OPTION AGREEMENT

RELATING TO

PARTNERSHIP INTEREST

IN
IROQUOIS GAS TRANSMISSION SYSTEM, L.P.
A DELAWARE LIMITED PARTNERSHIP

by and between

TRANSCANADA IROQUOIS LTD.

and

TC PIPELINES INTERMEDIATE LIMITED PARTNERSHIP

MAY 3, 2017

 

 

OPTION AGREEMENT

THIS OPTION AGREEMENT (this "Agreement") is executed as of this 3rd day of May, 2017, by and between TRANSCANADA IROQUOIS LTD., a Delaware corporation ("TCIL") and TC PIPELINES INTERMEDIATE LIMITED PARTNERSHIP, a Delaware limited partnership ("Buyer"). TCIL and Buyer are sometimes referred to herein individually as a "Party" and collectively as the "Parties".

 

 

WITNESSETH:

 

WHEREAS, simultaneously with the execution of this Agreement, TCIL, TCPL Northeast Ltd. ("TCPL"), and Buyer are entering into that certain Agreement for Purchase and Sale of Partnership Interest in Iroquois Gas Transmission System, L.P. dated as of the date hereof (the "Purchase Agreement"), pursuant to which Buyer will, subject to the fulfilment or waiver of certain conditions, acquire a 49.34% partnership interest in Iroquois Gas Transmission System, L.P., a Delaware limited partnership ("Iroquois"), comprising the entire 21% limited partner interest held by TCPL, the entire 25% general partner interest held by TCIL, and a 3.34% limited partner interest held by TCIL;

WHEREAS, TCIL will retain a 0.66% limited partner interest in Iroquois (the "Option Interest"); and

WHEREAS, the Parties desire to set forth in this Agreement certain rights and obligations relating to the Option Interest.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows.  Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth in the Purchase Agreement.

ARTICLE I
OPTION

(a)	expiry or termination of the waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby;

(b)

receipt of the consent of TCIL and the other parties to the Iroquois Partnership Agreement from time to time, if the transfer of the Option Interest as contemplated hereby would cause (i) a termination of the partnership for federal tax purposes pursuant to Section 708(b)(1)(B) of the Code, or (ii) a breach of the Iroquois Partnership Agreement, in which case the consent shall include an express waiver of such breach;

(c)	receipt of any third party consent required to the transfer of the Option Interest as contemplated hereby;

(d)

subject to matters disclosed in the Schedules to the Purchase Agreement, the Fundamental Representations and the representation and warranties set forth in Section 2.01 (Organization and Qualification), 2.03 (No Conflict; Required Filings and Consents), 3.01 (Organization and Qualification of Buyer) and 3.03 (No Conflict; Required Filings and Consents Applicable to Buyer) (each such Section reference corresponding to the Section reference in the Purchase Agreement) being true and correct in all material respects with respect to the Option Interest (except where such representations and warranties are already modified by materiality, in which case, such representations and warranties shall be true and correct in all respects) on and as of the date of the Option Closing as if made on and as of the Option Closing (except to the extent that reference to the "Sellers" shall be deemed to refer to TCIL and not to TCPL and references to Iroquois Interest shall be deemed to refer to Option Interest); provided, that this condition may be waived only by the Party to which the Fundamental Representation is made; and

 

 

(e)	each Party having delivered all of the items required to be delivered by such Party as described in Section 1.5; provided, that this condition may be waived in respect of any item only by the Party with the right to require delivery of such item.

(a)	each Party shall deliver or cause to be delivered to the other Party a duly executed assignment and assumption agreement in respect of the Option Interest, in substantially the form of the Assignment and Assumption Agreement;

(b)	TCIL shall deliver or cause to be delivered to Buyer a properly completed and executed certificate of non-foreign status satisfying the requirements of Treasury Regulation Section 1.1445-2(b)(2);

(c)	TCIL shall deliver or cause to be delivered to Buyer a properly completed and executed Internal Revenue Service Form W-9;

(d)	TCIL shall deliver evidence satisfactory to the Buyer acting reasonably of the receipt of the consents, authorizations, approvals, notices, filings and registrations described on Schedule 2.03(b) or Schedule 2.12(b), to the extent applicable to the transactions contemplated by this Agreement;

(e)	TCIL shall deliver a certificate, dated as of the Option Closing and signed by a duly authorized officer of TCIL, certifying that the conditions set forth in Section 1.3 have been satisfied;

(f)

TCIL shall deliver a certificate of the secretary or assistant secretary of TCIL, dated as of the Option Closing: (A) (1) certifying as to and attaching the resolutions adopted by TCIL authorizing the transactions contemplated by this Agreement, and (2) attaching a certificate of good standing (or equivalent certificate) of TCIL, issued within 15 days prior to the Option Closing by the Secretary of State (or equivalent Governmental Authority) of TCIL's jurisdiction of organization; and (B) certifying as to the authorization of the officers of TCIL executing documents in connection with the he transactions contemplated by this Agreement; and

(g)	Buyer shall pay the Exercise Price to TCIL in cash, by wire transfer in accordance with wiring instructions provided by TCIL.

ARTICLE II
INTERIM COVENANTS

(a)	TCIL and Buyer shall make all filings and notifications with all Governmental Authorities, if any, that may be or may become reasonably necessary, proper or advisable under this Agreement and Applicable Laws to consummate and make effective the transactions contemplated under this Agreement; and

 

(b)

Without prejudice to the generality of the foregoing clause (a), TCIL and Buyer shall file or cause to be filed with the Federal Trade Commission and the United States Department of Justice any notifications required to be filed under the HSR Act and the rules and regulations promulgated thereunder with respect to the transactions contemplated by this Agreement as promptly as practicable.  The Parties shall consult with each other as to the appropriate time of filing such notifications and shall use their best efforts to make such filings at the agreed upon time, to respond promptly to any requests for additional information made by either of such agencies, and to cause the waiting periods under the HSR Act to terminate or expire at the earliest possible date after the date of filing. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

(c)	Buyer and TCIL shall equally share the filing fees and associated costs, including legal fees, in connection with the foregoing provisions of this Section 2.4.

ARTICLE III
TERMINATION

(a)	Option Closing;

(b)	the expiration of the Exercise Period without the delivery by Buyer of a valid notice under Section 1.2;

(c)	the termination of the Purchase Agreement in accordance with its terms.

ARTICLE IV
MISCELLANEOUS

The following provisions of the Purchase Agreement are incorporated herein by reference and shall apply mutatis mutandis to this Agreement. In each case, reference to the Parties shall be deemed to refer to TCIL and Buyer but not to TCPL, and references to Closing shall be deemed to refer to the Option Closing: Section 9.01 (Modification); Section 9.02 (Notices); Section 9.04 (Successors and Assigns); Section 9.05 (Press Releases); Section 9.06 (Assignment); Section 9.07 (Severability); Section 9.08 (Captions; Article and Section Reference); Section 9.09 (Choice of Law); Section 9.10 (Counterparts); Section 9.11 (Waiver); Section 9.12 (Construction); Section 9.13 (Incorporation of Exhibits, Schedules and Appendices); Section 9.14 (No Third-Party Beneficiaries); Section 9.15 (No Consequential or Punitive Damages); Section 9.16 (Time of Essence); and Section 9.17 (Defined Terms). Notwithstanding the foregoing, to the extent of any conflict between the Purchase Agreement and this Agreement, the provisions of this Agreement shall prevail. This Agreement and all other documents executed and delivered by the Parties pursuant hereto (or as contemplated hereby) contains the entire understanding of the Parties with respect to the subject matter of this Agreement, and there are no representations, warranties, covenants or agreements other than those expressly set forth herein or therein.  This Agreement supersedes all prior agreements and understandings between the Parties with respect to the subject matter of this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by duly authorized officers of the Parties as of the day and year first above written.

 

	TRANSCANADA IROQUOIS LTD.
	By:         /s/Jasmin Bertovic
	Name:    Jasmin Bertovic
	Title:      Vice President
	By:         /s/James R. Eckert
	Name:    James R. Eckert
	Title:      Vice President, Commercial East
	TC PIPELINES INTERMEDIATE LIMITED PARTNERSHIP by TC PipeLines GP, Inc., its General Partner
	By:        /s/Janine M. Watson
	Name:   Janine M. Watson
	Title:     Vice President and General Manager
	By:         /s/Jon Dobson
	Name:    Jon Dobson
	Title:      Corporate Secretary