"INTEREST PAYMENT DATE" means, with respect to each Loan, the last Business Day
of each applicable Interest Period; provided that, any earlier date on which the
Credit Facility is fully cancelled or permanently reduced in full, shall be an
Interest Payment Date with respect to all Loans then outstanding.
"INTEREST PERIOD" means, with respect to each Loan, the initial period of one
month, two months, three months or six months (as selected by the Borrower and
notified to the Lender) commencing on the applicable Drawdown Date or Rollover
Date and ending on and including the last day of such period
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provided that the last day of each Interest Period whether with respect to the
same or another Loan and the last day of each Interest period shall be a Banking
Day and if the last day of an Interest Period selected by the Borrower is not a
Banking Day the next Banking Day.
"INTERMEDIATE PARTNERSHIP" means TC PipeLines Intermediate Limited Partnership,
a Delaware limited partnership, and any successor thereto.
"LIBOR" means the London Interbank Offered Rate of Interest and means, with
respect to any Interest Period applicable to a Loan, the per annum rate of
interest determined by the Lender, based on a three hundred sixty (360) day
year, rounded upwards, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16th%), as the average of the offered quotations
appearing on the display referred to as the "LIBO Page" (or any display
substituted therefor) of Reuter Monitor Money Rates Service (or if such LIBO
Page shall not be available, any successor or similar services as may be
selected by the Lender) for deposits in United States Dollars for a period equal
to the number of days in the applicable Interest Period, at or about 11:00 a.m.
(London, England time) on the second Banking Day prior to a Drawdown Date, for
the applicable Interest Period. Each determination of LIBOR may be computed
using any reasonable averaging and attribution method.
"LIMITED PARTNER" means any person who is or shall become a limited partner of
the Borrower.
"LIMITED PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of TC PipeLines, LP dated as of the 28th day of May, 1999
and made among the General Partner, TransCan Northern Ltd. as the organizational
Limited Partner and those parties referred to as Partners therein, as from time
to time amended, supplemented or restated.
"LOAN DOCUMENTS" means this Agreement and all certificates, agreements,
instruments and other documents delivered or to be delivered to the Lender in
relation to the Credit Facility pursuant hereto, and, when used in relation to
any person, the term "Loan Documents" shall mean and refer to the Loan Documents
executed and delivered by such person.
"LOAN" means an advance of funds in United States dollars made by the Lender to
the Borrower pursuant to this Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect (i) on the business,
operations, property and assets or financial condition of the Borrower, or (ii)
on the ability of the Borrower to repay or pay, as the case may be, any
Obligations.
"NORTHERN BORDER" means Northern Border Pipeline Company, a general partnership
organized under the laws of Texas.
"OBLIGATIONS" means, at any time and from time to time, all of the obligations,
indebtedness and liabilities (present or future, absolute or contingent, matured
or not) of the Borrower to the Lender under, pursuant to or relating to this
Agreement or the Credit Facility and whether the same are from time to time
reduced and thereafter increased or entirely extinguished
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and thereafter incurred again and including all interest, commissions, legal and
other costs, charges and expenses under this Agreement.
"OUTSTANDING PRINCIPAL" means, at any time, the aggregate of the principal
amount of all outstanding Loans.
"PARTNERS" means the General Partner and the Limited Partners.
"PERMITTED ENCUMBRANCES" means:
i) liens for taxes, assessments or governmental charges which are not due
and delinquent, or the validity of which the Borrower shall be
contesting in good faith, provided the Borrower shall have made
adequate provision (in accordance with generally accepted accounting
principles) therefor;
ii) the lien of any judgment rendered, or claim filed, against the Borrower
which the Borrower shall be contesting in good faith, provided the
Borrower shall have made adequate provision (in accordance with
generally accepted accounting principles) therefor;
iii) liens, privileges or other charges imposed or permitted by law such as
statutory liens and deemed trusts, carriers' liens, builders' liens,
materialmen's liens, operator's liens and other liens, privileges or
other charges of a similar nature which relate to obligations which are
not due and delinquent;
iv) undetermined or inchoate liens arising in the ordinary course of and
incidental to operations of the Borrower which relate to obligations
which are not due and delinquent, or the validity of which the Borrower
shall be contesting in good faith, provided the Borrower shall have
made adequate provision (in accordance with generally accepted
accounting principles) therefor;
v) security given to a public utility or any municipality or governmental
or other public authority when required by such utility, municipality
or authority in connection with the operations of the Borrower, to the
extent such security does not materially detract from the value of any
material part of the property of the Borrower;
vi) cash or marketable securities deposited in connection with bids or
tenders, or deposited with a court as security for costs in any
litigation, or to secure workmen's compensation or unemployment
insurance liabilities;
vii) the lien or any right of distress reserved in or exercisable under any
real property lease for rent or otherwise to effect compliance with the
terms of such lease in respect of which the rent or any other
obligation is not at the time overdue or if overdue the validity of
which is being contested at the time in good faith, if the Borrower
shall have made on its books a provision therefor reasonably deemed by
the Lender to be adequate therefor;
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viii) Security Interests on property of the Borrower which are not otherwise
Permitted Encumbrances if the aggregate amount of the Debt or other
obligations secured by all such Security Interests is not at any time
in excess of U.S.$1,000,000;
ix) Security Interests arising under or in connection with the Partnership
Agreement, the agreement of limited partnership of the Intermediate
Partnership, the agreement of limited partnership of the TC Tuscarora
Partnership, the partnership agreements of Northern Border or Tuscarora
and the partnership agreements of any other entities acquired directly
or indirectly by the Borrower in the future; and
x) any extension, renewal or replacement (or successive extensions,
renewals or replacements), as a whole or in part, of any Security
Interest referred to in the preceding paragraphs (i) to (ix) inclusive
of this definition, so long as any such extension, renewal or
replacement of such Security Interest is limited to all or any part of
the same property that secured the Security Interest extended, renewed
or replaced (plus improvements on such property) and the indebtedness
or obligation secured thereby is not increased;
provided that nothing in this definition shall in and of itself cause the Loans
and other amounts owing by the Borrower to the Lender hereunder to be
subordinated in priority to any such Permitted Encumbrance.
"ROLLOVER" means the continuation of all or a portion of such Loan (subject to
the provisions hereof) for an additional Interest Period subsequent to the
initial or any subsequent Interest Period applicable thereto.
"ROLLOVER DATE" means the commencement of a new Interest Period applicable to a
Loan.
"SECURITY INTEREST" means mortgages, charges, pledges, hypothecs, assignments by
way of security, conditional sales or other title retentions (including, without
limitation, capital leases or any other lease financing), liens, security
interests or other encumbrances, howsoever created or arising, whether fixed or
floating, perfected or not.
"TC TUSCARORA PARTNERSHIP" means TC Tuscarora Intermediate Limited Partnership,
a Delaware limited partnership and any successor thereto.
"TUSCARORA" means Tuscarora Gas Transmission Company, a general partnership
organized under the laws of Nevada.
"TUSCARORA PURCHASE AGREEMENT" means the purchase and sale agreement dated July
19, 2000 though which TC Tuscarora Partnership purchased a 49% interest in
Tuscarora from TCPL Tuscarora Ltd.
"UNITED STATES DOLLARS" and "U.S. $" mean the lawful money of the United States.
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ARTICLE ONE - THE REVOLVING CREDIT FACILITY
1.01 AMOUNT. Revolving loans are available to the Borrower under the Credit
Facility to a maximum outstanding principal amount of U.S.$40,000,000.
Notwithstanding the foregoing, the maximum outstanding principal amount of
U.S.$40,000,000 may be increased or decreased (but not to be less than
U.S.$2,500,000) upon mutual written agreement of the Lender and the Borrower.
1.02 CURRENCY AND MINIMUM AMOUNTS. Drawdowns may only be made in United States
Dollars and in a minimum amount of U.S.$500,000.
1.03 DRAWDOWN NOTICES. The Borrower shall deliver to the Lender a Drawdown
Notice at least two Business Days prior to a Drawdown Date. Such notice shall
specify: i) the date of the Drawdown, such date being a Business Day; ii) the
principal amount of the Drawdown; and iii) particulars of the account into which
funds representing the Drawdown are to be transferred on the Drawdown Date.
1.04 PURPOSE. The Credit Facility shall be used for working capital and other
general business purposes, to fund capital expenditures, to fund capital
contributions to Northern Border, Tuscarora and any other entity in which the
Borrower may directly or indirectly acquire an interest, and to enable the
Borrower to make cash distributions to Partners if there has been a temporary
interruption or delay in the receipt of cash distributions from Northern Border,
Tuscarora or such other entity in which the Borrower has acquired a direct or
indirect interest.
1.05 REVOLVING NATURE AND AVAILABILITY. Subject to the terms and conditions
hereof, the Borrower may increase or decrease Loans under the Credit Facility by
making Drawdowns, repayments and further Drawdowns.
1.06 REPAYMENTS. The Borrower may at the end of any Interest Period repay,
without payment of penalty, the whole or any part of any Loan together with all
accrued and unpaid interest thereon to the date of such repayment. The Borrower
shall give the Lender advance notice of any such repayment at least two Business
Days prior to the date of repayment.
1.07 LIBOR LOAN ROLLOVERS. At or before 10:00 a.m. (Calgary time) two Banking
Days prior to the expiration of each Interest Period of each Loan, the Borrower
shall, unless it has delivered a repayment notice pursuant to Section 1.06 of
this Agreement (together with a Rollover Notice if a portion only is to be
repaid; provided that a portion of a Loan may be continued only if the portion
to remain outstanding is equal to or exceeds the minimum amount required
hereunder for Drawdowns of Loans) with respect to the aggregate amount of such
Loan, deliver a Rollover Notice to the Lender selecting the next Interest Period
applicable to the Loan, which new Interest Period shall commence on and include
the last day of such prior Interest Period. If the Borrower fails to deliver a
Rollover Notice to the Lender as provided in this Section, the Borrower shall be
deemed to have elected to Rollover the outstanding amount of the Loan for an
Interest Period equal to the Interest Period of the maturing loan.
1.08 NO SECURITY. The Credit facility shall be unsecured.
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1.09 SET-OFF; NO WITHHOLDING. Any and all payments by the Borrower to or for the
benefit of the Lender shall be free and clear of and without set-off,
counterclaim, reduction or deduction whatsoever, including, without limiting the
generality of the foregoing, for any claims that the Borrower have or may have
against the Lender or for any present or future taxes, levies, imposts,
deductions, charges or withholdings, whether imposed by or on behalf of the
United States or Canada or any political subdivision thereof or any other taxing
authority. If the Borrower shall be required by law to deduct or withhold any
taxes from or in respect of any sum payable hereunder to the Lender, (i) the sum
payable shall be increased as may be necessary so that, after making all
required deductions and withholdings the Lender receives an amount equal to the
amount it would have received had no such deductions or withholdings been made,
(ii) the Borrower shall make such deductions and withholdings, and (iii) the
Borrower shall pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law.
1.10 MATURITY. The Credit Facility shall mature on the earlier of: (i) the date
two years from the date of this Agreement (the "FIXED MATURITY DATE"), or (ii)
the date upon which the Borrower provides written notice to the Lender that it
has obtained from another lender or lenders an economically comparable
replacement Credit Facility. Upon such date of maturity, all Outstanding
Principal, accrued and unpaid interest and all other amounts under or in respect
of this Agreement and the Credit Facility shall be paid to the Lender (x) on the
Fixed Maturity Date (in the case of maturity under clauses (i)) or (y) on or
prior to the 30th day after such written notice is provided to the Lender (in
the case of maturity under clause (ii)).
1.11 TERMINATION. The Borrower may terminate this Agreement upon 90 days written
notice to the Lender, provided, however, that in order for such termination by
the Borrower to be effective, all Outstanding Principal, accrued and unpaid
interest and all other amounts under or in respect of this Agreement and the
Credit Facility shall be paid to the Lender on or prior to the 30th day after
the termination date specified in such written notice provided to the Lender.
1.12 RENEWAL. This Agreement may be renewed upon the mutual written agreement of
the Borrower and the Lender.
ARTICLE TWO - INTEREST
2.01 RATE APPLICABLE TO LOANS. The Borrower shall pay interest to the Lender in
United States Dollars on Loans outstanding under the Credit Facility at a rate
per annum equal to LIBOR plus 1.25 per cent.
2.02 CALCULATION AND PAYMENT OF INTEREST. Interest on Loans, as specified above,
shall accrue daily and be calculated on the principal amount of each such loan
and on the basis of the actual number of days each such loan is outstanding in a
year of 360 days. Interest shall be calculated and payable in arrears on the
Interest Payment Date for each such loan for the actual number of days such loan
is outstanding in the period from and including the date such loan was made or
the preceding Interest Payment Date to which all
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accrued interest has been duly paid, as the case may be, to and including the
day immediately preceding the following Interest Payment Date.
2.03 DEFAULT RATE. In the event that any amount due hereunder on any Loan
(including, without limitation, any interest payment) is not paid when due, the
Borrower shall pay interest on such unpaid amount (including, without
limitation, interest on interest) from the date when such amount was due until
the date that such amount is paid in full (but excluding the date of such
payment if the payment is made for value on such date at the required place of
payment specified by the Lender from time to time), and such interest shall
accrue daily, be calculated and compounded monthly and be payable on demand,
after as well as before demand, maturity, default and judgment, at a rate per
annum that is equal to LIBOR plus 3.25 per cent.
2.04 MAXIMUM RATE PERMITTED BY LAW. No interest to be paid hereunder shall be
paid at a rate exceeding the maximum non-usurious rate permitted by applicable
law. In the event that any interest exceeds such maximum rate, such interest
shall be reduced or refunded, as the case may be, so that interest payable
hereunder shall be payable at the highest rate recoverable under applicable law.
ARTICLE THREE - ACCOUNTS OF RECORD; PAYMENTS
3.01 CURRENCY AND PLACE OF PAYMENT. All payments of principal, interest and
other amounts to be made by the Borrower to the Lender pursuant to this
Agreement shall be made in United States Dollars for value on the Interest
Payment Date, or at such other date under this Agreement when such amounts are
due and payable and if such day is not a Business Day on the Business Day next
following, by deposit or transfer thereof to the account or accounts of the
Lender designated by the Lender to the Borrower for such purpose from time to
time.
3.02 LENDER RECORDS EVIDENCE. The Lender shall open and maintain books of
account evidencing the Loans and all other amounts owing by the Borrower to the
Lender hereunder. The Lender shall enter in the foregoing accounts details of
all amounts from time to time owing, paid or repaid by the Borrower hereunder.
The information entered in the foregoing accounts shall constitute prima facie
evidence of the obligations of the Borrower to the Lender hereunder with respect
to all Loans and all other amounts owing by the Borrower to the Lender
hereunder.
ARTICLE FOUR - CONDITIONS PRECEDENT
4.01 CONDITIONS FOR ALL DRAWDOWNS. On or before each Drawdown under the Credit
Facility the following conditions shall be satisfied to the satisfaction of the
Lender:
a) after giving effect to the proposed Drawdown, the Outstanding Principal
shall not exceed the maximum amount of the Credit Facility as set forth
in Section 1.01;
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b) the Borrower shall, if so requested by the Lender, have executed and
delivered to the Lender a promissory note in favour of the Lender
evidencing the obligation of the Borrower to pay the Lender the
principal amount of such Drawdown and interest thereon in accordance
with this Agreement; and
c) the Lender shall have received all such other agreements, certificates,
declarations, opinions and documents, and all steps, actions and
proceedings shall have been taken or performed, as the Lender may
reasonably require, all in form and substance satisfactory to the
Lender and its counsel.
4.02 WAIVERS. The above conditions are inserted for the sole benefit of the
Lender and may be waived by the Lender, in whole or in part (with or without
terms or conditions) without prejudicing the right of the Lender at any time to
assert such conditions in respect of any subsequent Drawdown.
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES
5.01 REPRESENTATIONS AND WARRANTIES. The Borrower and the General Partner hereby
represent and warrant to the Lender as follows and acknowledge and confirm that
the Lender is relying upon such representations and warranties:
a) CORPORATE STATUS. The Borrower is a limited partnership duly formed and
validly existing under the laws of Delaware and the General Partner is
duly incorporated and validly existing under the laws of Delaware.
b) AUTHORITY. Each of the Borrower and the General Partner has the
requisite power and authority to own or hold its respective properties
and assets, to carry on its business as presently conducted and to
execute, deliver and perform its obligations under this Agreement and
the other Loan Documents to which it is a party.
c) DUE AUTHORIZATION. Each of the Borrower and the General Partner has
duly authorized, by all necessary action, the execution, delivery and
performance of this Agreement and the other Loan Documents to which it
is a party.
d) ENFORCEABILITY. This Agreement and each of the Loan Documents has been
duly executed and delivered by each of the Borrower and the General
Partner and constitute legal, valid and binding obligations of each of
the Borrower and the General Partner enforceable against each of the
Borrower and the General Partner in accordance with their respective
terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other applicable laws relating to creditor's rights generally and
to general principles of equity and public policy.
e) NO RESULTING VIOLATION. Neither the execution and delivery of this
Agreement or any other Loan Document, nor compliance with the terms and
conditions of this Agreement or any other Loan Document, has resulted
or will (x) result in a violation of any applicable law or the Limited
Partnership Agreement or the articles or by-laws of the General Partner
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or any resolutions passed by the Limited Partners of the Borrower or
the shareholders or directors of the General Partner, or (y) result in
a default under any agreement to which the Borrower or the General
Partner is a party or by which the Borrower or the General Partner is
bound, or (z) result in the creation of any Security Interest on any
property of the Borrower or the General Partner under any agreement or
instrument to which the Borrower or the General Partner is a party or
by which the Borrower or the General Partner is bound, which in the
case of (y) or (z) has a Material Adverse Effect.
f) NON-DEFAULT. No event has occurred which would constitute an Event of
Default or a breach of or default under the covenants herein or in any
of the other Loan Documents or which would constitute such a breach or
default with the giving of notice or lapse of time or both.
g) FINANCIAL CONDITION. Except as has been disclosed to the Lender by
written notice in accordance with the provisions of this Agreement, no
change in the Borrower's financial condition (as disclosed or reflected
in the financial statements delivered under Section 6.01(e) of this
Agreement) has occurred which would reasonably be expected to have a
Material Adverse Effect.
h) ABSENCE OF LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened in writing
against or affecting the Borrower or any of its undertakings, property
or assets, at law or in equity, in or before any court or before any
arbitrator or before or by any Governmental Authority having
jurisdiction in the premises in respect of which there is a reasonable
possibility of a determination adverse to the Borrower and which, if
determined adversely, would have a Material Adverse Effect.
i) COMPLIANCE WITH APPLICABLE LAWS, COURT ORDERS AND MATERIAL AGREEMENTS.
The Borrower has obtained all licences, permits, approvals and
authorizations required in connection with its respective businesses
and operations, all of which are in good standing, except where the
failure to obtain such or be in good standing would not reasonably be
expected to have a Material Adverse Effect. The Borrower and its
respective businesses and operations are in compliance with all
applicable laws, all applicable directives, judgments, decrees,
injunctions and orders rendered by any Governmental Authority or court
of competent jurisdiction, the Limited Partnership Agreement and all
agreements or instruments to which it is a party or by which its
property or assets are bound, except where the failure to comply would
not reasonably be expected to have a Material Adverse Effect.
j) NO ENCUMBRANCES. Except for Permitted Encumbrances, there are no
Security Interests against, on or affecting any or all of the
properties or assets, of whatsoever nature or kind, of the Borrower,
and the Borrower has not given any undertaking to grant or create any
such Security Interest or otherwise entered into any agreement pursuant
to which any person may have or be entitled to any such Security
Interest.
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k) AGREEMENTS. Each of the Limited Partnership Agreement, the
Contribution, Conveyance and Assumption Agreement and the Tuscarora
Purchase Agreement has been duly executed and delivered by the parties
thereto and constitutes legal, valid and binding obligations of the
parties thereto, enforceable against such parties in accordance with
its respective terms and no such agreement has been amended in any
manner which would reasonably be expected to have a Material Adverse
Effect.
l) RANKING WITH OTHER DEBT. All Obligations of the Borrower hereunder rank
at least PARI PASSU in right of payment with the other unsecured and
unsubordinated Debt of the Borrower.
5.02 INQUIRIES; DEEMED REPETITION. All representations and warranties made
herein shall remain in full force and effect notwithstanding the execution of
the Loan Documents and shall be deemed to be restated by the Borrower and the
General Partner as if made effective on each Drawdown under this Agreement.
ARTICLE SIX - GENERAL COVENANTS
6.01 COVENANTS OF THE BORROWER. The Borrower hereby covenants and agrees with
the Lender that, unless the Lender otherwise consents in writing:
a) PUNCTUAL PAYMENT. The Borrower shall duly and punctually pay all
Outstanding Principal, interest and other amounts required to be paid
by the Borrower hereunder in the manner specified hereunder.
b) MAINTAIN EXISTENCE; NO CHANGE OF BUSINESS. The Borrower shall maintain
its existence in good standing and do or cause to be done all things
necessary to keep in full force and effect all properties, rights,
franchises, licenses, permits and qualifications to carry on business
in any jurisdiction in which it carries on business, except where
failure to comply with the foregoing would not reasonably be expected
to have a Material Adverse Effect. The Borrower shall maintain all its
respective properties and assets and conduct its business, activities
and operations in a manner consistent with applicable industry
standards and industry practice in each jurisdiction where its business
is conducted or its property and interests are located, except where
failure to comply with the foregoing would not reasonably be expected
to have a Material Adverse Effect. The Borrower shall not carry on
businesses or operations which are materially different from the
businesses and operations carried on by the Borrower on the date of
this Agreement.
c) MATERIAL LITIGATION. The Borrower shall promptly give written notice to
the Lender of any litigation, proceeding, dispute or action if the same
has or might reasonably have a Material Adverse Effect and from time to
time shall furnish to the Lender all reasonable information requested
by the Lender concerning the status of any of the foregoing.
d) NOTICE OF DEFAULT. The Borrower shall give prompt written notice to the
Lender upon becoming aware of any default of the performance of any
covenant, agreement or condition contained in this Agreement or any of
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the other Loan Documents, which notice shall specify such default or
defaults.
e) FINANCIAL STATEMENTS. i) The Borrower shall deliver to the Lender, as
soon as available, and in any event within 90 days after the end of
each of its fiscal years, copies of the audited annual financial
statements of the Borrower, together with the notes thereto, all
prepared in accordance with generally accepted accounting principles,
consistently applied, together with a report of the Borrower's auditors
on such statements, together with a Compliance Certificate, and ii) the
Borrower shall deliver to the Lender, as soon as available, and in any
event within 45 days after the end of each of its first, second and
third fiscal quarters, copies of its unaudited quarterly financial
statements, prepared in accordance with generally accepted accounting
principles.
f) NOTICE OF AMENDMENT OF AND DEFAULT UNDER AGREEMENTS. The Borrower shall
give prompt written notice to the Lender of any default under or
pursuant to the Limited Partnership Agreement and the amendment,
cancellation or termination of, or the giving of any notice or the
taking of any other step or action to amend, cancel or terminate the
Limited Partnership Agreement or any other agreement in which the
amendment, cancellation or termination of which might reasonably be
expected to have a Material Adverse Effect.
g) BOOKS AND RECORDS. The Borrower shall have and maintain proper books of
account, records and other documents (in accordance with sound
accounting practice) relating to its business and financial affairs and
shall permit the Lender or its authorized agents at any reasonable
time, at the expense of the Borrower, to examine such books of account,
records and other documents and to make copies thereof and take
extracts therefrom.
h) INSPECTIONS. The Lender shall be entitled from time to time at any
reasonable time to inspect the assets and properties and the business
and operations of the Borrower and, for such purpose, the Lender shall
have access to all premises occupied by the Borrower where any of such
assets or properties may be found.
i) OTHER INFORMATION. At the request of the Lender, the Borrower shall
provide such other information regarding the business, affairs,
financial condition, property or assets of the Borrower as the Lender
may reasonably request.
j) INSURANCE. The Borrower shall maintain insurance of such types, in such
amounts and with such deductibles as are customary in the case of
businesses of established reputation engaged in the same or similar
businesses.
k) COMPLIANCE WITH APPLICABLE LAWS. The Borrower shall comply with all
applicable laws if the consequences of a failure to comply might
reasonably be expected, either alone or in conjunction with any other
such non-compliances, to have a Material Adverse Effect.
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l) PAYMENT OF TAXES. The Borrower shall from time to time pay or cause to
be paid all material rents, taxes, rates, levies or assessments,
ordinary or extraordinary, governmental royalties, fees or dues, and
any other amount which may result in a Security Interest or similar
encumbrance against the assets of the Borrower arising under statute or
regulation, lawfully levied, assessed or imposed upon the Borrower as
and when the same become due and payable, except when and so long as
the validity of any such rents, taxes, rates, levies, assessments,
royalties, fees, dues or other amounts is in good faith being contested
by the Borrower in appropriate proceedings and provided that it shall
have established adequate reserves therefor (in accordance with
generally accepted accounting principles) and such contestation will
not involve forfeiture of any part of its assets which are material to
the Borrower.
m) DEFEND TITLE. The Borrower shall defend its property, undertaking and
assets and its right, title and interest thereto, against all adverse
claims and demands respecting the same, other than Permitted
Encumbrances.
n) NO SALE OF ASSETS. The Borrower shall not sell, transfer, lease,
convey, abandon or otherwise dispose of (including, without limitation,
in connection with a sale and a lease-back transaction) any of its
assets or property (each of the foregoing transactions, an "asset
sale"), unless any such asset sale or the cumulative effect of a series
of such asset sales would not result in a Material Adverse Effect.
o) NEGATIVE PLEDGE. The Borrower shall not create, issue, incur, assume or
permit to exist any Security Interests on any of its property,
undertakings or assets other than Permitted Encumbrances.
p) PARI PASSU RANKING. The Borrower shall not create, assume or otherwise
incur any Debt ranking prior to the indebtedness and liabilities of the
Borrower to the Lender hereunder other than Debt secured by Permitted
Encumbrances. The Borrower shall ensure that at all times all of its
Obligations hereunder and under any Loan Documents rank at least PARI
PASSU in right of payment with the other unsecured and unsubordinated
Debt of the Borrower.
q) NO MERGER, ETC. The Borrower shall not enter into any transaction
whereby all or substantially all of its undertaking, property or assets
would become the property of another person, whether by way of
reconstruction, reorganization, recapitalization, consolidation,
amalgamation, merger, transfer, sale or otherwise if the effect of any
such transaction would be a Material Adverse Effect.
r) NO DISSOLUTION. The Borrower shall not liquidate, dissolve or wind-up
or take any steps or proceedings in connection therewith.
6.02 COVENANTS OF THE GENERAL PARTNER. The General Partner hereby covenants
and agrees with the Lender that:
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a) COMPLIANCE WITH AGREEMENT. The General Partner shall cause the Borrower
to comply with this Agreement and each of the other Loan Documents to
which the Borrower is a party.
b) MAINTAIN EXISTENCE; NO DISSOLUTION. The General Partner shall maintain
its existence in good standing. The General Partner shall not liquidate,
dissolve or wind up or take any steps or proceedings in connection
therewith.
c) MAINTAIN STATUS AS GENERAL PARTNER. The General Partner shall not,
without the consent of the Lender, resign as General Partner of the
Borrower or otherwise limit its duties under the Limited Partnership
Agreement.
ARTICLE SEVEN - EVENTS OF DEFAULT AND REMEDIES
7.01 EVENTS OF DEFAULT. "Event of Default", as used in this Agreement, means the
occurrence of any one or more of the following events or circumstances:
a) if the Borrower fails to pay the principal amount of any Loan when due
and such default continues for five Business Days after notice from the
Lender of such default;
b) if the Borrower fails to pay:
i) any interest (including, if applicable, default interest)
hereunder when due; or
ii) any other Obligation not specifically referred to above
payable by the Borrower hereunder when due,
and such default continues for 30 days after notice from the Lender of
such default;
c) if the Borrower fails to observe or perform any covenant or obligation
contained in this Agreement on its part to be observed or performed
(other than a covenant or obligation whose breach or default in
performance is specifically dealt with elsewhere in this section) and
such failure continues for a period in excess of 45 days after notice
from the Lender of such failure, unless the Lender (having regard to
the subject matter of the default) shall have agreed to a longer
period, and in such event, within the period agreed to by the Lender;
d) the filing by or on behalf of the Borrower of a voluntary petition or
an answer seeking or consenting to reorganization, liquidation,
arrangement, readjustment of its debts or for any other relief under
any bankruptcy, reorganization, compromise, arrangement, insolvency,
readjustment of debt, dissolution, liquidation, or similar act or law,
state or federal, now or hereafter existing ("BANKRUPTCY LAW"), or the
making by the Borrower of any assignment for the benefit of creditors;
or the admission by the Borrower in writing of its inability to pay its
debts as they become due;
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e) the filing of any involuntary petition against the Borrower in
bankruptcy or seeking reorganization, liquidation, arrangement,
readjustment of its debts or for any other relief under any Bankruptcy
Law and an order for relief by a court having jurisdiction in the
premises shall have been issued or entered therein; or a decree or
order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other
officer having similar powers over the Borrower or all or a substantial
part of its property shall have been entered;
f) if a final judgment or order (subject to no further right of appeal)
for the payment of money aggregating in excess of U.S.$10,000,000 or
the equivalent amount in any other currency shall be rendered against
the Borrower in respect of which enforcement proceedings have been
commenced and such proceedings have not been effectively stayed and the
Borrower has not paid or settled such judgment or order within thirty
days after enforcement proceedings have been commenced;
g) if a default with respect to any issue of Debt (which shall include,
for avoidance of doubt, Debt incurred, assumed or otherwise created by
the Borrower), which default results in the acceleration of any Debt in
an aggregate amount in excess of U.S.$10,000,000 or the equivalent
amount thereof in any other currency without such Debt having been
discharged or such acceleration having been cured, waived, rescinded or
annulled for a period of 30 days after written notice thereof has been
given by the Lender to the Borrower; or
h) if any representation or warranty made by the Borrower in this
Agreement, in a Compliance Certificate or any of the Loan Documents to
the Lender shall prove to have been incorrect or misleading in any
material respect on and as of the date thereof.
7.02 REMEDIES. If an Event of Default has occurred, which has not been waived by
the Lender or cured to the satisfaction of the Lender, Drawdowns under the
Credit Facility shall not be available and the Lender shall be entitled to
immediately demand and receive payment of all amounts owing by the Borrower to
the Lender hereunder by providing written notice to the Borrower. If the
Borrower fails to perform or make payment of any Obligations upon demand for
payment in accordance herewith, the Lender may in its discretion, exercise any
right or recourse and/or proceed by any action, suit, remedy or proceeding
against the Borrower authorized or permitted by law for the recovery of all the
Obligations and proceed to exercise any and all rights hereunder and the other
Loan Documents and no such remedy for the enforcement of the rights of the
Lender shall be exclusive of or dependent on any other remedy but any one or
more of such remedies may from time to time be exercised independently or in
combination.
7.03 REMEDIES CUMULATIVE. The rights and remedies of the Lender hereunder and
under any other Loan Documents are cumulative and are in addition to and not in
substitution of any rights or remedies provided by law or by equity. Any single
or partial exercise by the Lender of any right or remedy for, or procurement of
any judgment in respect of, default or breach of any term, covenant, condition
or agreement contained in this Agreement or any other
15
Loan Document shall not be deemed to operate as a merger of or be a waiver of or
to alter, affect or prejudice any other right or remedy or other rights or
remedies to which the Lender may be lawfully entitled for such default or
breach.
ARTICLE EIGHT - EXPENSES AND INDEMNITIES
8.01 COSTS AND EXPENSES. The Borrower shall promptly pay upon notice from the
Lender all reasonable costs and expenses of the Lender in connection with the
Credit Facility, this Agreement and the other Loan Documents, including, without
limitation, in connection with the reasonable fees and out-of-pocket expenses of
legal counsel to the Lender and all costs and expenses in connection with the
establishment of the validity and enforceability of the Loan Documents and the
preservation, perfection or enforcement of the rights of the Lender under the
Loan Documents.
8.02 INDEMNITIES OF THE BORROWER. The Borrower hereby agrees to indemnify and
save harmless the Lender against any reasonable cost, loss, liability or expense
incurred by the Lender as a result of the failure of the Borrower to fulfil any
of its covenants or obligations hereunder or under the other Loan Documents.
8.03 INDEMNITY OF THE GENERAL PARTNER. The General Partner hereby agrees to
indemnify and save harmless the Lender against any reasonable cost, loss,
liability or expense incurred by the Lender as a result of the failure of the
General Partner to fulfil any of its covenants or obligations hereunder or under
any of the other Loan Documents.
ARTICLE NINE - GENERAL
9.01 NOTICES. Any demand, notice or communication to be made or given hereunder
(a "Communication") shall be in writing and shall be made or given by personal
delivery, registered mail or by transmittal by telecopy or other electronic
means of communication addressed to the respective parties as follows:
To the Borrower:
TC PipeLines, LP
c/o TC PipeLines GP, Inc.
450-First Street S.W.
Calgary, Alberta
Attention: President
Telecopy No.: ( 403) 920-2350
To the Lender:
TransCanada PipeLine USA Ltd.
450-First Street S.W.
Calgary, Alberta
Attention: Treasurer
16
Telecopy No.: ( 403) 920-2358
or to such other address or telecopy number as either party may from time to
time notify the other of in accordance with this provision. Any Communication
made or given hereunder by personal delivery or electronic communication during
normal business hours at the place of receipt on a Business Day shall be
conclusively deemed to have been made or given at the time of actual delivery or
receipt of Communication, as the case may be, on such Business Day. Any
Communication made or given hereunder by personal delivery or electronic
communication after normal business hours at the place of receipt or otherwise
than on a Business Day shall be conclusively deemed to have been made or given
at 9:00 a.m. (Eastern Standard time) on the first Business Day following actual
delivery or receipt of Communication, as the case may be. Any Communication made
or given hereunder by registered mail shall be conclusively deemed to have been
made or given at 9:00 a.m. (Eastern Standard time) on the third Business Day
after the mailing thereof.
9.02 WHOLE AGREEMENT. This Agreement together with any other Loan Documents
constitute the whole and entire agreement between the Borrower and the Lender
with respect to the subject matter hereof and cancel and supersede any prior
agreements, undertakings, declarations, commitments, representations,
warranties, written or oral, in respect thereof.
9.03 BENEFIT OF AGREEMENT. This Agreement shall enure to the benefit of and be
binding upon the Borrower and the Lender and their respective successors and
permitted assigns.
9.04 AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended only
if the Borrower and the Lender so agree in writing. Any waiver or any consent by
the Lender under any provision of this Agreement or any of the other Loan
Documents must be in writing and may be given subject to any conditions thought
fit by the Lender. Any waiver or consent shall be effective only in the instance
and for the purpose for which it is given.
9.05 SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
of this Agreement and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
9.06 NUMBER AND PERSONS. Words used herein importing the singular number only
shall include the plural and vice versa, words used herein importing the
masculine gender shall include the feminine and neuter genders and vice versa
and words used herein importing persons shall include individuals, partnerships,
associations, trusts, unincorporated associations and corporations and vice
versa.
9.07 HEADINGS; SECTIONS. The insertion of headings herein is for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. Unless something in the subject matter or context is inconsistent
therewith, references herein to Articles and Sections are to Articles and
Sections of this Agreement.
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9.08 ACCOUNTING PRINCIPLES. Wherever in this Agreement reference is made to
generally accepted accounting principles, such reference shall be deemed to be
United States generally accepted accounting principles in use from time to time.
9.09 ASSIGNMENT. The Borrower shall not assign its rights or obligations under
this Agreement or the other Loan Documents without the prior written consent of
the Lender. The Lender may, without the consent of the Borrower, sell, assign,
transfer or grant an interest in the outstanding Loans and this Agreement and
the other Loan Documents to TransCanada PipeLines Limited, a Canadian
corporation, or any subsidiary thereof so long as such transaction does not
increase the Borrower's costs or risks under Section 1.09 hereof.
9.10 SCHEDULE. The Schedule to this Agreement is hereby incorporated herein and
deemed to be part hereof.
9.11 THIS AGREEMENT GOVERNS. In the event of any conflict or inconsistency
between the provisions of this Agreement and the provisions of any of the other
Loan Documents, the provisions this Agreement, to the extent of the conflict or
inconsistency, shall govern and prevail with respect to any Obligations.
9.12 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (including Section
5-510.6(b) of the General Obligation Law of the State of New York) without
regard to the choice or conflict of law rules or principles.
9.13 BORROWER'S STATUS. TC PipeLines, LP is a limited partnership formed under
the laws of Delaware. A Limited Partner shall have no liability or obligation of
any kind whatsoever for any Obligations.
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Kindly signify your acceptance of the Agreement by signing and
returning one copy of this Agreement to us.
Yours very truly,
TRANSCANADA PIPELINE USA LTD.
By: /s/ Russell K. Girling
-------------------------------------
Name: Russell K. Girling
Title: Senior Vice-President and
Chief Financial Officer
By: /s/ Robert J. Pitt
-------------------------------------
Name: Robert J. Pitt
Title: Vice-President, Finance Law
ACCEPTED AND AGREED
as of the date first written above.
TC PIPELINES, LP
by its General Partner
TC PipeLines GP, Inc.
By: /s/ Theresa Jang
-------------------------------------
Name: Theresa Jang
Title: Controller
By: /s/ Rhondda Grant
-------------------------------------
Name: Rhondda Grant
Title: Secretary
TC PIPELINES GP, INC.
By: /s/ Theresa Jang
-------------------------------------
Name: Theresa Jang
Title: Controller
By: /s/ Rhondda Grant
-------------------------------------
Name: Rhondda Grant
Title: Secretary
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<Page>
SCHEDULE A
TO THE LETTER AGREEMENT
DATED MAY 28, 2001 AMONG
TRANSCANADA PIPELINE USA LTD.,
TC PIPELINES, LP AND
TC PIPELINES GP INC.
COMPLIANCE CERTIFICATE
TO: TRANSCANADA PIPELINE USA LTD. (the "Lender")
Reference is made to the letter agreement dated May 28, 2001 among
TransCanada PipeLine USA Ltd., TC PipeLines, LP and TC PipeLines GP, Inc. (as
amended, modified, supplemented or restated, the "Credit Agreement").
Capitalized terms used herein, and not otherwise defined herein, shall have the
meanings attributed to such terms in the Credit Agreement.
This Compliance Certificate is delivered to the Lender pursuant to
Section 6.01(e) of the Credit Agreement.
The undersigned, [name], [title] of the General Partner of the
Borrower, hereby certifies that, as of the date of this Compliance Certificate:
1. I have made or caused to be made such investigations as are necessary or
appropriate for the purposes of this Compliance Certificate.
2. To the best of my knowledge after due enquiry:
a) the consolidated financial statements for the fiscal year
ending December 31, ______ provided to the Lender pursuant to
the Credit Agreement were prepared in accordance with
generally accepted accounting principles and present fairly,
in all material respects, the financial position of the
Borrower as at the date thereof;
b) the representations and warranties made by the Borrower and
the General Partner in Section 5.01 of the Credit Agreement
are true and correct in all material respects, except as has
heretofore been notified to the Lender by the Borrower in
writing [or except as described in Schedule _______ hereto];
and
c) the Borrower and the General Partner are in compliance in all
respects with all covenants in the Credit Agreement except as
has heretofore been notified to the Lender by the Borrower in
writing [or except as described in Schedule _______ hereto].
3. Except as has heretofore been notified to the Lender by the Borrower in
writing [or except as described in Schedule _______ hereto], to the best of my
knowledge after due enquiry there are not pending or threatened, in writing, any
(a) claims, complaints, notices or requests for information received from a
Governmental Authority by the Borrower or the General Partner, or which any of
them is otherwise aware, with respect to any alleged violation of or alleged
liability under any applicable laws, which, if prosecuted, would reasonably be
expected to have a Material Adverse Effect or (b) actions, suits or proceedings
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect.
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I give this Compliance Certificate on behalf of the General
Partner of the Borrower and in my capacity as the [title] of the Borrower, and
no personal liability is created against or assumed by me in the giving of this
Certificate.
Dated at - , this - day of -, _____.
___________________________________
Name:
Title:
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