Document:

Exhibit 4.1

 

EXECUTION VERSION

 

 

TRANSCANADA PIPELINES LIMITED

 

AND

 

THE BANK OF NEW YORK MELLON, as Trustee

 

Second Amended and Restated Debt Indenture

 

Dated as of September 15, 2010

 

 

 

TRANSCANADA PIPELINES LIMITED

 

CROSS-REFERENCE SHEET(1)

 

Reconciliation and tie between the Trust Indenture Act
of 1939

and the Second Amended and Restated Debt Indenture,
dated as of September 15, 2010, between TRANSCANADA PIPELINES LIMITED and

THE BANK OF NEW YORK MELLON

 

	
  Trust Indenture

  	
   

  	
   

  
	
  Act Section

  	
   

  	
  Indenture Section

  
	
   

  	
   

  	
   

  	
   

  
	
  § 310(a)

  	
  (1)

  	
   

  	
  6.7

  
	
  (a)

  	
  (2)

  	
   

  	
  6.7

  
	
  (b)

  	
   

  	
   

  	
  6.8

  
	
  (c)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 311(a)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (c)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 312(a)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (c)

  	
   

  	
   

  	
  4.1

  
	
  § 313(a)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
  (1)

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
  (2)

  	
   

  	
  Not
  Applicable

  
	
  (c)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (d)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 314(a)

  	
   

  	
   

  	
  4.3

  
	
  (a)

  	
  (4)

  	
   

  	
  3.5

  
	
  (b)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (c)

  	
  (1)

  	
   

  	
  11.5

  
	
  (c)

  	
  (2)

  	
   

  	
  11.5

  
	
  (d)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (e)

  	
   

  	
   

  	
  11.5

  
	
  (f)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  § 315(a)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
   

  	
   

  	
  5.13

  
	
  § 316(a)

  	
  (last
  sentence)

  	
   

  	
  1.1
  (“Outstanding”), 7.4

  
	
  (a)

  	
  (1)(A)

  	
   

  	
  5.8

  
	
  (a)

  	
  (1)(B)

  	
   

  	
  5.9

  
	
  (a)

  	
  (2)

  	
   

  	
  Not
  Applicable

  
	
  (b)

  	
   

  	
   

  	
  5.12

  
	
  (c)

  	
   

  	
   

  	
  7.6

  
	
  § 317(a)

  	
  (1)

  	
   

  	
  5.2

  
	
  (a)

  	
  (2)

  	
   

  	
  5.2

  
	
  (b)

  	
   

  	
   

  	
  6.4

  
	
  § 318(a)

  	
   

  	
   

  	
  11.7

  
	
  (b)

  	
   

  	
   

  	
  Not
  Applicable

  
	
  (c)

  	
   

  	
   

  	
  Not
  Applicable

  

 

	
  (1)

  	
  Note:

  	
  This reconciliation and tie shall not, for any
  purpose, be deemed to be a part of the Indenture.

  

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  PARTIES

  	
  1

  
	
   

  	
   

  
	
  RECITALS

  	
   

  
	
   

  	
   

  
	
  Authorization of Securities

  	
  1

  
	
  Authorization of Indenture

  	
  1

  
	
  Compliance with Legal Requirements

  	
  1

  
	
  Purpose of and Consideration for Indenture

  	
  1

  
	
   

  	
   

  
	
  ARTICLE ONE

  
	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  
	
  SECTION 1.1

  	
  Certain Terms Defined

  	
  2

  
	
   

  	
  Authenticating Agent

  	
  2

  
	
   

  	
  Board of Directors

  	
  2

  
	
   

  	
  Board Resolution

  	
  2

  
	
   

  	
  Business Day

  	
  2

  
	
   

  	
  Canadian Trust Indenture

  	
  2

  
	
   

  	
  Commission

  	
  2

  
	
   

  	
  Component Currency

  	
  3

  
	
   

  	
  Conversion Date

  	
  3

  
	
   

  	
  Conversion Event

  	
  3

  
	
   

  	
  Corporate Trust Office

  	
  3

  
	
   

  	
  covenant defeasance

  	
  3

  
	
   

  	
  Currency

  	
  3

  
	
   

  	
  Depositary

  	
  3

  
	
   

  	
  Designated Subsidiary

  	
  3

  
	
   

  	
  Dollar or $

  	
  5

  
	
   

  	
  Dollar Equivalent of the Currency Unit

  	
  5

  
	
   

  	
  Dollar Equivalent of the Foreign Currency

  	
  5

  
	
   

  	
  Election Date

  	
  5

  
	
   

  	
  Euro

  	
  5

  
	
   

  	
  Event of Default

  	
  5

  
	
   

  	
  Exchange Rate Agent

  	
  5

  
	
   

  	
  Exchange Rate Officer’s Certificate

  	
  5

  
	
   

  	
  Financial Intermediary

  	
  5

  
	
   

  	
  First Mortgage Pipe Line Bonds

  	
  5

  
	
   

  	
  Foreign Currency

  	
  5

  
	
   

  	
  Foreign Currency Securities

  	
  5

  
	
   

  	
  Funded Obligations

  	
  5

  
	
   

  	
  Government Obligations

  	
  6

  

 

 

	
   

  	
  Holder, Holder
  of Securities, Securityholder

  	
  6

  
	
   

  	
  Indebtedness

  	
  6

  
	
   

  	
  Indenture

  	
  6

  
	
   

  	
  Independent Appraiser

  	
  6

  
	
   

  	
  Index Currency

  	
  7

  
	
   

  	
  Interest

  	
  7

  
	
   

  	
  Investment

  	
  7

  
	
   

  	
  Issuer

  	
  7

  
	
   

  	
  Issuer Order

  	
  7

  
	
   

  	
  Judgment Currency

  	
  7

  
	
   

  	
  London Business Day

  	
  7

  
	
   

  	
  Market Exchange Rate

  	
  7

  
	
   

  	
  Mortgage

  	
  8

  
	
   

  	
  Officer’s Certificate

  	
  8

  
	
   

  	
  Opinion of Counsel

  	
  8

  
	
   

  	
  original issue date

  	
  8

  
	
   

  	
  Original Issue Discount Security

  	
  8

  
	
   

  	
  Outstanding

  	
  8

  
	
   

  	
  Periodic Offering

  	
  9

  
	
   

  	
  Person

  	
  9

  
	
   

  	
  principal

  	
  9

  
	
   

  	
  Principal Financial Center

  	
  9

  
	
   

  	
  Purchase Money Mortgage

  	
  9

  
	
   

  	
  Purchase Money Obligation

  	
  10

  
	
   

  	
  Record Date

  	
  10

  
	
   

  	
  Registered Global Security

  	
  10

  
	
   

  	
  Repayment Date

  	
  10

  
	
   

  	
  Repayment Price

  	
  10

  
	
   

  	
  Required Currency

  	
  10

  
	
   

  	
  Responsible Officer

  	
  10

  
	
   

  	
  Security or Securities

  	
  10

  
	
   

  	
  Significant Subsidiary

  	
  10

  
	
   

  	
  Specified Amount

  	
  10

  
	
   

  	
  Specified Currency

  	
  10

  
	
   

  	
  Subsidiary

  	
  11

  
	
   

  	
  TCPL Finance N.V.

  	
  11

  
	
   

  	
  Termination Amount

  	
  11

  
	
   

  	
  TransCan Investments Limited

  	
  11

  
	
   

  	
  Trust Indenture Act of 1939 or TIA

  	
  11

  
	
   

  	
  Trustee

  	
  11

  
	
   

  	
  United States

  	
  11

  
	
   

  	
  Valuation Date

  	
  11

  
	
   

  	
  Voting Shares

  	
  11

  
	
   

  	
  Yield to Maturity

  	
  11

  

 

 

	
  ARTICLE TWO

  
	
   

  
	
  SECURITIES

  
	
   

  
	
  SECTION 2.1 Forms Generally

  	
  11

  
	
  SECTION 2.2 Form of Trustee’s Certificate of
  Authentication

  	
  12

  
	
  SECTION 2.3 Amount Unlimited; Issuable in Series

  	
  12

  
	
  SECTION 2.4 Authentication and Delivery of Securities

  	
  15

  
	
  SECTION 2.5 Execution of Securities

  	
  17

  
	
  SECTION 2.6 Certificate of Authentication

  	
  18

  
	
  SECTION 2.7 Denomination and Date of Securities;
  Payments of Interest

  	
  18

  
	
  SECTION 2.8 Registration, Transfer and Exchange

  	
  18

  
	
  SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and
  Stolen Securities

  	
  21

  
	
  SECTION 2.10 Cancellation of Securities; Destruction
  Thereof

  	
  22

  
	
  SECTION 2.11 Temporary Securities

  	
  22

  
	
  SECTION 2.12 Currency and Manner of Payments in
  Respect of Securities

  	
  22

  
	
  SECTION 2.13 Appointment and Resignation of Successor
  Exchange Rate Agent

  	
  26

  
	
   

  
	
  ARTICLE THREE

  
	
   

  
	
  COVENANTS
  OF THE ISSUER

  
	
   

  	
   

  
	
  SECTION 3.1 Payment of Principal and Interest

  	
  26

  
	
  SECTION 3.2 Offices for Payments, Etc.

  	
  27

  
	
  SECTION 3.3 Appointment to Fill a Vacancy in Office of
  Trustee

  	
  27

  
	
  SECTION 3.4 Paying Agents

  	
  27

  
	
  SECTION 3.5 Written Statement to Trustee

  	
  28

  
	
  SECTION 3.6 Limitation on Liens, Ownership of
  Subsidiaries and Certain Other Transactions

  	
  29

  
	
   

  	
   

  
	
  ARTICLE FOUR

  
	
   

  
	
  SECURITYHOLDERS
  LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE

  
	
   

  	
   

  
	
  SECTION 4.1 Issuer to Furnish Trustee Information as
  to Names and Addresses of Securityholders

  	
  31

  
	
  SECTION 4.2 Reports by the Trustee

  	
  31

  
	
  SECTION 4.3 Reports by the Issuer

  	
  31

  
	
   

  	
   

  
	
  ARTICLE FIVE

  
	
   

  
	
  REMEDIES
  OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

  
	
   

  	
   

  
	
  SECTION 5.1 Event of Default Defined; Acceleration of
  Maturity; Waiver of Default

  	
  32

  
	
  SECTION 5.2 Collection of Indebtedness by Trustee;
  Trustee May Prove Debt

  	
  35

  
	
  SECTION 5.3 Application of Proceeds

  	
  37

  
	
  SECTION 5.4 Suits for Enforcement

  	
  37

  
	
  SECTION 5.5 Restoration of Rights on Abandonment of
  Proceedings

  	
  38

  
	
  SECTION 5.6 Limitations on Suits by Securityholders

  	
  38

  

 

 

	
  SECTION 5.7 Powers and Remedies Cumulative; Delay or
  Omission Not Waiver of Default

  	
  38

  
	
  SECTION 5.8 Control by Holders of Securities

  	
  39

  
	
  SECTION 5.9 Waiver of Past Defaults

  	
  39

  
	
  SECTION 5.10 Right of Court to Require Filing of
  Undertaking to Pay Costs

  	
  40

  
	
  SECTION 5.11 Waiver of Stay or Extension Laws

  	
  40

  
	
  SECTION 5.12 Unconditional Right of Securityholders to
  Institute Certain Suits

  	
  40

  
	
  SECTION 5.13 Notice of Events of Default

  	
  40

  
	
   

  	
   

  
	
  ARTICLE SIX

  
	
   

  
	
  CONCERNING
  THE TRUSTEE

  
	
   

  	
   

  
	
  SECTION 6.1 Certain Rights of the Trustee

  	
  41

  
	
  SECTION 6.2 Trustee Not Responsible for Recitals,
  Disposition of Securities or Application of Proceeds Thereof

  	
  42

  
	
  SECTION 6.3 Trustee and Agents May Hold Securities;
  Collections; Etc.

  	
  42

  
	
  SECTION 6.4 Moneys Held by Trustee

  	
  43

  
	
  SECTION 6.5 Compensation and Indemnification of
  Trustee and Its Prior Claim

  	
  43

  
	
  SECTION 6.6 Right of Trustee to Rely on Officer’s
  Certificate, Etc.

  	
  43

  
	
  SECTION 6.7 Persons Eligible for Appointment as
  Trustee

  	
  43

  
	
  SECTION 6.8 Resignation and Removal; Appointment of
  Successor Trustee

  	
  44

  
	
  SECTION 6.9 Acceptance of Appointment by Successor
  Trustee

  	
  45

  
	
  SECTION 6.10 Merger, Conversion, Consolidation or
  Succession to Business of Trustee

  	
  46

  
	
  SECTION 6.11 Appointment of Authenticating Agent

  	
  46

  
	
   

  	
   

  
	
  ARTICLE SEVEN

  
	
   

  
	
  CONCERNING
  THE SECURITYHOLDERS

  
	
   

  	
   

  
	
  SECTION 7.1 Evidence of Action Taken by
  Securityholders

  	
  47

  
	
  SECTION 7.2 Proof of Execution of Instruments and of
  Holding of Securities

  	
  48

  
	
  SECTION 7.3 Holders to Be Treated as Owners

  	
  48

  
	
  SECTION 7.4 Securities Owned by Issuer Deemed Not
  Outstanding

  	
  48

  
	
  SECTION 7.5 Right of Revocation of Action Taken

  	
  49

  
	
  SECTION 7.6 Determination of Holders of Securities

  	
  49

  
	
   

  	
   

  
	
  ARTICLE EIGHT

  
	
   

  
	
  SUPPLEMENTAL
  INDENTURES

  
	
   

  	
   

  
	
  SECTION 8.1 Supplemental Indentures Without Consent of
  Securityholders

  	
  50

  
	
  SECTION 8.2 Supplemental Indentures with Consent of
  Securityholders

  	
  51

  
	
  SECTION 8.3 Effect of Supplemental Indenture

  	
  52

  
	
  SECTION 8.4 Documents to Be Given to Trustee

  	
  52

  
	
  SECTION 8.5 Notation on Securities in Respect of
  Supplemental Indentures

  	
  52

  

 

 

	
  ARTICLE NINE

  
	
   

  
	
  CONSOLIDATION,
  MERGER, SALE OR CONVEYANCE

  
	
   

  	
   

  
	
  SECTION 9.1 Covenant Not to Merge, Consolidate, Sell
  or Convey Property Except Under Certain Conditions

  	
  53

  
	
  SECTION 9.2 Successor Corporation Substituted

  	
  53

  
	
  SECTION 9.3 Opinion of Counsel Delivered to Trustee

  	
  53

  
	
   

  	
   

  
	
  ARTICLE TEN

  
	
   

  
	
  SATISFACTION
  AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

  
	
   

  	
   

  
	
  SECTION 10.1 Satisfaction and Discharge of Indenture

  	
  54

  
	
  SECTION 10.2 Application by Trustee of Funds Deposited
  for Payment of Securities

  	
  58

  
	
  SECTION 10.3 Repayment of Moneys Held by Paying Agent

  	
  58

  
	
  SECTION 10.4 Return of Moneys Held by Trustee and
  Paying Agent Unclaimed for Two Years

  	
  58

  
	
  SECTION 10.5 Indemnity for Government Obligations

  	
  59

  
	
   

  	
   

  
	
  ARTICLE ELEVEN

  
	
   

  
	
  MISCELLANEOUS
  PROVISIONS

  
	
   

  	
   

  
	
  SECTION 11.1 Incorporators, Stockholders, Officers and
  Directors of Issuer Exempt from Individual Liability

  	
  59

  
	
  SECTION 11.2 Provisions of Indenture for the Sole
  Benefit of Parties and Holders of Securities

  	
  59

  
	
  SECTION 11.3 Successors and Assigns of Issuer Bound by
  Indenture

  	
  59

  
	
  SECTION 11.4 Notices and Demands on Issuer, Trustee
  and Holders of Securities

  	
  59

  
	
  SECTION 11.5 Officer’s Certificates and Opinions of
  Counsel; Statements to Be Contained Therein

  	
  60

  
	
  SECTION 11.6 Payments Due on Saturdays, Sundays and
  Holidays

  	
  61

  
	
  SECTION 11.7 Governing Law

  	
  61

  
	
  SECTION 11.8 Counterparts

  	
  61

  
	
  SECTION 11.9 Effect of Headings

  	
  61

  
	
  SECTION 11.10 Judgment Currency

  	
  61

  
	
  SECTION 11.11 Currency Equivalent

  	
  62

  
	
  SECTION 11.12 Consent to Jurisdiction and Service of
  Process

  	
  62

  
	
  SECTION 11.13 Waiver of Jury Trial

  	
  63

  
	
  SECTION 11.14 Force Majeure

  	
  63

  
	
   

  	
   

  
	
  ARTICLE TWELVE

  
	
   

  
	
  REDEMPTION
  OF SECURITIES AND SINKING FUNDS

  
	
   

  	
   

  
	
  SECTION 12.1 Applicability of Article

  	
  63

  
	
  SECTION 12.2 Notice of Redemption; Partial Redemptions

  	
  64

  

 

 

	
  SECTION 12.3 Payment of Securities Called for
  Redemption

  	
  65

  
	
  SECTION 12.4 Exclusion of Certain Securities from
  Eligibility for Selection for Redemption

  	
  65

  
	
  SECTION 12.5 Mandatory and Optional Sinking Funds

  	
  66

  
	
   

  	
   

  
	
  ARTICLE THIRTEEN

  
	
   

  
	
  REPAYMENT
  AT OPTION OF HOLDERS

  
	
   

  	
   

  
	
  SECTION 13.1 Applicability of Article

  	
  68

  
	
  SECTION 13.2 Repayment of Securities

  	
  68

  
	
  SECTION 13.3 Exercise of Option

  	
  68

  
	
  SECTION 13.4 When Securities Presented for Repayment
  Become Due and Payable

  	
  69

  
	
  SECTION 13.5 Securities Repaid in Part

  	
  69

  

 

 

THIS
SECOND AMENDED AND RESTATED INDENTURE (the “Indenture”), dated as of September 15,
2010 between TRANSCANADA PIPELINES LIMITED, a corporation organized under the
laws of Canada (the “Issuer”), and THE BANK OF NEW YORK MELLON, a corporation
organized under the laws of the State of New York, as successor trustee (the “Trustee”).

 

W I T N E S S E T H:

 

WHEREAS,
the Issuer and Canadian Imperial Bank of Commerce (New York) entered into a
debt indenture (the “1991 Indenture”) dated as of January 10, 1991, providing
for the creation and issuance from time to time of the Issuer’s unsecured
debentures, notes or other evidences of indebtedness to be created and issued
in one or more series (the “Securities”) up to such principal amount or amounts
as may from time to time be authorized;

 

WHEREAS,
the 1991 Indenture was supplemented by a supplemental indenture dated as of April 7,
1995 (the “First Supplemental Indenture”) between the Issuer and Bank of
Montreal Trust Company (as successor trustee), providing for transactions
involving Securities denominated in foreign currencies;

 

WHEREAS,
the 1991 Indenture and the First Supplemental Indenture were supplemented by a
second supplemental indenture dated as of March 12, 1998 (the “Second
Supplemental Indenture”) between the Issuer and Bank of Montreal Trust Company,
providing for the issuance of 6.43% putable callable notes of the Issuer due
2029 (the “Callable Notes”);

 

WHEREAS
the 1991 Indenture, the First Supplemental Indenture and the Second
Supplemental Indenture (collectively, the “Original Indenture”) was amended and
restated on November 30, 2000 (the “Amended and Restated Indenture”) to,
among other things, consolidate the Original Indenture documentation and
provide for Euro transactions;

 

WHEREAS
the Issuer and the Trustee desire to amend and restate the Amended and Restated
Indenture to, among other things, reflect the new name of the Trustee, expand
upon certain rights of the Trustee, delete the references to the Callable Notes
which were all repaid in 2004, and make certain other clarifications to its
terms;

 

WHEREAS,
the Issuer has duly authorized the execution and delivery of this Indenture to
provide, among other things, for the creation, issue, authentication, delivery
and administration of the Securities; and

 

WHEREAS,
all things necessary to make this Indenture a valid indenture and legally,
binding agreement according to its terms have been done;

 

NOW,
THEREFORE:

 

In
consideration of the premises and the purchases of the Securities by the
holders thereof, the Issuer and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
the Securities as follows:

 

 

ARTICLE ONE

 

DEFINITIONS

 

SECTION 1.1  Certain Terms Defined.  The following terms (except as otherwise
expressly provided or unless the context otherwise clearly requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section.   All other terms used in this Indenture that
are defined in the Trust Indenture Act of 1939 or the definitions of which in
the Securities Act of 1933 are referred to in the Trust Indenture Act of 1939,
including terms defined therein by reference to the Securities Act of 1933 (except
as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
Indenture.  All accounting terms used
herein and not expressly defined shall have the meanings assigned to such terms
in accordance with generally accepted accounting principles in Canada and the
term “generally accepted Canadian accounting principles” means such
accounting principles as are generally accepted in Canada at the time of
computation and may include international financial reporting standards or
United States generally accepted accounting principles.  The words “herein”, “hereof”
and “hereunder” and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.  The terms defined in this Article include
the plural as well as the singular.

 

“Authenticating Agent”
shall have the meaning set forth in Section 6.11.

 

“Board of Directors”
means either the Board of Directors of the Issuer or any committee of such
Board duly authorized to act on its behalf.

 

“Board Resolution”
means a copy of one or more resolutions, certified by the secretary or an
assistant secretary of the Issuer to have been duly adopted or consented to by
the Board of Directors and to be in full force and effect, and delivered to the
Trustee.

 

“Business Day”
means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which commercial banks are authorized or required by law,
regulation or executive order to close in The City of New York; provided,
however, that, with respect to Foreign Currency Securities, the day must also
not be a day on which commercial banks are authorized or required by law,
regulation or executive order to close in the Principal Financial Center of the
country issuing the Specified Currency (or, if the Specified Currency is Euro,
the day must also be a day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open); provided, further,
that, with respect to Securities as to which the London interbank offered rate
(LIBOR) is an applicable interest rate basis, the day must also be a London
Business Day.

 

“Canadian Trust
Indenture” means the trust indenture dated as of June 15, 1970,
between the Issuer and Crown Trust Company, as from time to time amended.

 

“Commission” means
the Securities and Exchange Commission, as from time to time constituted,
created under the Securities Exchange Act of 1934, or if at any time after the 

 

2

 

execution and delivery of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.

 

“Component Currency”
shall have the meaning set forth in Section 2.12.

 

“Conversion Date” has the meaning specified in Section 2.12(d).

 

“Conversion Event”
means the cessation of use of (i) a Foreign Currency (other than the Euro
or other currency unit) both by the government of the country which issued such
Currency and for the settlement of transactions by a central bank or other
public institutions of or within the international banking community, (ii) the
Euro or (iii) any currency unit (or composite currency) other than Euro
for the purposes for which it was established.

 

“Corporate Trust Office”
means the office of the Trustee at which the corporate trust business of the
Trustee shall, at any particular time, be principally administered, which
office is, at the date as of which this Indenture is dated, located at 101
Barclay Street, FL 4-E, New York, NY 10286.

 

“covenant defeasance”
shall have the meaning set forth in Section 10.1(C).

 

“Currency” means
any currency or currencies, composite currency or currency unit or currency
units, including, without limitation, the Euro, issued by the government of one
or more countries or by any recognized confederation or association of such
governments.

 

“Depositary” means,
with respect to the Securities of any series issuable or issued in the form of
one or more Registered Global Securities, the Person designated as Depositary
by the Issuer pursuant to Section 2.3 until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter “Depositary” shall mean or include each Person who is then a
Depositary hereunder, and if at any time there is more than one such Person, “Depositary”
as used with respect to the Securities of any such series shall mean the
Depositary with respect to the Registered Global Securities of that series.

 

“Designated Subsidiary”
means:

 

(a)                                  any Subsidiary which:

 

(i)                                     is engaged in or proposes to engage in the business of producing,
gathering, processing, storing, manufacturing, compressing, liquefying,
selling, transporting, transmitting, distributing or supplying natural,
manufactured or mixed gas or extracts there from, in gaseous, liquefied or
other form, for light, heat, cold, fuel or other purposes, or in the business
of acquiring, owning, exploring, developing, dealing in, selling or otherwise
disposing of oil or gas, or any products thereof, or oil or gas properties and
interests therein; and

 

(ii)                                  shall have been designated by the Board of Directors of the Issuer as a “restricted
subsidiary” under the Mortgage on or prior to the date such Subsidiary became a
Subsidiary or, in the case of a corporation which was a Subsidiary at
March 1, 1964, on 

 

3

 

or
prior to the first date thereafter on which the Issuer shall make an additional
Investment in such Subsidiary; or

 

(b)                                 any Subsidiary that:

 

(i)                                     is chiefly engaged in or proposed to chiefly engage in the business of
producing, gathering, processing, storing, manufacturing, compressing,
liquefying, selling, transporting, transmitting, distributing or supplying
natural, manufactured or mixed gas or extracts therefrom, in gaseous, liquefied
or other form, for light, heat, cold, fuel or other purposes, or in the
business of acquiring, owning, exploring, developing, dealing in, selling or
otherwise disposing of oil or gas or any products thereof or oil and gas
properties and interests therein; or

 

(ii)                                  is a Financial Intermediary;

 

and,
in the case of both (b)(i) and (ii), does not at the time of designation
have outstanding any Funded Obligations (other than those held by the Issuer or
its Designated Subsidiaries) which were issued after the date such Designated
Subsidiary became a Subsidiary and of which there is owned by the Issuer and/or
its Designated Subsidiaries Voting Shares which, in the aggregate, entitle the
holders thereof to elect at least a majority of the directors of such first
mentioned corporation; or

 

(c)                                  TCPL Finance N.V.; or

 

(d)                                 TransCan Investments Limited; and

 

(e)                                  each Subsidiary of the Issuer which is classified as a “Designated
Subsidiary” as such term is defined in the Canadian Trust Indenture;

 

and,
in the case of clauses (a), (b), (c) and (d), which shall have been
designated from time to time by resolution of the Board of Directors of the
Issuer as a Designated Subsidiary, provided that any designation
pursuant to clauses (a), (b), (c) or (d) or classification as a
Designated Subsidiary pursuant to clause (e) may be revoked from time
to time by further resolution of the Board of Directors of the Issuer if, but
only if, the entity which is a Designated Subsidiary under this Indenture could
cease to be classified as a Designated Subsidiary under the Canadian Trust
Indenture.

 

Notwithstanding
the foregoing, if at any time there is no Indebtedness outstanding under either
the Mortgage or the Canadian Trust Indenture, then for purposes of this
Indenture the term “Designated Subsidiary” shall mean (x) each entity and
each successor thereto which is classified as a “Designated Subsidiary” under
the Mortgage if there has been since the date of this Indenture Indebtedness
outstanding under the Mortgage at a time when no Indebtedness was outstanding
under the Canadian Trust Indenture or (y) each entity which is classified
as a “Designated Subsidiary” under the Canadian Trust Indenture if there has
been since the date of this Indenture Indebtedness outstanding under the
Canadian Trust Indenture at a time when no Indebtedness was outstanding under
the Mortgage.

 

4

 

“Dollar” or “$”
means the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.

 

“Dollar Equivalent of
the Currency Unit” has the meaning specified in Section 2.12(g).

 

“Dollar Equivalent of
the Foreign Currency” has the meaning specified in Section 2.12(f).

 

“Election Date” has
the meaning specified in Section 2.12(h).

 

“Euro” means the
single currency of the participating member states from time to time of the
European Union described in legislation of the European Council for the
operation of a single unified European currency (whether known as the Euro or
otherwise).

 

“Event of Default”
means any event or condition specified as such in Section 5.1.

 

“Exchange Rate Agent” means, with respect to Securities of or within any series, unless
otherwise specified with respect to any Securities pursuant to Section 2.3,
a New York Clearing House bank, designated pursuant to Section 2.3 or Section 2.13.

 

“Exchange Rate Officer’s
Certificate” means a tested telex or a certificate setting forth (i) the
applicable Market Exchange Rate and (ii) the Dollar or Foreign Currency
amounts of principal and interest, if any (on an aggregate basis and on the
basis of a Security having the lowest denomination principal amount determined
in accordance with Section 2.3 in the relevant Currency), payable with
respect to a Security of any series on the basis of such Market Exchange Rate,
sent (in the case of a telex) or signed (in the case of a certificate) by the
Treasurer, any Vice President or any Assistant Treasurer of the Issuer.

 

“Financial Intermediary”
means a Subsidiary which is chiefly engaged in or proposes chiefly to engage in
the business of or whose principal activity or undertaking is or will be:  (a)  the holding, directly or
indirectly, of any securities of any corporation or entity in which the Issuer
also has an ownership interest of any kind or (b) the entering into and
maintaining of relations or arrangements, whether contractual or otherwise,
with any such corporation or entity for the purpose of facilitating financial
transactions with such corporation or entity.

 

“First Mortgage Pipe
Line Bonds” means all bonds issued from time to time under the Mortgage.

 

“Foreign Currency”
means any currency other than Currency of the United States.

 

“Foreign Currency
Securities” means Securities denominated in a Foreign Currency.

 

“Funded Obligations”
means all Indebtedness of the obligor or Indebtedness of others upon which the
obligor customarily pays interest charges, other than (i) Indebtedness
which is payable on demand and (ii) Indebtedness which matures by its
terms, or which the obligor has the right at its option to renew or extend to a
date, 24 months or less after the date of 

 

5

 

its incurrence by the obligor or the date on which
the obligor commenced to pay interest charges thereon.

 

“Government Obligations”
means, unless otherwise specified with respect to any series of Securities
pursuant to Section 2.3, Securities which are (i) direct obligations
of the government which issued the Currency in which the Securities of a
particular series are payable or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the government
which issued the Currency in which the Securities of such series are payable,
the payment of which is unconditionally guaranteed by such government, which,
in either case, are full faith and credit obligations of such government
payable in such Currency and are not callable or redeemable at the option of
the issuer thereof and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such Government Obligation or
a specific payment of interest on or principal of any such Government
Obligation held by such custodian for the account of the holder of a depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
Government Obligation or the specific payment of interest or principal of the
Government Obligation evidenced by such depository receipt.

 

“Holder”, “Holder
of Securities”, “Securityholder” or other similar terms mean the
person in whose name such Security is registered in the security register kept
by the Issuer for that purpose in accordance with the terms hereof.

 

“Indebtedness”,
as to any corporation, means and includes, without duplication, (a) all
items of indebtedness or liability which in accordance with generally accepted
Canadian accounting principles would be considered to be direct indebtedness or
liabilities of such Person as at the date as of which indebtedness is to be
determined; (b) the full amount of all liabilities of others for the
repayment, either in money or in property, of borrowed money, guaranteed or
endorsed (otherwise than for purposes of collection) by such Person, or which
such Person is obligated, contingently or otherwise, to purchase, or on which
such Person is otherwise contingently liable; and (c) liabilities secured
by Purchase Money Mortgages on property owned by such Person or by mortgages or
liens existing on such property at the time of acquisition thereof by such
Person or by conditional sales or other title retention agreements with respect
to any such property, whether or not such liabilities shall have been assumed
by such Person.

 

“Indenture” means
this instrument as originally executed and delivered or, if amended or
supplemented as herein provided, as so amended or supplemented or both, and
shall include the forms and terms of particular series of Securities
established as contemplated hereunder.

 

“Independent Appraiser”
means a person engaged in the business of appraising the value of the
securities of corporations engaged in the types of business referred to in
clause (b)(i) of the definition of “Designated Subsidiary” or
otherwise qualified to pass upon the particular question of appraisal, who is
not an employee of, and who or which is in fact independent of, but who or
which may be on a regular retainer from, the Issuer or any Subsidiary of the
Issuer.

 

6

 

“Index Currency”
means the Currency specified by a Holder as the currency for which the London
interbank offered rate (LIBOR) shall be calculated.

 

“Interest” means, when
used with respect to non-interest bearing Securities, interest payable after
maturity.

 

“Investment” means
the purchase or other acquisition, direct or indirect, of capital stock or
Indebtedness of any Person arising from borrowing, the making of a capital
contribution in any form to any Person (other than an incorporated trade
association or research institution not carrying on business for profit) and
the payment of, or obligation to pay (other than the contingent obligation of a
guarantor before liability for payment has arisen), any amount to any Person
under a guarantee of any Indebtedness of any Person, and the term “Investment”
shall also mean and include the interest or claim acquired or created by the
making of any Investment; the amount of an Investment shall be the amount at
which such Investment is entered in the accounting records of the Person making
such Investment at the time of making thereof as required by generally accepted
Canadian accounting principles.

 

“Issuer” means
(except as otherwise provided in Article Six) TransCanada PipeLines
Limited, a corporation organized under the laws of Canada and, subject to Article Nine,
its successors and assigns.

 

“Issuer Order”
means a written statement, request or order of the Issuer signed in its name by
the chairman or vice chairman of the Board of Directors, the president, the
chief financial officer, the vice president of finance or the treasurer of the
Issuer.

 

“Judgment Currency”
shall have the meaning set forth in Section 11.10.

 

“London
Business Day” means a day on which commercial banks are open for business
(including dealings in the Index Currency) in London.

 

“Market Exchange Rate”
means, unless otherwise specified with respect to any Securities pursuant to Section 2.3,
(a) for any conversion involving a currency unit on the one hand and
Dollars or any Foreign Currency on the other, the exchange rate between the
relevant currency unit and Dollars or such Foreign Currency calculated by the
method specified pursuant to Section 2.3 for the Securities of the
relevant series, (b) for any conversion of Dollars into any Foreign
Currency, the noon (New York City time) buying rate for such Foreign Currency
for cable transfers quoted in New York City as certified for customs purposes
by the Federal Reserve Bank of New York and (c) for any conversion of one
Foreign Currency into Dollars or another Foreign Currency, the spot rate at
noon local time in the relevant market at which, in accordance with normal
banking procedures, the Dollars or Foreign Currency into which conversion is
being made could be purchased with the Foreign Currency from which conversion
is being made from major banks located in either New York City, London or any
other principal market for Dollars or such purchased Foreign Currency, in each
case determined by the Exchange Rate Agent. 
Unless otherwise specified with respect to any Securities pursuant to Section 2.3,
in the event of the unavailability of any of the exchange rates provided for in
the foregoing clauses (a), (b) and (c), the Exchange Rate Agent shall use,
in its sole discretion and without liability on its part, such quotation of the
Federal Reserve Bank of New York as of the 

 

7

 

most recent available date, or quotations from one
or more major banks in New York City, London or another principal market for
the Currency in question, or such other quotations as the Exchange Rate Agent
shall deem appropriate.  Unless otherwise
specified by the Exchange Rate Agent, if there is more than one market for
dealing in any Currency by reason of foreign exchange regulations or otherwise,
the market to be used in respect of such Currency shall be that upon which a
non-resident issuer of securities designated in such Currency would purchase
such Currency in order to make payments in respect of such securities.

 

“Mortgage” means
the Deed of Trust and Mortgage and Trust Deed of Hypothec, Mortgage and Pledge,
both dated as of January 1, 1957 and made between the Issuer and National
Trust Company, Limited, as trustee, as from time to time amended.

 

“Officer’s Certificate”
means a certificate signed by the chairman or vice chairman of the Board of
Directors, the president, the chief financial officer, the vice president of
finance or the treasurer of the Issuer and delivered to the Trustee.  Each such certificate shall include the
statements provided for in Section 11.5.

 

“Opinion of Counsel”
means an opinion in writing signed by a general counsel of the Issuer or by
such other legal counsel who may be an employee of or counsel to the Issuer and
who shall be satisfactory to the Trustee. 
Each such opinion shall include the statements provided for in
Section 11.5.

 

“original issue date”
of any Security (or portion thereof) means the earlier of (a) the date of
such Security or (b) the date of any Security (or portion thereof) for
which such Security was issued (directly or indirectly) on registration of
transfer, exchange or substitution.

 

“Original Issue
Discount Security” means any Security that provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of
acceleration of the maturity thereof pursuant to Section 5.1.

 

“Outstanding”, when
used with reference to Securities, shall, subject to the provisions of Section 7.4,
mean, as of any particular time, all Securities authenticated and delivered by
the Trustee under this Indenture, except

 

(a)          Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;

 

(b)         Securities,
or portions thereof, for the payment, repayment at the option of the Holder or
redemption of which moneys or Government Obligations in the necessary amount
shall have been deposited in trust with the Trustee or with any paying agent
(other than the Issuer) or shall have been set aside, segregated and held in
trust by the Issuer for the Holders of such Securities (if the Issuer shall act
as its own paying agent); provided that
if such Securities, or portions thereof, are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made for
giving such notice; and

 

(c)          Securities which shall have been paid or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the terms of
Section 

 

8

 

2.9
(except with respect to any such Security as to which proof satisfactory to the
Trustee is presented that such Security is held by a person in whose hands such
Security is a legal, valid and binding obligation of the Issuer).

 

In
determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (a) the
portion of the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purpose shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity thereof
pursuant to Section 5.1 and (b) the principal amount of any Security
denominated in a Foreign Currency that may be counted in making such
determination or calculation and that shall be deemed Outstanding for such
purpose shall be equal to the Dollar equivalent, determined as of the date such
Security is originally issued by the Issuer as set forth in an Exchange Rate
Officer’s Certificate delivered to the Trustee, of the principal amount (or, in
the case of an Original Issue Discount Security, the Dollar equivalent as of
such date of original issuance of the amount determined as provided in clause (a) above),
of such Security.

 

“Periodic Offering”
means an offering of Securities of a series from time to time, the specific
terms of which Securities, including, without limitation, the rate or rates of
interest, if any, thereon, the stated maturity or maturities thereof and the
redemption provisions, if any, with respect thereto, are to be determined by
the Issuer or its agents upon the issuance of such Securities.

 

“Person” means any
individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.

 

“principal”,
whenever used with reference to the Securities or any Security or any portion
thereof, shall be deemed to include “and premium, if any”.

 

“Principal Financial
Center” means, as applicable:

 

(a)                                  the capital city of the country issuing the Specified Currency; or

 

(b)         the
capital city of the country to which the Index Currency relates;

 

provided,
however, that with respect to United States dollars, Australian dollars,
Canadian dollars, Deutsche marks, Dutch guilders, Italian lire, Portuguese
escudos, South African rand and Swiss francs, the “Principal Financial Center”
shall be The City of New York, Sydney and (solely in the case of the Specified
Currency) Melbourne, Toronto, Frankfurt, Amsterdam, Milan, London (solely in
the case of the Index Currency), Johannesburg and Zurich, respectively.

 

“Purchase Money
Mortgage” means a mortgage, charge or other lien on or against any property
securing any Purchase Money Obligation for such property.

 

9

 

“Purchase Money
Obligation” means any Indebtedness created or assumed as part of the
purchase price of real or tangible personal property, whether or not secured,
and any extensions, renewals or refundings of any such Indebtedness, provided
that the principal amount of such Indebtedness outstanding on the date of such
extension, renewal or refunding is not increased and provided  further
that any security given in respect of such Indebtedness shall not extend to any
property other than the property acquired in connection with which such
Indebtedness was created or assumed and fixed improvements, if any, erected or
constructed thereon.

 

“Record Date” shall
have the meaning set forth in Section 2.7.

 

“Registered Global
Security” means a Security evidencing all or a part of a series of
Securities, issued to the Depositary for such series in accordance with Section 2.4,
and bearing the legend prescribed in Section 2.4.

 

“Repayment Date”
means, when used with respect to any Security to be repaid at the option of the
Holder, the date fixed for such repayment pursuant to this Indenture.

 

“Repayment Price”
means, when used with respect to any Security to be repaid at the option of the
Holder, the price at which it is to be repaid pursuant to this Indenture.

 

“Required Currency”
shall have the meaning set forth in Section 11.10.

 

“Responsible Officer”
when used with respect to the Trustee means any vice president (whether or not
designated by numbers or words added before or after the title “vice president”),
the treasurer, any trust officer, any assistant trust officer, any assistant
vice president, any assistant treasurer, or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of his knowledge of
and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.

 

“Security” or “Securities”
has the meaning stated in the first recital of this Indenture, or, as the case
may be, Securities that have been authenticated and delivered under this
Indenture.

 

“Significant Subsidiary”
shall have the meaning assigned to such term in Rule 405 under the
Securities Act of 1933.

 

“Specified Amount”
shall have the meaning set forth in Section 2.12.

 

“Specified Currency”
means the Currency in which a Security is denominated (or, if that Currency is
no longer legal tender for the payment of public and private debts in the
country issuing that Currency or, in the case of Euro, in the member states of
the European Union that have adopted the Euro, the Currency which is then legal
tender in the related country or in the adopting member states of the European
Union, as the case may be).

 

10

 

“Subsidiary”
means any corporation of which at the time of determination the Issuer owns or
controls directly or indirectly more than 50% of the Voting Shares.

 

“TCPL
Finance N.V.” means TCPL Finance N.V., a corporation incorporated under the
laws of the Netherlands Antilles, and any successor corporation thereto.

 

“Termination
Amount” shall have the meaning set forth in each of the MSIL Securities
Option Purchase Agreement and the UBS Securities Option Purchase Agreement.

 

“TransCan
Investments Limited” means TransCan Investments Limited, a corporation
incorporated under the laws of Guernsey, The Channel Islands, and any successor
corporation thereto.

 

“Trust
Indenture Act of 1939” or “TIA” (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939 as in force at the
date as of which this Indenture was originally executed.

 

“Trustee”
means the Person identified as “Trustee” in the first paragraph hereof and,
subject to the provisions of Article Six, shall also include any successor
trustee.  “Trustee” shall also mean or
include each Person who is then a trustee hereunder and, if at any time there
is more than one such Person, “Trustee” as used with respect to the Securities
of any series shall mean the trustee with respect to the Securities of such
series.

 

“United
States” means the United States of America (including the states thereof
and the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.

 

“Valuation
Date” has the meaning specified in Section 2.12(c).

 

“Voting
Shares” means shares of capital stock of any class of a corporation having
under all circumstances the right to vote for the election of the directors of
such corporation, provided that, for the purpose of this definition,
shares which only carry the right to vote conditionally on the happening of an
event shall not be considered Voting Shares whether or not such event shall
have happened.

 

“Yield
to Maturity” means the yield to maturity on a series of Securities, calculated
at the time of issuance of such series, or, if applicable, at the most recent
redetermination of interest on such series, and calculated in accordance with
accepted financial practice.

 

ARTICLE
TWO

 

SECURITIES

 

SECTION 2.1  Forms
Generally.  The Securities of each
series shall be substantially in such form (not inconsistent with this
Indenture) as shall be established by or pursuant to one or more Board
Resolutions (as set forth in a Board Resolution or, to the extent established
pursuant to rather than set forth in a Board Resolution, an Officer’s
Certificate 

 

11

 

detailing
such establishment) or in one or more indentures supplemental hereto, in each
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
conclusively evidenced by their execution of such Securities.

 

The definitive Securities shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities, as
conclusively evidenced by their execution of such Securities.

 

SECTION 2.2  Form
of Trustee’s Certificate of Authentication. 
The Trustee’s certificate of authentication on all Securities shall be
in substantially the following form:

 

“This is one of the Securities referred to in the
within-mentioned Indenture.

 

	
   

  	
   

  	
  ,

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Authorized Signatory”

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  
					

 

If at any time there shall be an Authenticating
Agent appointed with respect to any series of Securities, then the Trustee’s
Certificate of Authentication to be borne by the Securities of each such series
shall be substantially as follows:

 

“This is one of the Securities referred to in the
within-mentioned Indenture.

 

	
   

  	
   

  	
  ,

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  ,

  
	
   

  	
  as Authenticating Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Authorized Signatory”

  	
   

  

 

SECTION 2.3  Amount
Unlimited; Issuable in Series.  The
aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.

 

The Securities may be issued
in one or more series and the Securities of each such series shall rank equally
and pari passu with all other unsecured and unsubordinated debt of the
Issuer.  There shall be established in or
pursuant to one or more Board Resolutions 

 

12

 

(and, to the extent established pursuant to rather
than set forth in a Board Resolution, in an Officer’s Certificate detailing
such establishment) or established in one or more indentures supplemental
hereto, prior to the initial issuance of 
Securities of any series,

 

(1)                                  the designation
of the Securities of the series, which shall distinguish the Securities of the
series from the Securities of all other series;

 

(2)                                  any limit upon
the aggregate principal amount of the Securities of the series that may be
authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Securities of the series pursuant to Section 2.8,
2.9, 2.11, 8.5 or 12.3);

 

(3)                                  the date or dates
on which the principal of the Securities of the series is payable;

 

(4)                                  the rate or
rates at which the Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, on which such interest
shall be payable and on which a record shall be taken for the determination of
Holders to whom interest is payable and/or the method or methods by which such
rate or rates or date or dates shall be determined;

 

(5)                                  the place or
places where the principal of and any interest on Securities of the series
shall be payable, any Securities of any series may be surrendered for
registration of transfer, Securities of the series surrendered for exchange and
notices to or demands to or upon the Issuer in respect of the Securities of the
series and this Indenture may be served (if other than as provided in Section
3.2);

 

(6)                                  the right, if
any, of the Issuer to redeem Securities, in whole or in part, at its option and
the period or periods within which, the price or prices at which, the Currency
in which, and any terms and conditions upon which, Securities of the series may
be so redeemed, pursuant to any sinking fund or otherwise;

 

(7)                                  the obligation,
if any, of the Issuer to redeem, purchase or repay Securities of the series
pursuant to any mandatory redemption, sinking fund or analogous provisions or
at the option of a Holder thereof and the price or prices at which and the
period or periods within which or the date or dates on which, the Currency in
which, and any terms and conditions upon which Securities of the series shall
be redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;

 

(8)                                  if other than
denominations of $1,000 and any integral multiple thereof, the denominations in
which Securities of the series shall be issuable;

 

(9)                                  if other than
the principal amount thereof, the portion of the principal amount of Securities
of the series which shall be payable upon declaration of acceleration of the
maturity thereof pursuant to Section 5.1;

 

(10)                            whether and
under what circumstances the Issuer will pay additional amounts on the
Securities of the series held by a person who is not a U.S. person in 

 

13

 

respect of any tax, assessment or
governmental charge withheld or deducted and, if so, whether the Issuer will
have the option to redeem such Securities rather than pay such additional
amounts;

 

(11)                            if the
Securities of such series are to be issuable in definitive form (whether upon
original issue or upon exchange of a temporary Security of such series) only
upon receipt of certain certificates or other documents or satisfaction of
other conditions, the form and terms of such certificates, documents or
conditions;

 

(12)                            any trustees,
depositaries, authenticating or paying agents, transfer agents or registrars or
any other agents with respect to the Securities of such series;

 

(13)                            any other
events of default or covenants with respect to the Securities of such series;

 

(14)                            whether and
under what circumstances the Securities of the series will be convertible into
or exchangeable for securities of any Person;

 

(15)                            if other than
Dollars, the Currency in which payment of the principal of or interest, if any,
on the Securities of the series shall be payable or in which the Securities of
the series shall be denominated and the particular provisions applicable
thereto in accordance with, in addition to or in lieu of any of the provisions
of Section 2.12;

 

(16)                            whether the
principal of and interest, if any, on the Securities of the series are to be
payable, at the election of the Issuer or a Holder thereof, in a Currency other
than that in which such Securities are denominated or stated to be payable, the
period or periods within which (including the Election Date), and the terms and
conditions upon which, such election may be made, and the time and manner of
determining the exchange rate between the Currency in which such Securities are
denominated or stated to be payable and the Currency in which such Securities
are to be so payable, in each case in accordance with, in addition to or in
lieu of any of the provisions of Section 2.12;

 

(17)                            the designation
of the Exchange Rate Agent, if any; and

 

(18)                            any other terms
of the series (which terms shall not be inconsistent with the provisions of
this Indenture).

 

All Securities of any one
series shall be substantially identical, except as may otherwise be provided by
or pursuant to the Board Resolution or Officer’s Certificate referred to above
or as set forth in any such indenture supplemental hereto.  All Securities of any one series need not be
issued at the same time and may be issued from time to time, consistent with
the terms of this Indenture, if so provided by or pursuant to such Board
Resolution, such Officer’s Certificate or in any such indenture supplemental
hereto.  Unless otherwise specifically
provided with respect to a particular series of Securities, at any time the
Issuer may purchase Securities in the open market, by tender or by contract.

 

14

 

SECTION 2.4  Authentication
and Delivery of Securities.  The
Issuer may deliver Securities of any series executed by the Issuer to the
Trustee for authentication together with the applicable documents referred to
below in this Section, and the Trustee shall thereupon authenticate and deliver
such Securities to or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order.  The maturity
date, original issue date, interest rate and any other terms of the Securities
of such series shall be determined by or pursuant to such Issuer Order and
procedures.  If provided for in such
procedures, such Issuer Order may authorize authentication and delivery
pursuant to oral instructions from the Issuer or its duly authorized agent,
which instructions shall be promptly confirmed in writing.  In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be provided with receive and (subject to TIA
Section 315) shall be fully protected in relying upon, unless and until
such documents have been superseded or revoked:

 

(1)                                  an Issuer Order requesting such authentication
and setting forth delivery instructions if the Securities are not to be
delivered to the Issuer, provided that, with respect to Securities of a series
subject to a Periodic Offering, (a) such Issuer Order may be delivered by
the Issuer to the Trustee prior to the delivery to the Trustee of such
Securities for authentication and delivery, (b) the Trustee shall
authenticate and deliver Securities of such series for original issue from time
to time, in an aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or pursuant to
procedures acceptable to the Trustee as may be specified from time to time by
an Issuer Order, (c) the maturity date or dates, original issue date or
dates, interest rate or rates and any other terms of Securities of such series
shall be determined by an Issuer Order or pursuant to such procedures and
(d) if provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions from
the Issuer or its duly authorized agent or agents, which oral instructions
shall be promptly confirmed in writing;

 

(2)                                  any Board Resolution, Officer’s Certificate
and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by
or pursuant to which the forms and terms of the Securities were established;

 

(3)                                  an Officer’s Certificate setting forth the
form or forms and terms of the Securities stating that the form or forms and
terms of the Securities have been established pursuant to Sections 2.1 and 2.3
and comply with this Indenture, and covering such other matters as the Trustee
may reasonably request;

 

(4)                                  an Officer’s Certificate to the effect that
the terms and conditions of the Canadian Trust Indenture relating to the
creation, assumption or incurring of Funded Obligations (as such is defined in
the Canadian Trust Indenture) have been complied with; and

 

(5)                                  at the option of the Issuer, either an Opinion
of Counsel, or a letter addressed to the Trustee permitting it to rely on an
Opinion of Counsel, substantially to the effect that:

 

15

 

(a)                                  the forms of the Securities have been duly authorized and established in
conformity with the provisions of this Indenture;

 

(b)                                 in the case of an underwritten offering, the terms of the Securities have
been duly authorized and established in conformity with the provisions of this
Indenture, and, in the case of an offering that is not underwritten, certain
terms of the Securities have been established pursuant to a Board Resolution,
an Officer’s Certificate or a supplemental indenture in accordance with this
Indenture, and when such other terms as are to be established pursuant to
procedures set forth in an Issuer Order shall have been established, all such
terms will have been duly authorized by the Issuer and will have been
established in conformity with the provisions of this Indenture;

 

(c)                                  when the Securities have been executed by the Issuer and authenticated by
the Trustee in accordance with the provisions of this Indenture and delivered
to and duly paid for by the purchasers thereof, they will have been duly issued
under this Indenture and will be valid and legally binding obligations of the
Issuer, enforceable in accordance with their respective terms, and will be
entitled to the benefits of this Indenture; and

 

(d)                                 the execution and delivery by the Issuer of, and the performance by the
Issuer of its obligations under, this Indenture and the Securities will not
contravene any provision of applicable law or the certificate and articles of
incorporation or by-laws of the Issuer or the Canadian Trust Indenture or the
Mortgage, or, to the best of such counsel’s knowledge, any judgment, order or
decree of any governmental body, agency or court in Canada having jurisdiction
over the Issuer or any Significant Subsidiary, and no consent, approval or
authorization of or registration, qualification, recording or filing with any
governmental body or agency of Canada, the United States or the State of New
York is required for the performance by the Issuer of its obligations under
this Indenture and the Securities, except such as are specified and have been
obtained and such as may be required by the securities or blue sky laws of the
various states in connection with the offer and sale of the Securities.

 

In rendering such opinions, such counsel may qualify
any opinions as to enforceability by stating that such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium and
other similar laws affecting the rights and remedies of creditors and is
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).  Such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the State of New York, the
federal law of the United States and Canada upon opinions of other counsel
(copies of which shall be delivered to the Trustee), who shall be counsel
reasonably satisfactory to the Trustee, in which case the opinion shall state
that such counsel believes he and the Trustee are entitled so to rely.  Such counsel may also state that, insofar as
such opinion involves factual matters, he has relied, to the extent he deems
proper, upon certificates of officers of the Issuer and its Subsidiaries and
certificates of public officials.

 

The Trustee shall have the right to decline to
authenticate and deliver any Securities under this Section if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken
by the Issuer or if the Trustee in good faith by its board of directors or 

 

16

 

board
of trustees, executive committee, or a trust committee of directors or trustees
or Responsible Officers shall determine that such action would expose the
Trustee to personal liability to existing Holders or would affect the Trustee’s
own rights, duties or immunities under the Securities, this Indenture or
otherwise.

 

The Trustee shall not be required to authenticate
Securities denominated in a coin or currency other than that of the United
States of America if the Trustee reasonably determines that such Securities
impose duties or obligations on the Trustee which the Trustee is not able or
reasonably willing to accept; provided that the Trustee, upon the
request of the Issuer, will resign as Trustee with respect to Securities of any
series as to which such a determination is made, prior to the issuance of such
Securities, and will comply with the request of the Issuer to execute and
deliver a supplemental indenture appointing a successor Trustee pursuant to
Section 8.1 hereof.

 

If the Issuer shall establish pursuant to
Section 2.3 that the Securities of a series are to be issued in the form
of one or more Registered Global Securities, then the Issuer shall execute and
the Trustee shall, in accordance with this Section and the Issuer Order with
respect to such series, authenticate and deliver one or more Registered Global
Securities that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of all of the Securities of such series
issued and not yet cancelled, (ii) shall be registered in the name of the
Depositary for such Registered Global Security or Securities or the nominee of
such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary’s instructions and (iv) shall
bear a legend substantially to the following effect: “Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to the
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.”

 

Each Depositary for any Registered Global Security
designated pursuant to Section 2.3 must, at the time of its designation
and at all times while it serves as Depositary, be a clearing agency registered
under the Securities Exchange Act of 1934 and any other applicable statute or
regulation.

 

SECTION 2.5  Execution
of Securities.  The Securities shall
be signed on behalf of the Issuer by the chairman or vice chairman of its Board
of Directors or its president, chief financial officer or vice president and by
the vice-president, finance, treasurer or secretary of the Issuer, under its
corporate seal which may, but need not, be attested.  Such signatures may be the manual or
facsimile signatures of the present or any future such officers.  The seal of the Issuer may be in the form of
a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Securities. 
Typographical and other minor errors or defects in any such reproduction
of the seal or any such signature shall not affect the validity or
enforceability of any Security that has been duly authenticated and delivered
by the Trustee.

 

In case any officer of the Issuer who shall have
signed any of the Securities shall cease to be such officer before the Security
so signed shall be authenticated and delivered by the Trustee or disposed of by
the Issuer, such Security nevertheless may be authenticated and delivered or
disposed of as though the person who signed such Security had not ceased to be 

 

17

 

such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security, shall
be the proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.

 

SECTION 2.6  Certificate
of Authentication.  Only such
Securities as shall bear thereon a certificate of authentication substantially
in the form hereinbefore recited, executed by the Trustee by the manual
signature of one of its authorized signatories, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose.  The execution of such certificate by the
Trustee upon any Security executed by the Issuer shall be conclusive evidence
that the Security so authenticated has been duly authenticated and delivered
hereunder and that the Holder is entitled to the benefits of this Indenture.

 

SECTION 2.7  Denomination
and Date of Securities; Payments of Interest.  The Securities of each series shall be issuable
as fully registered Securities in denominations established as contemplated by
Section 2.3 or, if not so established, in denominations of $1,000 and any
integral multiple thereof.  The
Securities of each series shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plan as the officers of
the Issuer executing the same may determine with the approval of the Trustee,
as evidenced by the execution and authentication thereof.

 

Each Security shall be dated the date of its
authentication.  The Securities of each
series shall bear interest, if any, from the date, and such interest shall be
payable on the dates, established as contemplated by Section 2.3.

 

The person in whose name any Security of any series
is registered at the close of business on any Record Date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Security
subsequent to the Record Date and prior to such interest payment date, except
if and to the extent the Issuer shall default in the payment of the interest
due on such interest payment date for such series, in which case such defaulted
interest shall be paid to the persons in whose names Outstanding Securities for
such series are registered at the close of business on a subsequent Record Date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on behalf
of the Issuer to the Holders of Securities not less than 15 days preceding such
subsequent Record Date.  The term “Record
Date” as used with respect to any interest payment date (except a date for
payment of defaulted interest) for the Securities of any series shall mean the
date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such Record Date is a Business Day.

 

SECTION 2.8  Registration,
Transfer and Exchange.  The Issuer
will keep at each office or agency to be maintained for the purpose as provided
in Section 3.2 for each series of Securities a register or registers in
which, subject to such reasonable regulations as it may 

 

18

 

prescribe,
it will provide for the registration of Securities of such series and the
registration of transfer of Securities of such series.  Such register shall be in written form in the
English language or in any other form capable of being converted into such form
within a reasonable time.  At all
reasonable times such register or registers shall be open for inspection by the
Trustee.

 

Upon due presentation for registration of transfer
of any Security of any series at any such office or agency to be maintained for
the purpose as provided in Section 3.2, the Issuer shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or transferees
a new Security or Securities of the same series, maturity date, interest rate
and original issue date in authorized denominations for a like aggregate
principal amount.

 

At the option of the Holder thereof, Securities of
any series (other than a Registered Global Security, except as set forth below)
may be exchanged for a Security or Securities of such series having authorized
denominations and an equal aggregate principal amount, upon surrender of such
Securities to be exchanged at the agency of the Issuer that shall be maintained
for such purpose in accordance with Section 3.2 and upon payment, if the
Issuer shall so require, of the charges hereinafter provided.  Whenever any Securities are so surrendered
for exchange, the Issuer shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.  All Securities surrendered upon
any exchange or transfer provided for in this Indenture shall be promptly
cancelled and destroyed by the Trustee in accordance with the Trustee’s normal
procedures and the Trustee will deliver a certificate of destruction thereof to
the Issuer.

 

All Securities presented for registration of
transfer, exchange, redemption or payment shall (if so required by the Issuer
or the Trustee) be duly endorsed by, or be accompanied by a written instrument
or instruments of transfer in form satisfactory to the Issuer and the Trustee
duly executed by the Holder or his attorney duly authorized in writing.

 

The Issuer may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any exchange or registration of transfer of Securities.  A reasonable service charge may be made for
any such transaction.

 

The Issuer shall not be required to exchange or
register a transfer of (a) any Securities of any series for a period of 15
days next preceding the first mailing of notice of redemption of Securities of
such series to be redeemed or (b) any Securities selected, called or being
called for redemption or surrendered for repayment at the option of the Holder,
in whole or in part, except, in the case of any Security to be redeemed or
repaid in part, the portion thereof not so to be redeemed or repaid.

 

Notwithstanding any other provision of this
Section 2.8, unless and until it is exchanged in whole or in part for
Securities in definitive registered form, a Registered Global Security
representing all or a portion of the Securities of a series may not be
transferred except as a whole by the Depositary for such series to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by such Depositary or any such nominee to
a successor Depositary for such series or a nominee of such successor
Depositary.

 

19

 

If at any time the Depositary for any Securities of
a series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Securities or if at any time the Depositary for such Securities shall no longer
be eligible under Section 2.4, the Issuer shall appoint a successor
Depositary with respect to such Securities. 
If a successor Depositary for such Securities is not appointed by the Issuer
within 90 days after the Issuer receives such notice or becomes aware of such
ineligibility, the Issuer’s election pursuant to Section 2.3 that such
Securities be represented by one or more Registered Global Securities shall no
longer be effective and the Issuer will execute, and the Trustee, upon receipt
of an Officer’s Certificate for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Registered Global Security or Securities representing such Securities in
exchange for such Registered Global Security or Securities.

 

The Issuer may at any time and in its sole
discretion determine that the Securities of any series issued in the form of
one or more Registered Global Securities shall no longer be represented by a
Registered Global Security or Securities. 
In such event the Issuer will execute, and the Trustee, upon receipt of
an Officer’s Certificate for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Registered Global Security or Securities representing such Securities,
in exchange for such Registered Global Security or Securities.

 

The Depositary for Securities represented by a
Registered Global Security may surrender such Registered Global Security in
exchange in whole or in part for Securities of the same series in definitive
registered form on such terms as are acceptable to the Issuer and such
Depositary.  Thereupon, the Issuer shall
execute, and the Trustee shall authenticate and deliver, without service charge
to such Depositary,

 

(i)                                     to the Person
specified by such Depositary a new Security or Securities of the same series,
of any authorized denominations as requested by such Person, in an aggregate
principal amount equal to and in exchange for such Person’s beneficial interest
in the Registered Global Security; and

 

(ii)                                  to such
Depositary a new Registered Global Security in a denomination equal to the
difference, if any, between the principal amount of the surrendered Registered
Global Security and the aggregate principal amount of Securities authenticated
and delivered pursuant to clause (i) above.

 

Upon the exchange of a Registered Global Security
for Securities in definitive registered form without coupons, in authorized
denominations, such Registered Global Security shall be cancelled by the
Trustee or an agent of the Issuer or the Trustee.  Securities in definitive registered form
without coupons issued in exchange for a Registered Global Security pursuant to
this Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Registered Global Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Issuer or the 

 

20

 

Trustee.  The Trustee or such agent shall deliver such
Securities to or as directed by the Persons in whose names such Securities are
so registered.

 

All Securities issued upon any transfer or exchange
of Securities shall be valid obligations of the Issuer, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.

 

Notwithstanding anything herein or in the terms of
any series of Securities to the contrary, none of the Issuer, the Trustee or
any agent of the Issuer or the Trustee shall have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Security in global form or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.

 

SECTION 2.9 
Mutilated, Defaced, Destroyed, Lost and Stolen Securities.  In case any temporary or definitive Security
shall become mutilated, defaced or be destroyed, lost or stolen, the Issuer in
its discretion may execute, and upon the written request of any officer of the
Issuer, the Trustee shall authenticate and deliver a new Security of the same
series, maturity date, interest rate and original issue date, bearing a number
or other distinguishing symbol not contemporaneously outstanding, in exchange
and substitution for the mutilated or defaced Security, or in lieu of and in
substitution for the Security so destroyed, lost or stolen.  In every case the applicant for a substitute
Security shall furnish to the Issuer and to the Trustee and any agent of the
Issuer or the Trustee such security or indemnity as may be required by them to
indemnify and defend and to save each of them harmless and, in every case of
destruction, loss or theft, evidence to their satisfaction of the destruction,
loss or theft of such Security and of the ownership thereof and in the case of mutilation
or defacement shall surrender the Security to the Trustee or such agent.

 

Upon the issuance of any substitute Security, the
Issuer may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent)
connected therewith.  In case any
Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated or defaced Security), if the applicant for such payment shall
furnish to the Issuer and to the Trustee and any agent of the Issuer or the
Trustee such security or indemnity as any of them may require to save each of
them harmless, and, in every case of destruction, loss or theft, the applicant
shall also furnish to the Issuer and the Trustee and any agent of the Issuer or
the Trustee evidence to their satisfaction of the destruction, loss or theft of
such Security and of the ownership thereof.

 

Every substitute Security of any series issued
pursuant to the provisions of this Section by virtue of the fact that any
such Security is destroyed, lost or stolen shall constitute an additional
contractual obligation of the Issuer, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone and shall be
entitled to all the benefits of (but shall be subject to all the limitations of
rights set forth in) this Indenture equally and proportionately with any and
all other Securities of such series duly authenticated and delivered hereunder.  All Securities shall be held and owned upon
the express condition that, to the extent 

 

21

 

permitted
by law, the foregoing provisions are exclusive with respect to the replacement
or payment of mutilated, defaced or destroyed, lost or stolen Securities and
shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.

 

SECTION 2.10 
Cancellation of Securities; Destruction Thereof.  All Securities surrendered for payment,
redemption, repayment, registration of transfer or exchange, or for credit
against any payment in respect of a sinking or analogous fund, if surrendered
to the Issuer or any agent of the Issuer or the Trustee or any agent of the
Trustee, shall be delivered to the Trustee or its agent for cancellation or, if
surrendered to the Trustee, shall be cancelled by it; and no Securities shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture.  The
Trustee or its agent shall destroy cancelled Securities held by it and deliver
a certificate of destruction to the Issuer. 
If the Issuer or its agent shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless and until the same are
delivered to the Trustee or its agent for cancellation.  The Issuer may also deliver to the Trustee or
any agent of the Trustee for cancellation any Securities previously
authenticated hereunder that the Issuer has not issued and sold.

 

SECTION 2.11 
Temporary Securities. 
Pending the preparation of definitive Securities for any series, the
Issuer may execute and the Trustee shall authenticate and deliver temporary
Securities for such series (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee).  Temporary Securities of any series shall be
issuable as Securities without coupons of any authorized denomination, and
substantially in the form of the definitive Securities of such series but with
such omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee as evidenced by the execution and authentication thereof.  In the case of Securities of any series, such
temporary Securities may be in global form. 
Temporary Securities may contain such references to any provisions of
this Indenture as may be appropriate. 
Every temporary Security shall be executed by the Issuer and be
authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities.  Without unreasonable delay the Issuer shall
execute and shall furnish definitive Securities of such series and thereupon
temporary Securities of such series may be surrendered in exchange therefore without
charge at each office or agency to be maintained by the Issuer for that purpose
pursuant to Section 3.2 and the Trustee shall authenticate and deliver in
exchange for such temporary Securities of such series an equal aggregate
principal amount of definitive Securities of the same series having authorized
denominations.  Until so exchanged, the
temporary Securities of any series shall be entitled to the same benefits under
this Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.

 

SECTION 2.12 
Currency and Manner of Payments in Respect of Securities

 

(a)                                  Unless otherwise specified with respect to any Securities pursuant to Section 2.3,
with respect to Securities of any series not permitting the election provided
for in paragraph (b) below or the Holders of which have not made the
election provided for in paragraph (b) below, except as provided in
paragraph (d) below, payment of the 

 

22

 

principal
of and interest, if any, on any Security of such series will be made in the
Currency in which such Security is payable. 
The provisions of this Section 2.12 may be modified or superseded
with respect to any Securities pursuant to Section 2.3.

 

(b)                                 It may be provided pursuant to Section 2.3 with respect to
Securities of any series that Holders shall have the option, subject to
paragraphs (d) and (e) below, to receive payments of principal of or
interest, if any, on such Securities in any of the Currencies which may be
designated for such election by delivering to the Trustee a written election
with signature guarantees and in the applicable form established pursuant to Section 2.3,
not later than the close of business on the Election Date immediately preceding
the applicable payment date.  If a Holder
so elects to receive such payments in any such Currency, such election will
remain in effect until such Holder shall have delivered to the Trustee a
written notice of a change of election (but any such change must be made not
later than the close of business on the Election Date immediately preceding the
next payment date to be effective for the payment to be made on such payment
date and no such change of election may be made with respect to payments to be
made on any Security of such series with respect to which an Event of Default
has occurred or with respect to which the Issuer has deposited funds pursuant
to Article Ten or with respect to which a notice of redemption has been
given by the Issuer or a notice of option to elect repayment has been sent by
such Holder or such transferee).  Any
Holder of any such Security who shall not have delivered any such election to
the Trustee not later than the close of business on the applicable Election
Date will be paid the amount due on the applicable payment date in the relevant
Currency as provided in Section 2.12(a). 
The Trustee shall notify the Exchange Rate Agent as soon as practicable
after the Election Date of the aggregate principal amount of Securities for
which Holders have made such written election.

 

(c)                                  If the election referred to in paragraph (b) above has been provided
for pursuant to Section 2.3, then, unless otherwise specified pursuant to Section 2.3,
not later than the fourth Business Day after the Election Date for each payment
date for Securities of any series, the Exchange Rate Agent will deliver to the
Issuer a written notice specifying, in the Currency in which Securities of such
series are payable, the respective aggregate amounts of principal and interest,
if any, on the Securities to be paid on such payment date and specifying the
amount in such Currency so payable in respect of the Securities as to which the
Holders of Securities of such series shall have elected to be paid in another
Currency as provided in paragraph (b) above.  If the election referred to in paragraph (b) above
has been provided for pursuant to Section 2.3 and if at least one Holder
has made such election, then, unless otherwise specified pursuant to Section 2.3,
on the second Business Day preceding such payment date the Issuer will deliver
to the Trustee for such series of Securities an Exchange Rate Officer’s
Certificate in respect of the Dollar or Foreign Currency payments to be made on
such payment date.  Unless otherwise
specified pursuant to Section 2.3, the Dollar or Foreign Currency amount
receivable by Holders of Securities who have elected payment in a Currency as
provided in paragraph (b) above shall be determined by the Issuer on the
basis of the applicable Market Exchange Rate in effect on the third Business
Day (the “Valuation Date”) immediately preceding each payment date, and such
determination shall be conclusive and binding for all purposes, absent manifest
error.

 

23

 

(d)                                 If a Conversion Event occurs with respect to a Foreign Currency in which
any of the Securities are denominated or payable other than pursuant to an
election provided for pursuant to paragraph (b) above, then with respect
to each date for the payment of principal of and interest, if any, on the
applicable Securities denominated or payable in such Foreign Currency occurring
after the last date on which such Foreign Currency was used (the “Conversion
Date”), the Dollar shall be the Currency of payment for use on each such
payment date.  Unless otherwise specified
pursuant to Section 2.3, the Dollar amount to be paid by the Issuer to the
Trustee and by the Trustee or any Paying Agent to the Holders of such
Securities with respect to such payment date shall be, in the case of a Foreign
Currency, the Dollar Equivalent of the Foreign Currency, and, in the case of a
currency unit, the Dollar Equivalent of the Currency Unit, in each case as
determined by the Exchange Rate Agent in the manner provided in paragraph (f) or
(g) below.

 

(e)                                  Unless otherwise specified pursuant to Section 2.3, if the Holder of
a Security denominated in any Currency shall have elected to be paid in another
Currency as provided in paragraph (b) above, and a Conversion Event occurs
with respect to such elected Currency, such Holder shall receive payment in the
Currency in which payment would have been made in the absence of such election;
and if a Conversion Event occurs with respect to the Currency in which payment
would have been made in the absence of such election, such Holder shall receive
payment in Dollars as provided in paragraph (d) above.

 

(f)                                    The “Dollar Equivalent of the Foreign Currency” shall be determined by
the Exchange Rate Agent and shall be obtained for each subsequent payment date
by converting the specified Foreign Currency into Dollars at the Market
Exchange Rate on the Conversion Date.

 

(g)                                 The “Dollar Equivalent of the Currency Unit” shall be determined by the
Exchange Rate Agent and subject to the provisions of paragraph (h) below
shall be the sum of each amount obtained by converting the Specified Amount of
each Component Currency into Dollars at the Market Exchange Rate for such
Component Currency on the Valuation Date with respect to each payment.

 

(h)                                 For purposes of this Section 2.12 the following terms shall have the
following meanings:

 

A “Component Currency” shall
mean any Currency which, on the Conversion Date, was a component currency of
the relevant currency unit, including, but not limited to, the Euro.

 

A “Specified Amount” of a
Component Currency shall mean the number of units of such Component Currency or
fractions thereof which were represented in the relevant currency unit,
including, but not limited to, the Euro, on the Conversion Date.  If after the Conversion Date the official
unit of any Component Currency is altered by way of combination or subdivision,
the Specified Amount of such Component Currency shall be divided or multiplied
in the same proportion.  If after the
Conversion Date two or more 

 

24

 

Component Currencies are consolidated into a single
currency, the respective Specified Amounts of such Component Currencies shall
be replaced by an amount in such single Currency equal to the sum of the
respective Specified Amounts of such consolidated Component Currencies
expressed in such single Currency, and such amount shall thereafter be a
Specified Amount and such single Currency shall thereafter be a Component
Currency.  If after the Conversion Date
any Component Currency shall be divided into two or more currencies, the
Specified Amount of such Component Currency shall be replaced by amounts of
such two or more currencies, having an aggregate Dollar equivalent value at the
Market Exchange Rate on the date of such replacement equal to the Dollar
equivalent value of the Specified Amount of such former Component Currency at
the Market Exchange Rate immediately before such division and such amounts
shall thereafter be Specified Amounts and such currencies shall thereafter be
Component Currencies.  If, after the
Conversion Date of the relevant currency unit, including, but not limited to,
the Euro, a Conversion Event (other than any event referred to above in this
definition of “Specified Amount”) occurs with respect to any Component Currency
of such currency unit and is continuing on the applicable Valuation Date, the
Specified Amount of such Component Currency shall, for purposes of calculating
the Dollar Equivalent of the Currency Unit, be converted into Dollars at the
Market Exchange Rate in effect on the Conversion Date of such Component
Currency.

 

“Election Date” shall mean
the date for any series of Securities as specified pursuant to clause (16) of Section 2.3
by which the written election referred to in paragraph (b) above may be
made.

 

All decisions and
determinations of the Exchange Rate Agent regarding the Dollar Equivalent of
the Foreign Currency, the Dollar Equivalent of the Currency Unit, the Market
Exchange Rate and changes in the Specified Amounts as specified above shall be
in its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and irrevocably binding upon the Issuer, the
Trustee and all Holders of such Securities denominated or payable in the
relevant Currency.  The Exchange Rate
Agent shall promptly give written notice to the Issuer and the Trustee of any
such decision or determination.

 

In the event that the Issuer
determines in good faith that a Conversion Event has occurred with respect to a
Foreign Currency, the Issuer will immediately give written notice thereof to
the Trustee and to the Exchange Rate Agent (and the Trustee will promptly
thereafter give notice in the manner provided for in Section 11.4 to the
affected Holders) specifying the Conversion Date.  In the event the Issuer so determines that a
Conversion Event has occurred with respect to the Euro or any other currency
unit in which Securities are denominated or payable, the Issuer will
immediately give written notice thereof to the Trustee and to the Exchange Rate
Agent (and the Trustee will promptly thereafter give notice in the manner
provided for in Section 11.4 to the affected Holders) specifying the
Conversion Date and the Specified Amount of each Component Currency on the
Conversion Date.  In the event the Issuer
determines in good faith that any subsequent change in any Component Currency
as set forth in the definition of Specified Amount above has occurred, the
Issuer will similarly give notice to the Trustee and the Exchange Rate Agent.

 

25

 

The Trustee shall be fully
justified and protected in relying and acting upon information received by it
from the Issuer and the Exchange Rate Agent and shall not otherwise have any
duty or obligation to determine the accuracy or validity of such information
independent of the Issuer or the Exchange Rate Agent.

 

SECTION 2.13 
Appointment and Resignation of Successor Exchange Rate Agent.

 

(a)                                  Unless
otherwise specified pursuant to Section 2.3, if and so long as the
Securities of any series (i) are denominated in a Currency other than
Dollars or (ii) may be payable in a Currency other than Dollars, or so
long as it is required under any other provision of this Indenture, then the
Issuer will maintain with respect to each such series of Securities, or as so
required, at least one Exchange Rate Agent. 
The Issuer will cause the Exchange Rate Agent to make the necessary
foreign exchange determinations at the time and in the manner specified
pursuant to Section 2.3 for the purpose of determining the applicable rate
of exchange and, if applicable, for the purpose of converting the issued
Currency into the applicable payment Currency for the payment of principal and
interest, if any, pursuant to Section 2.12.

 

(b)                                 No resignation
of the Exchange Rate Agent and no appointment of a successor Exchange Rate
Agent pursuant to this Section shall become effective until the acceptance
of appointment by the successor Exchange Rate Agent as evidenced by a written
instrument delivered to the Issuer and the Trustee.

 

(c)                                  If the Exchange
Rate Agent shall resign, be removed or become incapable of acting, or if a
vacancy shall occur in the office of the Exchange Rate Agent for any cause with
respect to the Securities of one or more series, the Issuer, by or pursuant to
a Board Resolution, shall promptly appoint a successor Exchange Rate Agent or
Exchange Rate Agents with respect to the Securities of that or those series (it
being understood that any such successor Exchange Rate Agent may be appointed
with respect to the Securities of one or more or all of such series and that,
unless otherwise specified pursuant to Section 2.3, at any time there
shall only be one Exchange Rate Agent with respect to the Securities of any
particular series that are originally issued by the Issuer on the same date and
that are initially denominated and/or payable in the same Currency).

 

ARTICLE THREE

 

COVENANTS
OF THE ISSUER

 

SECTION 3.1 
Payment of Principal and Interest.  The Issuer covenants and agrees for the
benefit of each series of Securities that it will duly and punctually pay or
cause to be paid the principal of, and interest on, each of the Securities of
such series (together with any additional amounts payable pursuant to the terms
of such Securities) at the place or places, at the respective times and in the
manner provided in such Securities and in this Indenture.  The interest on Securities (together with any
additional amounts payable pursuant to the terms of such Securities) shall be
payable only to or upon the written order of the Holders thereof and, at the
option of the Issuer, may be paid by wire transfer or by mailing checks for
such interest 

 

26

 

payable
to or upon the written order of such Holders at their last addresses as they
appear on the registry books of the Issuer.

 

SECTION 3.2 
Offices for Payments, Etc. 
So long as any Securities are authorized for issuance pursuant to this
Indenture or are outstanding hereunder, the Issuer will maintain in the Borough
of Manhattan, The City of New York, an office or agency where the Securities of
each series may be presented or surrendered for payment, where the Securities
of each series may be presented for exchange as is provided in this Indenture
and, if applicable, pursuant to Section 2.3 and where the Securities of
each series may be presented for registration of transfer as in this Indenture
provided.

 

The Issuer will maintain in the Borough of
Manhattan, The City of New York, an office or agency where notices and demands
to or upon the Issuer in respect of the Securities of any series or this
Indenture may be served.

 

The Issuer will give to the Trustee written notice
of the location of each such office or agency and of any change of location
thereof.  In case the Issuer shall fail
to maintain any agency required by this Section to be located in the
Borough of Manhattan, The City of New York, or shall fail to give such notice
of the location or of any change in the location of any of the above agencies,
presentations, surrenders and demands may be made and notices may be served at
the Corporate Trust Office of the Trustee and the Issuer hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, demands and
notices.

 

The Issuer may from time to time designate one or
more additional offices or agencies where the Securities of a series may be
presented for payment, where the Securities of that series may be presented for
exchange as provided in this Indenture and pursuant to Section 2.3 and
where the Securities of that series may be presented for registration of
transfer as in this Indenture provided, and the Issuer may from time to time
rescind any such designation, as the Issuer may deem desirable or expedient; provided,
however, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain the agencies provided for in
this Section.  The Issuer will give to
the Trustee prompt written notice of any such designation or rescission thereof.

 

Unless otherwise specified with respect to any
Securities pursuant to Section 2.3, if and so long as the Securities of
any series (i) are denominated in a Currency other than Dollars or (ii) may
be payable in a Currency other than Dollars, or so long as it is required under
any other provision of the Indenture, then the Issuer will maintain with
respect to each such series of Securities, or as so required, at least one
Exchange Rate Agent.

 

SECTION 3.3 
Appointment to Fill a Vacancy in Office of Trustee.  The Issuer, whenever necessary to avoid or
fill a vacancy in the office of Trustee, will appoint, in the manner provided
in Section 6.8, a Trustee, so that there shall at all times be a Trustee
with respect to each series of Securities hereunder.

 

SECTION 3.4 
Paying Agents.  Whenever
the Issuer shall appoint a paying agent other than the Trustee with respect to
the Securities of any series, it will cause such paying agent 

 

27

 

to
execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provisions of this Section,

 

(a)          that
it will hold all sums received by it as such agent for the payment of the
principal of or interest on the Securities of such series (whether such sums
have been paid to it by the Issuer or by any other obligor on the Securities of
such series) in trust for the benefit of the Holders of the Securities of such
series or of the Trustee,

 

(b)         that
it will give the Trustee notice of any failure by the Issuer (or by any other
obligor on the Securities of such series) to make any payment of the principal
of or interest on the Securities of such series when the same shall be due and
payable, and

 

(c)          that,
at any time during the continuance of any failure referred to in clause (b) above,
upon the written request of the Trustee, it will forthwith pay to the Trustee
all sums so held in trust by such paying agent.

 

The Issuer will, on or prior to each due date of the
principal of or interest on the Securities of each series, deposit with the
paying agent a sum in the Currency in which the Securities of such series are
payable (except as otherwise specified pursuant to Section 2.3 for the
Securities of such series and except, if applicable, as provided in Sections
2.12 (b), 2.12 (d) and 2.12 (e)) sufficient to pay such principal or
interest so becoming due, and (unless such paying agent is the Trustee) the
Issuer will promptly notify the Trustee of any failure to take such action.

 

If the Issuer shall act as its own paying agent with
respect to the Securities of any series, it will, on or before each due date of
the principal of or interest on the Securities of such series, set aside,
segregate and hold in trust for the benefit of the Holders of the Securities of
such series a sum (in the Currency described in the preceding paragraph)
sufficient to pay such principal or interest so becoming due.  The Issuer will promptly notify the Trustee
of any failure to take such action.

 

Anything in this Section to the contrary
notwithstanding, but subject to Section 10.1, the Issuer may at any time,
for the purpose of obtaining a satisfaction and discharge with respect to one
or more or all series of Securities hereunder, or for any other reason, pay or
cause to be paid to the Trustee all sums held in trust for any such series by
the Issuer or any paying agent hereunder, as required by this Section, such
sums to be held by the Trustee in the trusts herein described.

 

Anything in this Section to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section is
subject to the provisions of Sections 10.3 and 10.4.

 

SECTION 3.5 
Written Statement to Trustee. 
The Issuer will deliver to the Trustee on or before March 31 in
each year a certificate (which need not comply with Section 11.5) from the
principal executive officer, principal financial officer or principal
accounting officer of the Issuer as to his or her knowledge of the Issuer’s
compliance with all covenants and conditions under this Indenture.  For purposes of this Section 3.5, such
compliance shall be determined without regard to any period of grace or
requirement of notice provided under this Indenture.  In addition, the Issuer will deliver to the
Trustee on or before March 31, in each year an Officer’s 

 

28

 

Certificate
listing each Subsidiary of the Issuer which at the preceding December 31
was a Designated Subsidiary under this Indenture.

 

SECTION 3.6 
Limitation on Liens, Ownership of Subsidiaries and Certain Other
Transactions.  The Issuer covenants
with the Trustee that so long as any Securities remain outstanding:

 

(i)                                     It will not,
nor will it permit any Designated Subsidiary to, mortgage, hypothecate, charge,
pledge or otherwise encumber any of its assets to secure any obligations (other
than First Mortgage Pipe Line Bonds) unless at the same time all Outstanding
Securities shall be secured equally and ratably with such obligations; provided
that this covenant will not apply to nor operate to prevent (A) any security
given in the ordinary course of business to any bank or banks to secure any
Indebtedness payable on demand or maturing (including any right of extension or
renewal) 24 months or less after the date such Indebtedness is incurred or the
date of any renewal or extension thereof, (B) Purchase Money Mortgages,
(C) the giving of security for Indebtedness of the Issuer or a Designated
Subsidiary to the Issuer or to another Designated Subsidiary, or (D)

 

(1)                                  liens for taxes and assessments not at the time overdue and liens
securing workmen’s compensation assessments;

 

(2)                                  liens for specified taxes and assessments which are overdue but the
validity of which is being contested at the time by the Issuer or such
Designated Subsidiary in good faith;

 

(3)                                  liens or rights of distress reserved in or exercisable under any lease
for rent and for compliance with the terms of such lease;

 

(4)                                  any obligations or duties affecting the property of the Issuer or such
Designated Subsidiary, to any municipality or governmental, statutory or public
authority, with respect to any franchise, grant, license or permit and any
defects in title to structures or other facilities arising solely from the fact
that such structures or facilities are constructed or installed on lands held by
the Issuer or such Designated Subsidiary under government permits, leases or
other grants, which obligations, duties and defects in the aggregate do not
materially impair the use of such property, structures or facilities for the
purposes for which they are held by the Issuer or such Designated Subsidiary;

 

(5)                                  deposits in connection with contracts, bids, tenders or expropriation
proceedings, or to secure workmen’s compensation, unemployment insurance,
surety or appeal bonds, costs of litigation when required by law, public and
statutory obligations, liens or claims incidental to current construction,
mechanics’, warehousemen’s, carriers’ and other similar liens;

 

(6)                                  security given to a public utility or any municipality or governmental
or other public authority when required by such utility or other 

 

29

 

authority
in connection with the operations of the Issuer or such Designated Subsidiary;

 

(7)                                  liens and privileges arising out of judgments or awards with respect to
which the Issuer or such Designated Subsidiary shall be prosecuting an appeal
or proceedings for review and with respect to which it shall have secured a
stay of execution pending such appeal or proceedings for review; or

 

(8)                                  any other liens of a nature similar to the foregoing which do not
secure Indebtedness of, or guaranteed by, the Issuer or any Designated
Subsidiary and which do not materially impair the use of the property subject
thereto or the operation of the business of the Issuer or such Designated
Subsidiary or the value of such property for the purpose of such business.

 

(ii)                                  It will not
create, assume or otherwise incur any Funded Obligations ranking prior to the
Securities except additional First Mortgage Pipe Line Bonds.

 

(iii)                               If it shall
cause the payment of the principal of or interest on any of its Indebtedness to
be subordinated to the prior payment of any other of its Indebtedness it shall
in like manner subordinate such payment to the prior payment in full of all the
Securities.

 

(iv)                              It will at all
times hold Voting Shares of each Designated Subsidiary (other than TCPL Finance
N.V.  and TransCan Investments Limited)
which, together with Voting Shares of such Designated Subsidiary held by other
Designated Subsidiaries, are sufficient to entitle such holders to elect at
least a majority of the directors of such Designated Subsidiary.

 

(v)                                 It will not
enter into any agreement providing for the issue or sale of Funded Obligations
unless such agreement contains a condition of such issue or sale (which
condition can only be waived with the consent of the Securityholders expressed
by resolution) to the effect that the terms and conditions of this Indenture
relating to the creation, assumption or incurring of Funded Obligations shall be
complied with at the time of each issue and sale provided for in such
agreement.

 

(vi)                              It will not
permit any Designated Subsidiary to issue any shares of its capital stock
except (i) to the extent, if any, required to qualify directors of a
Designated Subsidiary under applicable law, or (ii) to the Issuer, or
(iii) pursuant to obligations to issue shares which exist prior to the
date when such Designated Subsidiary became a Subsidiary, or (iv) except
to the extent issued to other shareholders of such Designated Subsidiary if
after giving effect to such issue the pro rata aggregate ownership interest of
the Issuer and any other Designated Subsidiaries in the capital stock of such
Designated Subsidiary and the Issuer’s direct and indirect pro rata voting rights,
pro rata interest in shareholders’ equity, and pro rata rights to participate
in earnings of such Designated Subsidiary are not reduced.

 

(vii)                           It will not,
and will not permit any Designated Subsidiary to, sell or dispose of any shares
of capital stock or Indebtedness of any Designated Subsidiary to 

 

30

 

any Person other than the
Issuer or another Designated Subsidiary unless all shares of capital stock and
Indebtedness of such Designated Subsidiary then held by the Issuer and any of
its Subsidiaries (together with all shares of capital stock and Indebtedness of
the Issuer and other Designated Subsidiaries then held by such Designated
Subsidiary) are being sold or disposed of at such time to a Subsidiary for cash
at fair value determined by an Independent Appraiser or to persons other than
any of the Issuer’s Subsidiaries.

 

ARTICLE FOUR

 

SECURITYHOLDERS
LISTS AND REPORTS BY THE ISSUER AND THE TRUSTEE

 

SECTION 4.1 
Issuer to Furnish Trustee Information as to Names and Addresses of
Securityholders.  The Issuer and any
other obligor on the Securities covenant and agree that they will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the Securities
of each series:

 

(a)          semiannually
and not more than 15 days after each Record Date for the payment of interest on
such Securities, as hereinabove specified, as of such Record Date and on dates
to be determined pursuant to Section 2.3 for non-interest bearing
Securities in each year, and

 

(b)         at
such other times as the Trustee may request in writing.

 

SECTION 4.2 
Reports by the Trustee.  In
the event the Trustee is required to transmit a report to Securityholders pursuant
to TIA Section 313(a), within 60 days after January 1 of each year
commencing with the year 1992, the Trustee shall, at the expense of the Issuer,
transmit by mail to the Holders of Securities, as provided in TIA
Section 313(c), reports dated as of such January 1 and required by
TIA Section 313(a).

 

SECTION 4.3 
Reports by the Issuer.  The
Issuer covenants:

 

(a)          to
file with the Trustee, within 15 days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or if the Issuer is not required to file information,
documents, or reports pursuant to either of such Sections, then to file with
the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the commission, such of the supplementary and
periodic information, documents, and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a debt
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;

 

(b)         to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents, and reports with respect to compliance by the Issuer
with the conditions and 

 

31

 

covenants
provided for in this Indenture as may be required from time to time by such rules and
regulations; and

 

(c)          to
transmit by mail to the Holders of Securities, in the manner and to the extent
provided in TIA Section 313(c), such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to subsections
(a) and (b) of this Section as may be required to be transmitted
to such Holders by rules and regulations prescribed from time to time by
the Commission.

 

Delivery
of such reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Issuer’s compliance with any of it
covenants hereunder (as to which the Trustee is entitled to rely exclusively on
Officers’ Certificates).

 

ARTICLE FIVE

 

REMEDIES
OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT

 

SECTION 5.1 
Event of Default Defined; Acceleration of Maturity; Waiver of Default.  “Event of Default”, with respect to
Securities of any series wherever used herein, means each one of the following
events which shall have occurred and be continuing (whatever the reason for
such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

 

(a)          default
in the payment of any installment of interest upon any of the Securities of
such series as and when the same shall become due and payable, and continuance
of such default for a period of 30 days; or

 

(b)         default
in the payment of all or any part of the principal on any of the Securities of
such series as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise; or

 

(c)          failure
on the part of the Issuer duly to observe or perform any other of the covenants
or agreements on the part of the Issuer in the Securities of such series (other
than a covenant or warranty in respect of the Securities of such series a
default in the performance or breach of which is elsewhere in this Section specifically
dealt with) or in this Indenture contained for a period of 60 days after the
date on which written notice specifying such failure, stating that such notice
is a “Notice of Default” hereunder and demanding that the Issuer remedy the
same, shall have been given by registered or certified mail, return receipt
requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by
the holders of at least 25% in aggregate principal amount of the Outstanding
Securities of all series affected thereby; or

 

(d)         a
court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Issuer in an involuntary case under any applicable
bankruptcy, 

 

32

 

insolvency
or other similar law now or hereafter in effect, or appointing a receiver,
receiver and manager, liquidator, assignee, custodian, trustee or sequestrator
(or similar official) of the Issuer or for any substantial part of its property
or ordering the winding up or liquidation of its affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive days;
or

 

(e)          the
Issuer shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any such law, or
consent to the appointment or taking possession by a receiver, receiver and
manager, liquidator, assignee, custodian, trustee or sequestrator (or similar
official) of the Issuer or for any substantial part of its property, or make
any general assignment for the benefit of creditors; or

 

(f)            failure
by the Issuer to make any payment at maturity, including any applicable grace
period, in respect of any issue of Indebtedness in an aggregate amount in
excess of $50,000,000 or the equivalent thereof in any other currency and such
failure shall have continued for a period of 30 days after written notice
thereof shall have been given by registered or certified mail, return receipt
requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by
the holders of not less than 25% in aggregate principal amount of the
Outstanding Securities (treated as one class); or

 

(g)         a
default with respect to any Indebtedness, which default results in the
acceleration of any issue of Indebtedness in an aggregate amount in excess of
$50,000,000 or the equivalent thereof in any other currency without such
Indebtedness having been discharged or such acceleration having been cured,
waived, rescinded or annulled for a period of 30 days after written notice
thereof shall have been given by registered or certified mail, return receipt
requested, to the Issuer by the Trustee, or to the Issuer and the Trustee by
the holders of not less than 25% in aggregate principal amount of the
Outstanding Securities (treated as one class); or

 

(h)         any
other Event of Default provided in the supplemental indenture under which such
series of Securities is issued or in the form of Security for such series;

 

provided that if any such failure, default or acceleration
referred to in clause (f) or (g) above shall cease or be cured,
waived, rescinded or annulled, then the Event of Default hereunder by reason
thereof shall be deemed likewise to have been thereupon cured.

 

If an Event of Default described in clause (a),
(b), (c) or (h) above (if the Event of Default under clause (c) or
(h) above, as the case may be, is with respect to less than all series of
Securities then Outstanding) occurs and is continuing, then, and in each and
every such case, except for any series of Securities the principal of which
shall have already become due and payable, either the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Securities of each such
affected series then Outstanding hereunder (voting as a single class) by notice
in writing to the Issuer (and to the Trustee if given by Securityholders), may
declare the entire principal (or, if the Securities of any such affected series
are Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of such series) of all Securities of such
affected series, and the interest accrued thereon, if any, to be due and 

 

33

 

payable
immediately, and upon any such declaration, the same shall become immediately
due and payable.  If an Event of Default
described in clause (c) or (h) (if the Event of Default under clause (c) or
(h) above, as the case may be, is with respect to all series of Securities
then Outstanding), (d), (e), (f) or (g) above occurs and is
continuing, then and in each and every such case, unless the principal of all
the Securities shall have already become due and payable, either the Trustee or
the Holders of not less than 25% in aggregate principal amount of all the
Securities then Outstanding hereunder (treated as one class), by notice in
writing to the Issuer (and to the Trustee if given by Securityholders), may
declare the entire principal (or, if any Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof) of all the Securities then Outstanding, and interest accrued thereon,
if any, to be due and payable immediately, and upon any such declaration the
same shall become immediately due and payable.

 

The foregoing provisions, however, are subject to
the condition that if, at any time after the principal (or, if the Securities
are Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of the Securities of any series (or of all the
Securities, as the case may be) shall have been so declared due and payable,
and before any judgment or decree for the payment of the moneys due shall have
been obtained or entered as hereinafter provided, the Issuer shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon all the Securities of each such series (or of all the Securities,
as the case may be) and the principal of any and all Securities of each such
series (or of all the Securities, as the case may be) which shall have become
due otherwise than by acceleration (with interest upon such principal and, to
the extent that payment of such interest is enforceable under applicable law,
on overdue installments of interest, at the same rate as the rate of interest
or Yield to Maturity (in the case of Original Issue Discount Securities)
specified in the Securities of each such series (or at the respective rates of
interest or Yields to Maturity of all the Securities, as the case may be) to
the date of such payment or deposit) and such amount as shall be sufficient to
cover reasonable compensation to the Trustee and each predecessor Trustee, its
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the Trustee and each predecessor Trustee, and if any
and all Events of Default under the Indenture, other than the non-payment of
the principal of Securities which shall have become due by acceleration, shall
have been cured, waived or otherwise remedied as provided herein—then and in
every such case the Holders of a majority in aggregate principal amount of all
the Securities of each such series or of all the Securities, in each case
voting as a single class, then Outstanding, by written notice to the Issuer and
to the Trustee, may waive all defaults with respect to each such series (or
with respect to all the Securities, as the case may be) and rescind and annul
such declaration and its consequences, but no such waiver or rescission and
annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.

 

For all purposes under this Indenture, if a portion
of the principal of any Original Issue Discount Securities shall have been
accelerated and declared due and payable pursuant to the provisions hereof,
then, from and after such declaration, unless such declaration has been
rescinded and annulled, the principal amount of such Original Issue Discount
Securities shall be deemed, for all purposes hereunder, to be such portion of the
principal thereof as shall be due and payable as a result of such acceleration,
and payment of such portion of the principal thereof as shall be due and
payable as a result of such acceleration, together with interest, if any,
thereon 

 

34

 

and
all other amounts owing thereunder, shall constitute payment in full of such
Original Issue Discount Securities.

 

SECTION 5.2 
Collection of Indebtedness by Trustee; Trustee May Prove Debt.  The Issuer covenants that (a) in case
default shall be made in the payment of any installment of interest on any of
the Securities of any series when such interest shall have become due and
payable, and such default shall have continued for a period of 30 days or
(b) in case default shall be made in the payment of all or any part of the
principal of any of the Securities of any series when the same shall have
become due and payable, whether upon maturity of the Securities of such series
or upon any redemption or by declaration or otherwise — then upon demand of the
Trustee, the Issuer will pay to the Trustee for the benefit of the Holders of
the Securities of such series the whole amount that then shall have become due
and payable on all Securities of such series for principal or interest, as the
case may be (with interest to the date of such payment upon the overdue
principal and, to the extent that payment of such interest is enforceable under
applicable law, on overdue installments of interest at the same rate as the
rate of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series); and in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to the Trustee and
each predecessor Trustee, their respective agents, attorneys and counsel, and
any expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee.

 

Until such demand is made by the Trustee, the Issuer
may pay the principal of and interest on the Securities of any series to the
registered holders, whether or not the Securities of such Series be
overdue.

 

In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Trustee, in its own name and as trustee of an
express trust, shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Issuer or
other obligor upon such Securities of such series and collect in the manner
provided by law out of the property of the Issuer or other obligor upon such
Securities of such series, the moneys adjudged or decreed to be payable.

 

In case there shall be pending proceedings relative
to the Issuer or any other obligor upon the Securities under Title 11 of
the United States Code, the Companies’ Creditors Arrangement Act (Canada), the
Bankruptcy Act (Canada) or the Winding-Up Act (Canada) or any other applicable
bankruptcy, insolvency or other similar law, or in case a receiver, receiver
and manager, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor, or in case of
any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities or to the creditors or property of the Issuer or
such other obligor, the Trustee, irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:

 

35

 

(a)          to
file and prove a claim or claims for the whole amount of principal and interest
(or, if the Securities of any series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms of such
series) owing and unpaid in respect of the Securities of any series, and to
file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for reasonable
compensation to the Trustee and each predecessor Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee) and of the Securityholders allowed in any judicial proceedings
relative to the Issuer or other obligor upon the Securities, or to the
creditors or property of the Issuer or such other obligor,

 

(b)         unless
prohibited by applicable law and regulations, to vote on behalf of the holders
of the Securities of any series in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in comparable
proceedings, and

 

(c)          to
collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute all amounts received with respect to the claims
of the Securityholders and of the Trustee on their behalf; and any trustee,
receiver, receiver and manager, or liquidator, custodian or other similar
official is hereby authorized by each of the Securityholders to make payments
to the Trustee, and, in the event that the Trustee shall consent to the making
of payments directly to the Securityholders, to pay to the Trustee such amounts
as shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee.

 

Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities of any series or the rights
of any Holder thereof, or to authorize the Trustee to vote in respect of the
claim of any Securityholder in any such proceeding except, as aforesaid, to
vote for the election of a trustee in bankruptcy or similar person.

 

All rights of action and of asserting claims under
this Indenture, or under any of the Securities of any series, may be enforced
by the Trustee without the possession of any of the Securities of such series
or the production thereof at any trial or other proceedings relative thereto,
and any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the Trustee,
each predecessor Trustee and their respective agents and attorneys, shall be
for the ratable benefit of the Holders of the Securities in respect of which
such action was taken.

 

In any proceedings brought by the Trustee (and also
any proceedings involving the interpretation of any provision of this Indenture
to which the Trustee shall be a party) the Trustee shall be held to represent
all the Holders of the Securities in respect to which such action 

 

36

 

was
taken, and it shall not be necessary to make any Holders of such Securities
parties to any such proceedings.

 

SECTION 5.3 
Application of Proceeds. 
Any moneys collected by the Trustee pursuant to this Article in
respect of any series of Securities shall be applied in the following order at
the date or dates fixed by the Trustee and, in case of the distribution of such
moneys on account of principal or interest, upon presentation of the several
Securities in respect of which moneys have been collected and stamping (or
otherwise noting) thereon the payment, or issuing Securities of such series in
reduced principal amounts in exchange for the presented Securities of like
series if only partially paid, or upon surrender thereof if fully paid:

 

FIRST:  To the payment of costs and expenses
applicable to such series in respect of which moneys have been collected,
including reasonable compensation to the Trustee and each predecessor Trustee
and their respective agents and attorneys and of all expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee;

 

SECOND:  In case the principal of the Securities of
such series in respect of which moneys have been collected shall not have
become and be then due and payable, to the payment of interest on the
Securities of such series in default in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue installments of interest at
the same rate as the rate of interest or Yield to Maturity (in the case of
Original Issue Discount Securities) specified in such Securities, such payments
to be made ratably to the persons entitled thereto, without discrimination or
preference;

 

THIRD:  In case the principal of the Securities of
such series in respect of which moneys have been collected shall have become
and shall be then due and payable, to the payment of the whole amount then
owing and unpaid upon all the Securities of such series for principal and
interest, with interest upon the overdue principal, and (to the extent that
such interest has been collected by the Trustee) upon overdue installments of
interest at the same rate as the rate of interest or Yield to Maturity (in the case
of Original Issue Discount Securities) specified in the Securities of such
series; and in case such moneys shall be insufficient to pay in full the whole
amount so due and unpaid upon the Securities of such series, then to the
payment of such principal and interest or Yield to Maturity, without preference
or priority of principal over interest or Yield to Maturity, or of interest or
Yield to Maturity over principal, or of any installment of interest over any
other installment of interest, or of any Security of such series over any other
Security of such series, ratably to the aggregate of such principal and accrued
and unpaid interest or Yield to Maturity; and

 

FOURTH:  To the payment of the remainder, if any, to
the Issuer or any other person lawfully entitled thereto.

 

SECTION 5.4 
Suits for Enforcement.  In
case an Event of Default has occurred, has not been waived and is continuing,
the Trustee may in its discretion proceed to protect and enforce the rights
vested in it by this Indenture by such appropriate judicial proceedings as the 

 

37

 

Trustee
shall deem most effectual to protect and enforce any of such rights, either at
law or in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.

 

SECTION 5.5 
Restoration of Rights on Abandonment of Proceedings.  In case the Trustee shall have proceeded to
enforce any right under this Indenture and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee, then and in every such case the Issuer and the
Trustee shall be restored respectively to their former positions and rights
hereunder, and all rights, remedies and powers of the Issuer, the Trustee and
the Securityholders shall continue as though no such proceeding had been taken.

 

SECTION 5.6 
Limitations on Suits by Securityholders.  No Holder of any Security of any series shall
have any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, receiver and manager, liquidator, custodian
or other similar official or for any other remedy hereunder, unless such Holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities of each
affected series then Outstanding (treated as a single class) shall have made
written request upon the Trustee to institute such action or proceedings in its
own name as trustee hereunder and shall have offered to the Trustee such
indemnity as it may reasonably require against the costs, expenses and
liabilities to be incurred therein or thereby and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity shall have failed to
institute any such action or proceeding and no direction inconsistent with such
written request shall have been given to the Trustee pursuant to
Section 5.8; it being understood and intended, and being expressly
covenanted by the taker and Holder of every Security with every other taker and
Holder and the Trustee, that no one or more Holders of Securities of any series
shall have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other such Holder of Securities, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of the applicable series.  For the protection and enforcement of the
provisions of this Section, each and every Securityholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.

 

SECTION 5.7 
Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.  Except as provided in Section 5.6, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders of Securities is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.

 

38

 

No delay or omission of the Trustee or of any Holder
of Securities to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and, subject to Section 5.6, every power and remedy
given by this Indenture or by law to the Trustee or to the Holders of
Securities may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Holders of Securities.

 

SECTION 5.8 
Control by Holders of Securities. 
The Holders of a majority in aggregate principal amount of the
Securities of each series affected (with all such series voting as a single
class) at the time Outstanding shall have the right to direct the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee with respect to the
Securities of such series by this Indenture; provided that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and provided further that (subject to the provisions of TIA Section 315)
the Trustee shall have the right to decline to follow any such direction if the
Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust committee
of directors or Responsible Officers of the Trustee shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability or if the Trustee in good faith shall so determine that the actions
or forbearances specified in or pursuant to such direction would be unduly
prejudicial to the interests of Holders of the Securities of all series so
affected not joining in the giving of said direction, it being understood that
(subject to TIA Section 315) the Trustee shall have no duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such
Holders.

 

Nothing in this Indenture shall impair the right of
the Trustee in its discretion to take any action deemed proper by the Trustee
and which is not inconsistent with such direction or directions by
Securityholders.

 

SECTION 5.9 
Waiver of Past Defaults. 
Prior to the acceleration of the maturity of any Securities as provided
in Section 5.1, the Holders of a majority in aggregate principal amount of
the Securities of all series at the time Outstanding with respect to which an
Event of Default shall have occurred and be continuing (voting as a single
class) may on behalf of the Holders of all such Securities waive any past
default or Event of Default described in Section 5.1 and its consequences,
except a default in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Security
affected.  In the case of any such
waiver, the Issuer, the Trustee and the Holders of all such Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.

 

Upon any such waiver, such default shall cease to
exist and be deemed to have been cured and not to have occurred, and any Event
of Default arising therefrom shall be deemed to have been cured, and not to
have occurred for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

 

39

 

SECTION 5.10 
Right of Court to Require Filing of Undertaking to Pay Costs.  All parties to this Indenture agree, and each
Holder of any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section shall not apply
to any suit instituted by the Trustee, to any suit instituted by any
Securityholder or group of Securityholders of any series holding in the
aggregate more than 10% in aggregate principal amount of the Securities of such
series then Outstanding, or, in the case of any suit relating to or arising
under clause (c) or (h) of Section 5.1 (if the suit relates to
Securities of more than one but less than all series), 10% in aggregate
principal amount of Securities then Outstanding and affected thereby, or in the
case of any suit relating to or arising under clause (c), (h) (if the suit
under clause (c) or (h) relates to all the Securities then
Outstanding), (d), (e), (f) or (g) of Section 5.1, 10% in
aggregate principal amount of all Securities then Outstanding, or to any suit
instituted by any Securityholder for the enforcement of the payment of the
principal of or interest on any Security on or after the due date expressed in
such Security or any date fixed for redemption.

 

SECTION 5.11 
Waiver of Stay or Extension Laws. 
The Issuer covenants (to the extent it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law whenever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.

 

SECTION 5.12 
Unconditional Right of Securityholders to Institute Certain Suits.  Nothwithstanding any other provision in this
Indenture and any provision of any Security, the right of any Holder of any
Security to receive payment of the principal of and interest on such Security
on or after the respective due dates expressed in such Security, or to
institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.

 

SECTION 5.13 
Notice of Events of Default. 
Within 90 days after the occurrence of any Event of Default hereunder
with respect to the Securities of any series, the Trustee shall transmit in the
manner and to the extent provided in TIA Section 313(c), notice of such
default hereunder known to the Trustee, unless such Event of Default shall have
been cured or waived; provided, however, that, except in the case of an Event
of Default in the payment of the principal of (or premium, if any) or interest,
if any, on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; and
provided  further that in the case
of any Event of Default of the character specified in 

 

40

 

Section 5.1(c) with
respect to Securities of such series, no such notice to Holders shall be given
until at least 60 days after the occurrence thereof.

 

ARTICLE SIX

 

CONCERNING
THE TRUSTEE

 

SECTION 6.1 
Certain Rights of the Trustee. 
Subject to TIA Section 315:

 

(a)                                  the Trustee may
conclusively rely and shall be fully protected in acting or refraining from
acting upon any resolution, Officer’s Certificate or any other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;

 

(b)         any
request, direction, order or demand of the Issuer mentioned herein shall be
sufficiently evidenced by an Officer’s Certificate (unless other evidence in
respect thereof be herein specifically prescribed); and any resolution of the
Board of Directors may be evidenced to the Trustee by a copy thereof certified
by the secretary or an assistant secretary of the Issuer;

 

(c)          the
Trustee may consult with counsel and any written advice or any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in reliance thereon in accordance with such advice or Opinion of Counsel;

 

(d)         the
Trustee shall be under no obligation to exercise any of the trusts or powers
vested in it by this Indenture at the request, order or direction of any of the
Securityholders pursuant to the provisions of this Indenture, unless such
Securityholders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred therein or thereby;

 

(e)          the
Trustee shall not be liable for any action taken or omitted by it in good faith
and believed by it to be authorized or within the discretion, rights or powers
conferred upon it by this Indenture;

 

(f)            the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security or other paper or document unless requested in writing so to
do by the Holders of not less than a majority in aggregate principal amount of
the Securities of all series affected then Outstanding; provided that,
if the payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
indemnity reasonably satisfactory to it against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the 

 

41

 

Issuer
or, if paid by the Trustee or any predecessor Trustee, shall be repaid by the
Issuer upon demand;

 

(g)         the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys not regularly in
its employ and the Trustee shall not be responsible for any misconduct or
negligence on the part of any such agent or attorney appointed with due care by
it hereunder;

 

(h)         none
of the provisions contained in this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its rights or
powers, if there shall be reasonable ground for believing that the repayment of
such funds or adequate indemnity against such liability is not reasonably
assured to it;

 

(i)                                     in no event
shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action;

 

(j)                                     the Trustee shall not be deemed to have notice of any Default or Event of
Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless written notice of any event which is in fact such a default
is received by the Trustee at the Corporate Trust Office of the Trustee, and
such notice references the Securities and this Indenture; and

 

(k)                                  the rights, privileges, protections, immunities and benefits given to the
Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act
hereunder.

 

SECTION 6.2 
Trustee Not Responsible for Recitals, Disposition of Securities or
Application of Proceeds Thereof.  The
recitals contained herein and in the Securities, except the Trustee’s
certificates of authentication, shall be taken as the statements of the Issuer,
and the Trustee assumes no responsibility for the correctness of the same.  The Trustee makes no representation as to the
validity or sufficiency of this Indenture or of the Securities, except that the
Trustee represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its obligations hereunder
and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Issuer are true and accurate
subject to the qualifications set forth therein.  The Trustee shall not be accountable for the
use or application by the Issuer of any of the Securities or of the proceeds
thereof.

 

SECTION 6.3 
Trustee and Agents May Hold Securities; Collections; Etc.  The Trustee or any agent of the Issuer or the
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities with the same rights it would have if it were not the
Trustee or such agent and, subject to TIA Sections 310 and 311, may otherwise
deal with the Issuer and receive, collect, hold and retain collections from the
Issuer with the same rights it would have if it were not the Trustee or such
agent.

 

42

 

SECTION 6.4 
Moneys Held by Trustee. 
Subject to the provisions of Section 10.4 hereof, all moneys
received by the Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated from other funds except to the extent required by mandatory
provisions of law.  Neither the Trustee
nor any agent of the Issuer or the Trustee shall be under any liability for
interest on any moneys received by it hereunder.

 

SECTION 6.5 
Compensation and Indemnification of Trustee and Its Prior Claim.  The Issuer covenants and agrees to pay to the
Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) and the Issuer covenants and
agrees to pay or reimburse the Trustee and each predecessor Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ) except any such expense, disbursement or advance as arises from
its gross negligence or bad faith.  The
Issuer also covenants to indemnify the Trustee and each predecessor Trustee
for, and to hold it harmless against, any loss, liability or expense incurred
without gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this Indenture or the
trusts hereunder and its duties hereunder, including liability which the
Trustee may incur as a result of failure to withhold, pay or report any tax,
assessment or other governmental charge, and the costs and expenses of
defending itself against or investigating any claim of liability in the
premises.  The obligations of the Issuer
under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture.  Such additional indebtedness
shall be a senior claim to that of the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
benefit of the Holders of particular Securities, and the Securities are hereby
subordinated to such senior claim.  When
the Trustee incurs expenses or renders services in connection with an Event of
Default, the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or state bankruptcy,
insolvency or other similar law.

 

SECTION 6.6 
Right of Trustee to Rely on Officer’s Certificate, Etc.  Subject to Section 6.1, whenever in the
administration of the trusts of this Indenture the Trustee shall deem it
necessary or desirable that a matter be proved or established prior to taking
or suffering or omitting any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may, in the absence of
gross negligence or bad faith on the part of the Trustee, be deemed to be
conclusively proved and established by an Officer’s Certificate delivered to
the Trustee, and such certificate, in the absence of gross negligence or bad
faith on the part of the Trustee, shall be full warrant to the Trustee for any
action taken, suffered or omitted by it under the provisions of this Indenture
upon the faith thereof.

 

SECTION 6.7 
Persons Eligible for Appointment as Trustee.  The Trustee for each series of Securities
hereunder shall at all times be eligible to act as trustee under TIA Section 310(a) and
shall always have a combined capital and surplus of at least $50,000,000.  If such 

 

43

 

corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.  In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, the Trustee
shall resign immediately in the manner and with the effect specified in Section 6.8.  For purposes of determining whether the
Trustee or any trustee or trustees hereinafter appointed has a conflicting
interest for purposes of the TIA, there shall be excluded from TIA Section 310(b) the
Trust Indenture dated as of June 15, 1970 between the Issuer and Crown
Trust Company, as amended.

 

SECTION 6.8  
Resignation and Removal; Appointment of Successor Trustee.

 

(a)                                  The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign with
respect to one or more or all series of Securities by giving written notice of
resignation to the Issuer and by mailing notice of such resignation to the
Holders of then Outstanding Securities of each series affected at their
addresses as they shall appear on the registry books.  Upon receiving such notice of resignation,
the Issuer shall promptly appoint a successor trustee or trustees with respect
to the applicable series by written instrument in duplicate, executed by
authority of the Board of Directors, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee or
trustees.  If no successor trustee shall
have been so appointed with respect to any series and have accepted appointment
within 30 days after the mailing of such notice of resignation, the resigning
trustee may at the expense of the Issuer petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Securityholder
who has been a bona fide Holder of a Security or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.12,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. 
Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.

 

(b)         In
case at any time any of the following shall occur:

 

(i)                                     the Trustee
shall fail to comply with the provisions of TIA Section 310(b) after
written request therefore by the Issuer or any Holder of a Security; or

 

(ii)                                  the Trustee
shall cease to be eligible in accordance with the provisions of
Section 6.7 and shall fail to resign after written request therefore by
the Issuer or by any Securityholder; or

 

(iii)                               the Trustee
shall become incapable of acting with respect to any series of Securities, or
shall be adjudged a bankrupt or insolvent, or a receiver, receiver and manager
or liquidator of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation;

 

44

 

then,
in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of
Directors of the Issuer, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of TIA Section 315(e), any Securityholder who has been a bona
fide Holder of a Security or Securities of such series for at least six months
may on behalf of himself and all others similarly situated petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor trustee with respect to such series.  Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.

 

(c)   The Holders of a majority in aggregate
principal amount of the Securities of each series at the time outstanding may
at any time remove the Trustee with respect to Securities of such series and
appoint a successor trustee with respect to the Securities of such series by
delivering to the Trustee so removed, to the successor trustee so appointed and
to the Issuer the evidence provided for in Section 7.1 of the action in
that regard taken by the Securityholders.

 

(d)   Any resignation or removal of the Trustee
with respect to any series and any appointment of a successor trustee with
respect to such series pursuant to any of the provisions of this Section 6.8
shall become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.9.

 

SECTION 6.9  Acceptance of Appointment by Successor
Trustee.  Any successor trustee
appointed as provided in Section 6.8 shall execute and deliver to the
Issuer and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
with respect to all or any applicable series shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all rights, powers, duties and obligations with respect to such
series of its predecessor hereunder, with like effect as if originally named as
trustee for such series hereunder; but, nevertheless, on the written request of
the Issuer or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 10.4, pay
over to the successor trustee all moneys at the time held by it hereunder and
shall execute and deliver an instrument transferring to such successor trustee
all such rights, powers, duties and obligations.  Upon request of any such successor trustee,
the Issuer shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers.  Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Section 6.5.

 

If
a successor trustee is appointed with respect to the Securities of one or more
(but not all) series, the Issuer, the predecessor Trustee and each successor
trustee with respect to the Securities of any applicable series shall execute
and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to
the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be 

 

45

 

necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.

 

No
successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 6.9 unless at the time of such
acceptance such successor trustee shall be eligible under the provisions of TIA
Section 310(a) and shall have a combined capital and surplus of at
least $50,000,000.

 

Upon
acceptance of appointment by any successor trustee as provided in this Section 6.9,
the Issuer shall give notice thereof to the Holders of Securities of each
series affected, by mailing such notice to such Holders at their addresses as
they shall appear on the registry books. 
If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.8.  If the Issuer fails to give such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be given at the expense of the
Issuer.

 

SECTION 6.10  Merger, Conversion, Consolidation or
Succession to Business of Trustee. 
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder; provided that such corporation
shall be eligible under the provisions of TIA Section 310(a) and
shall have a combined capital and surplus of at least $50,000,000, without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding.

 

In
case at the time such successor to the Trustee shall succeed to the trusts
created by this Indenture any of the Securities of any series shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor Trustee and deliver such
Securities so authenticated; and, in case at that time any of the Securities of
any series shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities of such series
or in this Indenture provided that the certificate of the Trustee shall have; provided
that the right to adopt the certificate of authentication of any predecessor
Trustee or to authenticate Securities of any series in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.

 

SECTION 6.11  Appointment of Authenticating Agent.  As long as any Securities of a series remain
Outstanding, the Trustee may, by an instrument in writing, appoint with the
approval of the Issuer an authenticating agent (the “Authenticating Agent”)
which shall be authorized to act on behalf of the Trustee to authenticate
Securities, including Securities issued upon exchange, registration of
transfer, partial redemption or pursuant to Section 2.9.  Securities of each such series authenticated
by such Authenticating Agent shall be entitled to the benefits of 

 

46

 

this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee.  Whenever reference is made in
this Indenture to the authentication and delivery of Securities of any series
by the Trustee or to the Trustee’s Certificate of Authentication, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent for such series and a Certificate of
Authentication executed on behalf of the Trustee by such Authenticating
Agent.  Such Authenticating Agent shall
at all times be a corporation organized and doing business under the laws of
the United States of America or of any State, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authority.

 

Any
corporation into which any Authenticating Agent may be merged or converted, or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be
a party, or any corporation succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent with
respect to all series of Securities for which it served as Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such Authenticating Agent. 
Any Authenticating Agent may at any time, and if it shall cease to be
eligible shall, resign by giving written notice of resignation to the Trustee
and to the Issuer.

 

Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 6.11 with respect to one or more
series of Securities, the Trustee shall upon receipt of an Issuer Order appoint
a successor Authenticating Agent and the Issuer shall provide notice of such
appointment to all Holders of Securities of such series in the manner and to
the extent provided in Section 11.4. 
Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent.  The
Issuer agrees to pay to the Authenticating Agent for such series from time to
time reasonable compensation.  The
Authenticating Agent for the Securities of any series shall have no
responsibility or liability for any action taken by it as such at the direction
of the Trustee.

 

Sections
6.1, 6.2, 6.3, 6.5, 6.7 and 7.3 shall be applicable to any Authenticating
Agent.

 

ARTICLE SEVEN

 

CONCERNING
THE SECURITYHOLDERS

 

SECTION 7.1  Evidence of Action Taken by
Securityholders.  Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by a specified percentage in
principal amount of the Securityholders of any or all series may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such specified percentage of Securityholders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered

 

47

 

to the
Trustee.  Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Article.

 

SECTION 7.2  Proof of Execution of Instruments and of
Holding of Securities.  Subject to Section 6.1,
the execution of any instrument by a Securityholder or his agent or proxy may
be proved in the following manner:

 

(a)   The fact and date of the execution by any
Holder of any instrument may be proved by the certificate of any notary public
or other officer of any jurisdiction authorized to take acknowledgments of
deeds or administer oaths that the person executing such instruments
acknowledged to him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such officer.  Where such execution is by or on behalf of
any legal entity other than an individual, such certificate or affidavit shall
also constitute sufficient proof of the authority of the person executing the
same.  Subject to Section 6.1, the
fact and date of the execution of any such instrument and the amount and
numbers of Securities of any series held by the person so executing such
instrument and the amount and numbers of any Security or Securities for such
series may also be proven in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee for such series or in any other
manner which the Trustee for such series may deem sufficient.

 

(b)   The ownership of Securities shall be proved
by the Security register or by a certificate of the Security registrar.

 

SECTION 7.3  Holders to Be Treated as Owners.  The Issuer, the Trustee and any agent of the
Issuer or the Trustee may deem and treat the person in whose name any Security
shall be registered upon the Security register for such series as the absolute
owner of such Security (whether or not such Security shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal of and, subject
to the provisions of this Indenture, interest on such Security and for all
other purposes; and neither the Issuer nor the Trustee nor any agent of the
Issuer or the Trustee shall be affected by any notice to the contrary.

 

SECTION 7.4  Securities Owned by Issuer Deemed Not
Outstanding.  In determining whether
the Holders of the requisite aggregate principal amount of Outstanding
Securities of any or all series have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Issuer or any
other obligor on the Securities with respect to which such determination is
being made or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer or any other obligor
on the Securities with respect to which such determination is being made shall
be disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver only
Securities which the Trustee knows are so owned shall be so disregarded.  Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee’s right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon 

 

48

 

the Securities or
any person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer or any other obligor on the
Securities.  In case of a dispute as to
such right, the advice of counsel shall be full protection in respect of any
decision made by the Trustee in accordance with such advice.  Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officer’s Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described persons; and, subject to Section 6.1,
the Trustee shall be entitled to accept such Officer’s Certificate as
conclusive evidence of the facts therein set forth and of the fact that all
Securities not listed therein are Outstanding for the purpose of any such determination.

 

SECTION 7.5  Right of Revocation of Action Taken.  At any time prior to (but not after) the
evidencing to the Trustee, as provided in Section 7.1, of the taking of
any action by the Holders of the percentage in aggregate principal amount of
the Securities of any or all series, as the case may be, specified in this
Indenture in connection with such action, any Holder of a Security the serial
number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security.  Except as aforesaid, any such
action taken by the Holder of any Security shall be conclusive and binding upon
such Holder and upon all future Holders and owners of such Security and of any
Securities issued in exchange or substitution therefore or on registration of
transfer thereof, irrespective of whether or not any notation in regard thereto
is made upon any such Security.  Any
action taken by the Holders of the percentage in aggregate principal amount of
the Securities of any or all series, as the case may be, specified in this
Indenture in connection with such action shall be conclusively binding upon the
Issuer, the Trustee and the Holders of all the Securities affected by such
action.

 

SECTION 7.6  Determination of Holders of Securities.  If the Issuer shall solicit from the Holders
of Securities any request, demand, authorization, direction, notice, consent or
waiver, the Issuer may, at its option, by or pursuant to a Board Resolution,
fix in advance a record date for the determination of Holders entitled to give
such request, demand, authorization, direction, notice, consent or waiver, but
the Issuer shall have no obligation to do so. 
Notwithstanding TIA Section 316(c) such record date shall be
the record date specified in or pursuant to such Board Resolution, which shall
be a date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed.  If such a
record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other act may be given before or after such record date, but
only the Holders of record at the close of business on such record date shall
be deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of Outstanding Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent or
waiver, and for that purpose the Outstanding Securities shall be computed as of
such record date; provided that no such authorization, agreement or consent by
the Holders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
eleven months after the record date.

 

49

 

ARTICLE EIGHT

 

SUPPLEMENTAL
INDENTURES

 

SECTION 8.1  Supplemental Indentures Without Consent of
Securityholders.  The Issuer, when
authorized by a resolution of its Board of Directors (which resolution may
provide general terms or parameters for such action and may provide that the
specific terms of such action may be determined in accordance with or pursuant
to an Issuer Order), and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto in form satisfactory
to the Trustee (which shall conform to the provisions of the Trust Indenture
Act of 1939 as in force at the date of the execution thereof) for one or more
of the following purposes:

 

(a)   to convey, transfer, assign, mortgage or pledge
to the Trustee as security for the Securities of one or more series any
property or assets;

 

(b)   to evidence the succession of another
corporation to the Issuer, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of the
Issuer pursuant to Article Nine;

 

(c)   to add to the covenants of the Issuer such
further covenants, restrictions, conditions or provisions for the benefit of
the Holders of Securities, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default that permits the enforcement of
all or any of the several remedies provided in this Indenture as herein set
forth; provided that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide for
a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit the right
of the Holders of a majority in aggregate principal amount of the Securities of
such series to waive such an Event of Default;

 

(d)   to cure any ambiguity or to correct or
supplement any provision contained herein or in any supplemental indenture
which may be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make any other provisions as the Issuer
may deem necessary or desirable, provided that no such action shall
adversely affect the interests of the Holders of the Securities;

 

(e)   to establish the form or terms of Securities
of any series as permitted by Sections 2.1 and 2.3, to provide for or
facilitate the issuance of Securities in bearer form, with or without coupons
attached thereto, or to provide for uncertificated Securities; and

 

(f)    to evidence and provide for the acceptance
of appointment hereunder by a successor trustee with respect to the Securities
of one or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or 

 

50

 

facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to
the requirements of Section 6.9.

 

The
Trustee is hereby authorized to join with the Issuer in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee’s own rights, duties or immunities under this
Indenture or otherwise.

 

Any
supplemental indenture authorized by the provisions of this Section may be
executed without the consent of the Holders of any of the Securities at the
time Outstanding, notwithstanding any of the provisions of Section 8.2.

 

SECTION 8.2  Supplemental Indentures with Consent of
Securityholders.  With the consent
(evidenced as provided in Article Seven) of the Holders of not less than a
majority in aggregate principal amount of the Securities at the time
Outstanding of all series affected by such supplemental indenture (voting as
one class) the Issuer, when authorized by a resolution of its Board of
Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of each
such series; provided that no such supplemental indenture shall (a) extend
the final maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or reduce
any amount payable on redemption thereof, or make the principal thereof
(including any amount in respect of original issue discount), or interest
thereon payable at any place or in any coin or currency other than that
provided in the Securities or in accordance with the terms thereof, or reduce
the amount of the principal of an Original Issue Discount Security that would
be due and payable upon an acceleration of the maturity thereof pursuant to Section 5.1
or the amount thereof provable in bankruptcy pursuant to Section 5.2, or
alter the provisions of Section 11.10, 11.11 or 11.12 or impair or affect
the right of any Securityholder to institute suit for the payment thereof or,
if the Securities provide therefore, any right of repayment at the option of
the Securityholder, in each case without the consent of the Holder of each
Security so affected, or (b) reduce the aforesaid percentage of Securities
of any series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected.

 

A
supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of Holders of Securities of such series, with respect to such covenant
or provision, shall be deemed not to affect the rights under this Indenture of
the Holders of Securities of any other series.

 

51

 

Upon
the request of the Issuer, accompanied by a copy of a resolution of the Board
of Directors (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be determined
in accordance with or pursuant to an Issuer Order) certified by the secretary
or an assistant secretary of the Issuer authorizing the execution of any such
supplemental indenture, and upon the filing with the Trustee of evidence of the
consent of the Holders of the Securities as aforesaid and other documents, if
any, required by Section 7.1, the Trustee shall join with the Issuer in
the execution of such supplemental indenture unless such supplemental indenture
affects the Trustee’s own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.

 

It
shall not be necessary for the consent of the Securityholders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such consent shall approve the substance thereof.

 

Promptly
after the execution by the Issuer and the Trustee of any supplemental indenture
pursuant to the provisions of this Section, the Trustee shall give notice
thereof to the Holders of then Outstanding Securities of each series affected
thereby, by mailing a notice thereof by first-class mail to such Holders at
their addresses as they shall appear on the Security register, and such notice
shall set forth in general terms the substance of such supplemental indenture.  Any failure of the Issuer to give such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.

 

SECTION 8.3  Effect of Supplemental Indenture.  Upon the execution of any supplemental
indenture pursuant to the provisions hereof, this Indenture shall be and shall
be deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Issuer and the Holders of Securities of each
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.

 

SECTION 8.4  Documents to Be Given to Trustee.  The Trustee, subject to the provisions of Section 6.1,
upon its request shall be provided with an Officer’s Certificate and an Opinion
of Counsel as conclusive evidence that any supplemental indenture executed
pursuant to this Article 8 is authorized or permitted by this Indenture.

 

SECTION 8.5  Notation on Securities in Respect of
Supplemental Indentures.  Securities
of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear
a notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture or as to any action taken by
Securityholders.  If the Issuer or the
Trustee shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Board of Directors, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared by the Issuer, authenticated by the Trustee and delivered in
exchange for the Securities of such series then Outstanding.

 

52

 

ARTICLE NINE

 

CONSOLIDATION,
MERGER, SALE OR CONVEYANCE

 

SECTION 9.1  Covenant Not to Merge, Consolidate, Sell
or Convey Property Except Under Certain Conditions.  The Issuer covenants that it will not merge,
amalgamate or consolidate with any other person or sell, lease or convey all or
substantially all of its assets to any other person, unless (i) either the
Issuer shall be the continuing corporation, or the successor corporation or the
person which acquires by sale, lease or conveyance all or substantially all the
assets of the Issuer shall expressly assume the due and punctual payment of the
principal of and interest on all the Securities according to their tenor, and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Issuer, by
supplemental indenture satisfactory to the Trustee, executed and delivered to
the Trustee by such corporation, and (ii) the Issuer, such person or such
successor corporation, as the case may be, shall not, immediately after such
merger, amalgamation or consolidation, or such sale, lease or conveyance, be in
default in the performance of any such covenant or condition.

 

SECTION 9.2  Successor Corporation Substituted.  In case of any such consolidation, merger, sale,
lease or conveyance, and following such an assumption by the successor
corporation, such successor corporation shall succeed to and be substituted for
the Issuer, with the same effect as if it had been named herein.  Such successor corporation may cause to be
signed, and may issue either in its own name or in the name of the Issuer prior
to such succession any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor corporation, instead of the
Issuer, and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the
officers of the Issuer to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. 
All of the Securities so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Securities theretofore or
thereafter issued in accordance with the terms of this Indenture as though all
of such Securities had been issued at the date of the execution hereof.

 

In
case of any such consolidation, merger, sale, lease or conveyance such changes
in phrasing and form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.

 

In
the event of any such sale or conveyance (other than a conveyance by way of
lease) the Issuer or any successor corporation which shall theretofore have
become such in the manner described in this Article shall be discharged
from all obligations and covenants under this Indenture and the Securities and
may be liquidated and dissolved.

 

SECTION 9.3  Opinion of Counsel Delivered to Trustee.  The Trustee, subject to the provisions of Section 6.1,
shall be entitled to receive an Opinion of Counsel as conclusive evidence that
any such consolidation, merger, amalgamation, sale, lease or conveyance, and
any such assumption, complies with the applicable provisions of this Indenture.

 

53

 

ARTICLE TEN

 

SATISFACTION
AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

 

SECTION 10.1  Satisfaction and Discharge of Indenture.

 

(A)          If at any time (a) the Issuer
shall have paid or caused to be paid the principal of and interest on all the
Securities of any series Outstanding hereunder (other than Securities of such
series which have been destroyed, lost or stolen and which have been replaced
or paid as provided in Section 2.9) as and when the same shall have become
due and payable, or (b) the Issuer shall have delivered to the Trustee for
cancellation all Securities of any series theretofore authenticated (other than
any Securities of such series which shall have been destroyed, lost or stolen
and which shall have been replaced or paid as provided in Section 2.9) or (c) in
the case of any series of Securities where the exact amount of principal of and
interest due on which can be determined at the time of making the deposit
referred to in clause (ii) below, (i) all the Securities of such
series not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
reasonably satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name and at the expense of the Issuer, and (ii) the
Issuer shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds the entire amount in cash in such Currency in which such
Securities are payable at their stated maturity without regard to any election
by any Holder pursuant to Section 2.12(b) or pursuant to the terms of
such Securities as established under Section 2.3 (other than moneys repaid
by the Trustee or any paying agent to the Issuer in accordance with Section 10.4)
or Government Obligations applicable to such Securities (determined on the
basis of the Currency in which such Securities are then specified as payable at
their stated maturity), maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash, or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public or chartered accountants expressed in a written certification
thereof delivered to the Trustee, to pay (x) the principal and interest on
all Securities of such series on each date that such principal or interest is
due and payable and (y) any mandatory sinking fund payments on the dates
on which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series; and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer, then this Indenture shall cease to be of further effect (except as
to (i) rights of registration of transfer and exchange of Securities of
such series and the Issuer’s right of optional redemption, if any, (ii) substitution
of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights
of holders of Securities to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefore (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) the rights, obligations, duties and immunities
of the Trustee hereunder, (v) the rights of the Holders of Securities of
such series as beneficiaries hereof with respect to the property so deposited
with the Trustee payable to all or any of them, and (vi) the obligations
of the Issuer under Section 3.2) and the Trustee, on demand of the Issuer
accompanied by an Officer’s Certificate and an Opinion of Counsel and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
such satisfaction of and discharging this Indenture; provided that the rights
of Holders of the Securities to receive amounts in respect of principal of and
interest on the Securities held by them shall not be delayed 

 

54

 

longer than required by
then-applicable mandatory rules or policies of any securities exchange
upon which the Securities are listed. 
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred and to compensate the Trustee for
any services thereafter reasonably and properly rendered by the Trustee in
connection with this Indenture or the Securities of such series.

 

(B)           The following provisions shall apply
to the Securities of each series unless otherwise specifically provided in a
Board Resolution, Officer’s Certificate or indenture supplemental hereto
provided pursuant to Section 2.3. 
In addition to discharge of the Indenture pursuant to the next preceding
paragraph, in the case of any series of Securities the exact amounts of
principal of and interest due on which can be determined at the time of making
the deposit referred to in subparagraph (a) below, the Issuer shall be
deemed to have paid and discharged the entire indebtedness on all the
Securities of such a series on the 91st day after the date of the deposit
referred to in subparagraph (a) below, and the provisions of this
Indenture with respect to the Securities of such series shall no longer be in
effect (except as to (I) rights of registration of transfer and exchange
of Securities of such series and the Issuer’s right of optional redemption, if
any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities, (iii) rights of Holders of Securities to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefore (but not upon acceleration), and remaining rights of the Holders to
receive mandatory sinking fund payments, if any, (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the Holders of Securities of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them and (vi) the obligations of the Issuer under Section 3.2) and
the Trustee, at the expense of the Issuer, shall at the Issuer’s request
execute proper instruments acknowledging the same, if

 

(a)   with reference to this provision the Issuer
has irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of such
series (i) cash (in such Currency in which such Securities are then
specified as payable at their stated maturity without regard to any election by
any Holder pursuant to Section 2.12(b) or pursuant to the terms of
such Securities as established under Section 2.3) in an amount, or (ii) Government
Obligations applicable to such Securities (determined on the basis of the
Currency in which such Securities are then specified as payable at their stated
maturity) maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public or chartered accountants expressed in a written
certification thereof delivered to the Trustee, to pay (x) the principal
and interest on all Securities of such series on each date that such principal
or interest is due and payable and (y) any mandatory sinking fund payments
on the dates on which such payments are due and payable in accordance with the
terms of the Indenture and the Securities of such series;

 

(b)   such deposit will not result in a breach or
violation of, or constitute a default under, any agreement or instrument to
which the Issuer is a party or by which it is bound;

 

55

 

(c)   the Issuer has delivered to the Trustee an
Opinion of Counsel based on the fact that (x) the Issuer has received
from, or there has been published by, the Internal Revenue Service a ruling or (y) since
the date hereof, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and such opinion shall confirm that,
the Holders of the Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred;

 

(d)   the Issuer has delivered to the Trustee an
Opinion of Counsel in Canada to the effect that such deposit and related
defeasance will not cause the Holders of such series of Securities, other than
holders of such series of Securities who are or who are deemed to be residents
of Canada or use or hold or are deemed to use or hold their Securities of such
series in carrying on a business in Canada, to recognize income, gain or loss
for Canadian income tax purposes, and to the effect that payments out of the
trust fund will be free and exempt from any and all withholding and other
income taxes of whatever nature of Canada or any province thereof or political
subdivision thereof or therein having power to tax, except in the case of
Securities of such series beneficially owned (x) by a person who is or is
deemed to be a resident of Canada or (y) by a person who uses or holds or
is deemed to use or hold such series of Securities in carrying on a business in
Canada; and

 

(e)   the Issuer has delivered to the Trustee an
Officer’s Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
this provision have been complied with.

 

(C)           The Issuer shall be released from its
obligations under Sections 3.6 and 9.1 with respect to the Securities of any
series Outstanding on and after the date the conditions set forth below are
satisfied (hereinafter, “covenant defeasance”). 
For this purpose, such covenant defeasance means that, with respect to
the Outstanding Securities of any series, the Issuer may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in such Section, whether directly or indirectly by reason of any
reference elsewhere herein to such Section or by reason of any reference
in such Section to any other provision herein or in any other document and
such omission to comply shall not constitute an Event of Default under Section 5.1,
but the remainder of this Indenture and such Securities shall be unaffected
thereby.  The following shall be the
conditions to application of this subsection (C) of this Section 10.1:

 

(a)           the Issuer has irrevocably deposited
or caused to be deposited with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Securities of such
series, (i) cash (in such Currency in which such Securities are then
specified as payable at their stated maturity without regard to any election by
any Holder pursuant to Section 2.12(b) or pursuant to the terms of
such Securities as established under Section 2.3) in an amount, or (ii) Government
Obligations applicable to such Securities (determined on the basis of the
Currency in which such Securities are then specified as payable at their stated
maturity) maturing as to principal and interest at such 

 

56

 

times and in such amounts
as will insure the availability of cash or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public or chartered accountants expressed in a written certification thereof
delivered to the Trustee, to pay (x) the principal and interest on all
Securities of such series and (y) any mandatory sinking fund payments on
the day on which such payments are due and payable in accordance with the terms
of the Indenture and the Securities of such series.

 

(b)   No Event of Default or event which with
notice or lapse of time or both would become an Event of Default with respect
to the Securities shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 5.1(d) and (e) are concerned, at
any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed satisfied
until the expiration of such period).

 

(c)   Such covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in the Trust Indenture Act of
1939 with respect to any securities of the Issuer.

 

(d)   Such covenant defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by which it is
bound.

 

(e)   Such covenant defeasance shall not cause any
Securities then listed on any registered national securities exchange under the
Securities Exchange Act of 1934, as amended, to be delisted.

 

(f)    The Issuer shall have delivered to the
Trustee an Officer’s Certificate and Opinion of Counsel to the effect that the
Holders of the Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred.

 

(g)   The Issuer has delivered to the Trustee an
opinion of Counsel in Canada to the effect that such deposit and related
covenant defeasance will not cause the Holders of such series of Securities,
other than holders of such series of Securities who are or who are deemed to be
residents of Canada or use or hold or are deemed to use or hold their
Securities of such series in carrying on a business in Canada, to recognize
income, gain or loss for Canadian income tax purposes, and to the effect that
payments out of the trust fund will be free and exempt from any and all
withholding and other income taxes of whatever nature of Canada or any province
thereof or political subdivision thereof or therein having power to tax, except
in the case of Securities of such series beneficially owned (x) by a
person who is or is deemed to be a resident of Canada or (y) by a person
who uses or holds or is deemed to use or hold such series of Securities in
carrying on a business in Canada.

 

57

 

(h)   The Issuer shall have delivered to the
Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to the covenant defeasance
contemplated by this provision have been complied with.

 

SECTION 10.2  Application by Trustee of Funds Deposited
for Payment of Securities.  Subject
to Section 10.4, all moneys deposited with the Trustee (or other trustee)
pursuant to Section 10.1 shall be held in trust and applied by it to the
payment, either directly or through any paying agent (including the Issuer
acting as its own paying agent), to the Holders of the particular Securities of
such series for the payment or redemption of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest; but such money need not be segregated from other funds
except to the extent required by law.

 

Unless
otherwise specified with respect to any Security pursuant to Section 2.3,
if, after a deposit referred to in Section 10.1 has been made, (a) the
Holder of a Security in respect of which such deposit was made is entitled to,
and does, elect pursuant to Section 2.12(b) or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 10.1 has been made in respect of such Security, or (b) a
Conversion Event occurs as contemplated in Section 2.12(d) or 2.12(e) or
by the terms of any Security in respect of which the deposit pursuant to Section 10.1
has been made, the indebtedness represented by such Security and any related
coupons shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of and interest, if any, on such
Security as they become due out of the proceeds yielded by converting (from
time to time as specified below in the case of any such election) the amount or
other property deposited in respect of such Security into the Currency in which
such Security becomes payable as a result of such election or Conversion Event
based on the applicable Market Exchange Rate for such Currency in effect on the
third Business Day prior to each payment date, except, with respect to a
Conversion Event, for such Currency in effect (as nearly as feasible) at the
time of the Conversion Event.

 

SECTION 10.3  Repayment of Moneys Held by Paying Agent.  In connection with the satisfaction and
discharge of this Indenture with respect to Securities of any series, all
moneys then held by any paying agent under the provisions of this Indenture
with respect to such series of Securities shall, upon demand of the Issuer, be
repaid to it or paid to the Trustee and thereupon such paying agent shall be
released from all further liability with respect to such moneys.

 

SECTION 10.4  Return of Moneys Held by Trustee and
Paying Agent Unclaimed for Two Years. 
Any moneys deposited with or paid to the Trustee or any paying agent for
the payment of the principal of or interest on any Security of any series and
not applied but remaining unclaimed for two years after the date upon which
such principal or interest shall have become due and payable, shall, upon the
written request of the Issuer and unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law, be
repaid to the Issuer by the Trustee for such series or such paying agent, and
the Holder of the Securities of such series shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Issuer for any payment which such Holder may
be entitled to collect, and all liability of the Trustee or any paying agent
with respect to such moneys shall thereupon cease; provided, however, that the 

 

58

 

Trustee or such paying
agent, before being required to make any such repayment with respect to moneys
deposited with it for any payment, shall at the expense of the Issuer, mail by
first-class mail to Holders of Securities at their addresses as they shall
appear on the Security register notice that such moneys remain and that, after
a date specified therein, which shall not be less than 30 days from the date of
such mailing, any unclaimed balance of such moneys then remaining will be
repaid to the Issuer.

 

SECTION 10.5  Indemnity for Government Obligations.  The Issuer shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
Government Obligations deposited pursuant to Section 10.1 or the principal
or interest received in respect of such obligations.

 

ARTICLE ELEVEN

 

MISCELLANEOUS
PROVISIONS

 

SECTION 11.1  Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability.  No recourse under or upon any obligation,
covenant or agreement contained in this Indenture, or in any Security, or
because of any indebtedness evidenced thereby, shall be had against any
incorporator, as such or against any past, present or future stockholder,
officer or director, as such, of the Issuer or of any successor, either
directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities by the
Holders thereof and as part of the consideration for the issue of the Securities.

 

SECTION 11.2  Provisions of Indenture for the Sole
Benefit of Parties and Holders of Securities.  Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
person, firm or corporation, other than the parties hereto and their successors
and the Holders of the Securities any legal or equitable right, remedy or claim
under this Indenture or under any covenant or provision herein contained, all
such covenants and provisions being for the sole benefit of the parties hereto
and their successors and of the Holders of the Securities.

 

SECTION 11.3  Successors and Assigns of Issuer Bound by
Indenture.  All the covenants,
stipulations, promises and agreements in this Indenture contained by or on
behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.

 

SECTION 11.4  Notices and Demands on Issuer, Trustee and
Holders of Securities.  Any notice or
demand which by any provision of this Indenture is required or permitted to be
given or served by the Trustee or by the Holders of Securities to or on the
Issuer may be given or served by being deposited postage prepaid, first-class
mail or transmitted by facsimile transmission (except as otherwise specifically
provided herein) addressed (until another address of the Issuer is filed by the
Issuer with the Trustee) to TransCanada PipeLines Limited, TransCanada
PipeLines Tower, 111-Fifth Avenue S.W., P.O.  Box 1000, Station M,
Calgary, Alberta, T2P 4K5, facsimile: 
(403) 267-8884, Attention: 
General Counsel, Corporate.  Any
notice, direction, request or demand by the Issuer or any Holder of Securities
to or upon the 

 

59

 

Trustee shall be deemed
to have been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to The Bank of New York, 101 Barclay Street, New York, New York 10286,
Attention:  Trust Services Division.

 

Where
this Indenture provides for notice to Holders of Securities, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder entitled
thereto, at his last address as it appears in the Security register.  In any case where notice to such Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders of Securities.

 

In
case, by reason of the suspension of or irregularities in regular mail service,
it shall be impracticable to mail notice to any Person when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be reasonably satisfactory to the Trustee
shall be deemed to be a sufficient giving of such notice.

 

Any
request, demand, authorization, direction, notice, consent or waiver required
or permitted under this Indenture shall be in the English language.

 

Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.

 

SECTION 11.5  Officer’s Certificates and Opinions of
Counsel; Statements to Be Contained Therein.  Upon any application or demand by the Issuer
to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officer’s Certificate
stating that all conditions precedent provided for in this Indenture relating
to the proposed action have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent have
been complied with, except that in the case of any such application or demand
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or demand,
no additional certificate or opinion need be furnished.

 

Each
certificate or opinion provided for in this Indenture (other than under Section 3.5)
and delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (a) a statement that
the person making such certificate or opinion has read such covenant or
condition, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based, (c) a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with and (d) a statement as
to whether or not, in the opinion of such person, such condition or covenant
has been complied with.

 

60

 

Any
certificate, statement or opinion of an officer of the Issuer may be based, insofar
as it relates to legal matters, upon a certificate or opinion of or
representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or
in the exercise of reasonable care should know that the same are
erroneous.  Any certificate, statement or
opinion of counsel may be based, insofar as it relates to factual matters,
information with respect to which is in the possession of the Issuer, upon the
certificate, statement or opinion of or representations by an officer or
officers of the Issuer, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.

 

Any
certificate, statement or opinion of an officer of the Issuer or of counsel may
be based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representations by an accountant or firm of accountants in the
employ of the Issuer, unless such officer or counsel, as the case may be, knows
that the certificate or opinion or representations with respect to the
accounting matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.

 

Any
certificate or opinion of any independent firm of public accountants filed with
and directed to the Trustee shall contain a statement that such firm is
independent.

 

SECTION 11.6  Payments Due on Saturdays, Sundays and
Holidays.  If the date of maturity of
interest on or principal of the Securities of any series or the date fixed for
redemption or repayment of any such Security shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, and no interest shall
accrue on such payment for the period after such date.

 

SECTION 11.7  Governing Law.  This Indenture and each Security shall be
deemed to be a contract under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of such State, except
as may otherwise be required by mandatory provisions of law.  In addition, this Indenture is subject to,
and shall be governed by, the provisions of the TIA required to be a part of
and govern indentures qualified under the TIA.

 

SECTION 11.8  Counterparts.  This Indenture may be executed in any number
of counterparts, each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.

 

SECTION 11.9  Effect of Headings.  The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.

 

SECTION 11.10  Judgment Currency.  The Issuer agrees, to the fullest extent that
it may effectively do so under applicable law, that (a) if for the purpose
of obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of or interest on the Securities of any series (the “Required
Currency”) into a currency in which a judgment will be 

 

61

 

rendered (the “Judgment
Currency”), the rate of exchange used shall be the rate at which at Citibank,
N.A. in New York City the Trustee could purchase the Required Currency with the
Judgment Currency on the day on which final unappealable judgment is entered,
unless such day is not a New York Banking Day, then, to the extent permitted by
applicable law, the rate of exchange used shall be the rate at which at
Citibank, N.A. in New York City the Trustee could purchase the Required
Currency with the Judgment Currency on the New York Banking Day preceding the
day on which a final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i) shall
not be discharged or satisfied by any tender, or any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)) in any
currency other than the Required Currency, except to the extent that such
tender or recovery shall result in the actual receipt, by the payee, of the
full amount of the Required Currency expressed to be payable in respect of such
payments, (ii) shall be enforceable as an alternative or additional cause
of action for the purpose of recovering in the Required Currency the amount, if
any, by which such actual receipt shall fall short of the full amount of the
Required Currency so expressed to be payable and (iii) shall not be
affected by judgment being obtained for any other sum due under this
Indenture.  For purposes of the
foregoing, “New York Banking Day” means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or required by law or executive order to
close.

 

SECTION 11.11  Currency Equivalent.  Except as provided in Section 11.10, for
purposes of the construction of the terms of this Indenture, the equivalent in
another currency or currencies of an amount in Dollars shall be determined by
using the applicable Market Exchange Rate on the date on which such equivalent
is to be determined.

 

SECTION 11.12  Consent to Jurisdiction and Service of
Process.  The Issuer irrevocably
submits to the non-exclusive jurisdiction of any New York State or Federal
court sitting in The City of New York over any suit, action or proceeding
arising out of or relating to this Indenture or any Security.  The Issuer waives, to the fullest extent
permitted by law, any objection which it may have to the laying of the venue of
any such suit, action or proceeding brought in such a court and any claim that
any such suit, action or proceeding brought in such court has been brought in
any inconvenient forum.  The Issuer
agrees that any final judgment in any such suit, action or proceeding brought
in such a court shall be conclusive and binding upon the Issuer and may be
enforced in the courts of Canada (or any other courts to the jurisdiction of
which the Issuer is subject) by a suit upon such judgment, provided that
service of process is effected upon the Issuer in the manner specified in the
following paragraph or as otherwise permitted by law; provided, however, that the
Issuer does not waive, and the foregoing provisions of this sentence shall not
constitute or be deemed to constitute a waiver of, (i) any right to appeal
any such judgment, to seek any stay or otherwise to seek reconsideration or
review of any such judgment or (ii) any stay of execution or levy pending
an appeal from, or a suit, action or proceeding for reconsideration or review
of, any such judgment.

 

As
long as any of the Securities remain Outstanding, the Issuer will at all times
have an authorized agent in the Borough of Manhattan, The City of New York upon
whom process may be served in any legal action or proceeding arising out of or
relating to the Indenture or any Security. 
Service of process upon such agent and written notice of such service
mailed or delivered to the Issuer shall to the extent permitted by law be
deemed in every respect effective 

 

62

 

service
of process upon the Issuer in any such legal action or proceeding.  The Issuer hereby appoints CT Corporation
System (formerly The Corporation Trust Company) as its agent for such purpose,
and covenants and agrees that service of process in any such legal action or
proceeding may be made upon it at the office of such agent at 1633 Broadway,
New York, New York 10019 (or at such other address in the Borough of Manhattan,
The City of New York, as the Issuer may designate by written notice to the
Trustee).

 

The
Issuer hereby consents to process being served in any suit, action or
proceeding of the nature referred to in the preceding paragraphs by service
upon such agent together with the mailing of a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to the address of
the Issuer set forth in Section 11.4 or to any other address of which the
Issuer shall have given written notice to the Trustee.  The Issuer irrevocably waives, to the fullest
extent permitted by law, all claim of error by reason of any such service (but
does not waive any right to assert lack of subject matter jurisdiction) and
agrees that such service (i) shall be deemed in every respect effective
service of process upon the Issuer in any such suit, action or proceeding and (ii) shall,
to the fullest extent permitted by law, be taken and held to be a valid
personal service upon and personal delivery to the Issuer.

 

Nothing in this Section shall affect the right of the Trustee or
any Securityholder to serve process in any manner permitted by law or limit the
right of the Trustee or any Securityholder to bring proceedings against the
Issuer in the courts of any jurisdiction or jurisdictions.

 

SECTION 11.13  Waiver of Jury Trial.  EACH OF THE ISSUER AND THE TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 11.14  Force Majeure.  In no event shall the Trustee be responsible
or liable for any failure or delay in the performance of its obligations
hereunder arising out of or caused by, directly or indirectly, forces beyond
its control, including, without limitation, strikes, work stoppages, accidents,
acts of war or terrorism, civil or military disturbances, nuclear or natural
catastrophes or acts of God and interruptions, loss of malfunctions of
utilities, communications or computer (software and hardware) services
affecting the banking industry generally; it being understood that the Trustee
shall use reasonable efforts which are consistent with accepted practices in
the banking industry to resume performance as soon as practicable under the
circumstances.

 

ARTICLE TWELVE

 

REDEMPTION
OF SECURITIES AND SINKING FUNDS

 

SECTION 12.1  Applicability of Article.  The provisions of this Article shall be
applicable to the Securities of any series which are redeemable before their
maturity or to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 2.3 for Securities
of such series.

 

63

 

SECTION 12.2  Notice of Redemption; Partial Redemptions.  Notice of redemption to the Holders of
Securities of any series to be redeemed as a whole or in part at the option of
the Issuer shall be given by mailing notice of such redemption by first class mail,
postage prepaid, at least 30 days and not more than 60 days prior to the date
fixed for redemption to such Holders of Securities of such series at their last
addresses as they shall appear upon the registry books.  Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given, whether
or not the Holder receives the notice. 
Failure to give notice by mail or any defect in the notice to the Holder
of any Security of a series designated for redemption as a whole or in part
shall not affect the validity of the proceedings for the redemption of any
other Security of such series.

 

The
notice of redemption to each such Holder shall specify the principal amount of
each Security of such series held by such Holder to be redeemed, the date fixed
for redemption, the redemption price, the place or places of payment, that
payment will be made upon presentation and surrender of such Securities, that
such redemption is pursuant to the mandatory or optional sinking fund, or both,
if such be the case, that interest accrued to the date fixed for redemption
will be paid as specified in such notice and that on and after said date
interest thereon or on the portions thereof to be redeemed will cease to
accrue.  In case any Security of a series
is to be redeemed in part only, the notice of redemption shall state the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Security, a new
Security or Securities of such series in principal amount equal to the
unredeemed portion thereof will be issued.

 

The
notice of redemption of Securities of any series to be redeemed at the option
of the Issuer shall be given by the Issuer or, at the Issuer’s request, by the
Trustee in the name and at the expense of the Issuer; provided however in the
latter case the Issuer will give the Trustee at least 10 days prior notice of
the requested date of the giving of such notice.

 

On
or before the redemption date specified in the notice of redemption given as
provided in this Section, the Issuer will deposit with the Trustee or with one
or more paying agents (or, if the Issuer is acting as its own paying agent, set
aside, segregate and hold in trust as provided in Section 3.4) an amount
of money in the Currency in which the Securities of such series are payable
(except as otherwise specified pursuant to Section 2.3 for the Securities
of such series and except, if applicable, as provided in Sections 2.12(b), 2.12(d) and
2.12(e)) sufficient to redeem on the redemption date all the Securities of such
series so called for redemption at the appropriate redemption price, together
with accrued interest to the date fixed for redemption.  The Issuer will deliver to the Trustee at
least 70 days prior to the date fixed for redemption an Officer’s Certificate
stating the aggregate principal amount of Securities to be redeemed.  In case of a redemption at the election of
the Issuer prior to the expiration of any restriction on such redemption, the
Issuer shall deliver to the Trustee, prior to the giving of any notice of
redemption to Holders pursuant to this Section, an Officer’s Certificate
stating that such restriction has been complied with.

 

If
less than all the Securities of a series issued on the same date with the same
terms are to be redeemed, the Trustee shall select, in such manner as it shall
deem appropriate and fair, Securities of such series issued on the same date
with the same terms to be redeemed in whole or in part.  Securities may be redeemed in part in
multiples equal to the minimum 

 

64

 

authorized
denomination for Securities of such series or any multiple thereof.  The Trustee shall promptly notify the Issuer
in writing of the Securities of such series selected for redemption and, in the
case of any Securities of such series selected for partial redemption, the
principal amount thereof to be redeemed. 
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any series
shall relate, in the case of any Security redeemed or to be redeemed only in
part, to the portion of the principal amount of such Security which has been or
is to be redeemed.

 

SECTION 12.3  Payment of Securities Called for
Redemption.  If notice of redemption
has been given as above provided, the Securities or portions of Securities
specified in such notice shall become due and payable on the date and at the
place stated in such notice at the applicable redemption price in the Currency
in which the Securities of such series are payable (except as otherwise
specified pursuant to Section 2.3 for the Securities of such series and
except, if applicable, as provided in Sections 2.12 (b), 2.12 (d) and 2.12
(e)), together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Issuer shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue, and, except as provided in Sections 6.4 and 10.4, such
Securities shall cease from and after the date fixed for redemption to be
entitled to any benefit or security under this Indenture, and the Holders
thereof shall have no right in respect of such Securities except the right to
receive the redemption price thereof and unpaid interest to the date fixed for
redemption.  On presentation and
surrender of such Securities at a place of payment specified in said notice,
said Securities or the specified portions thereof shall be paid and redeemed by
the Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that payment of interest
becoming due on or prior to the date fixed for redemption shall be payable to
the Holders of Securities registered as such on the relevant record date
subject to the terms and provisions of Sections 2.3 and 2.7 hereof.

 

If
any Security called for redemption shall not be so paid upon surrender thereof
for redemption, the principal shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate of interest or Yield to
Maturity (in the case of an Original Issue Discount Security) borne by such
Security.

 

Upon
presentation of any Security redeemed in part only, the Issuer shall execute
and the Trustee shall authenticate and deliver to or on the order of the Holder
thereof, at the expense of the Issuer, a new Security or Securities of such
series, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.

 

SECTION 12.4  Exclusion of Certain Securities from
Eligibility for Selection for Redemption. 
Securities shall be excluded from eligibility for selection for
redemption if they are identified by registration and certificate number in an
Officer’s Certificate delivered to the Trustee at least 40 days prior to the
last date on which notice of redemption may be given as being owned of record
and beneficially by, and not pledged or hypothecated by either (a) the
Issuer or (b) an entity specifically identified in such written statement
as directly or indirectly controlling or controlled by or under direct or
indirect common control with the Issuer.

 

65

 

SECTION 12.5  Mandatory and Optional Sinking Funds.  The minimum amount of any sinking fund
payment provided for by the terms of the Securities of any series is herein
referred to as a “mandatory sinking fund payment”, and any payment in excess of
such minimum amount provided for by the terms of the Securities of any series
is herein referred to as an “optional sinking fund payment”.  The date on which a sinking fund payment is
to be made is herein referred to as the “sinking fund payment date”.

 

In
lieu of making all or any part of any mandatory sinking fund payment with
respect to any series of Securities in cash, the Issuer may at its option (a) deliver
to the Trustee Securities of such series purchased or otherwise acquired
(except upon redemption pursuant to the mandatory sinking fund) by the Issuer
or receive credit for Securities of such series (not previously so credited)
theretofore purchased or otherwise acquired (except as aforesaid) by the Issuer
and delivered to the Trustee for cancellation pursuant to Section 2.10, (b) receive
credit for optional sinking fund payments (not previously so credited) made
pursuant to this Section or (c) receive credit for Securities of such
series (not previously so credited) redeemed by the Issuer through any optional
redemption provision contained in the terms of such series.  Securities so delivered or credited shall be
received or credited by the Trustee at the sinking fund redemption price
specified in such Securities.

 

On
or before the 60th day next preceding each sinking fund payment date for any
series, the Issuer will deliver to the Trustee an Officer’s Certificate (which
need not contain the statements required by Section 11.5) (a) specifying
the portion of the mandatory sinking fund payment to be satisfied by payment of
cash in the Currency in which the Securities of such series are payable (except
as otherwise specified pursuant to Section 2.3 for the Securities of such
series and except, if applicable as provided in Sections 2.12(b), 2.12(d) and
2.12(e)) and the portion to be satisfied by credit of Securities of such series
and the basis for such credit, (b) stating that none of the Securities of
such series has theretofore been so credited, (c) stating that no defaults
in the payment of interest or Events of Default with respect to such series
have occurred (which have not been waived or cured) and are continuing and (d) stating
whether or not the Issuer intends to exercise its right to make an optional
sinking fund payment with respect to such series and, if so, specifying the
amount of such optional sinking fund payment which the Issuer intends to pay on
or before the next succeeding sinking fund payment date.  Any Securities of such series to be credited
and required to be delivered to the Trustee in order for the Issuer to be
entitled to credit therefore as aforesaid which have not theretofore been
delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10
to the Trustee with such Officer’s Certificate (or reasonably promptly
thereafter if acceptable to the Trustee). 
Such Officer’s Certificate shall be irrevocable and upon its receipt by
the Trustee the Issuer shall become unconditionally obligated to make all the
cash payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. 
Failure of the Issuer, on or before any such 60th day, to deliver such
Officer’s Certificate and Securities specified in this paragraph, if any, shall
not constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Issuer (i) that the mandatory sinking fund
payment for such series due on the next succeeding sinking fund payment date
shall be paid entirely in cash without the option to deliver or credit
Securities of such series in respect thereof and (ii) that the Issuer will
make no optional sinking fund payment with respect to such series as provided
in this Section.

 

66

 

If
the sinking fund payment or payments (mandatory or optional or both) to be made
in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed
$50,000, if the Issuer shall so request with respect to the Securities of any
particular series, such cash shall be applied on the next succeeding sinking
fund payment date to the redemption of Securities of such series at the sinking
fund redemption price together with accrued interest to the date fixed for
redemption.  If such amount shall be
$50,000 or less and the Issuer makes no such request then it shall be carried
over until a sum in excess of $50,000 is available.  The Trustee shall select, in the manner
provided in Section 12.2, for redemption on such sinking fund payment date
a sufficient principal amount of Securities of such series to absorb said cash,
as nearly as may be, and shall (if requested in writing by the Issuer) inform
the Issuer of the serial numbers of the Securities of such series (or portions
thereof) so selected.  Securities shall
be excluded from eligibility for redemption under this Section if they are
identified by registration and certificate number in an Officer’s Certificate
delivered to the Trustee at least 60 days prior to the sinking fund payment
date as being owned of record and beneficially by, and not pledged or
hypothecated by, either (a) the Issuer or (b) an entity specifically
identified in such Officer’s Certificate as directly or indirectly controlling
or controlled by or under direct or indirect common control with the
Issuer.  The Trustee, in the name and at
the expense of the Issuer (or the Issuer, if it shall so request the Trustee in
writing) shall cause notice of redemption of the Securities of such series to
be given in substantially the manner provided in Section 12.2 (and with
the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Issuer.  The amount of any sinking fund payments not
so applied or allocated to the redemption of Securities of such series shall be
added to the next cash sinking fund payment for such series and, together with
such payment, shall be applied in accordance with the provisions of this
Section.  Any and all sinking fund moneys
held on the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated) which are not held for the payment or
redemption of particular Securities of such series shall be applied, together
with other moneys, if necessary, sufficient for the purpose, to the payment of
the principal of, and interest on, the Securities of such series at maturity.

 

Prior
to 10:00 a.m. New York City time on each sinking fund payment date, the
Issuer shall pay to the Trustee in cash or shall otherwise provide for the
payment of all interest accrued to the date fixed for redemption on Securities
to be redeemed on the next following sinking fund payment date.

 

The
Trustee shall not redeem or cause to be redeemed any Securities of a series
with sinking fund moneys or give any notice of redemption of Securities for
such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
except that, where the giving of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Issuer a
sum sufficient for such redemption. 
Except as aforesaid, any moneys in the sinking fund for such series at
the time when any such default or Event of Default shall occur, and any moneys
thereafter paid into the sinking fund, shall, during the continuance of such
default or Event of Default, be deemed to have been collected under Article Five
and held for the payment of all such Securities.  In case such Event of Default shall have been
waived as provided in Section 5.9 or the default cured on or before the
sixtieth day preceding the sinking fund payment date in any year, such moneys 

 

67

 

shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.

 

ARTICLE THIRTEEN

 

REPAYMENT
AT OPTION OF HOLDERS

 

SECTION 13.1  Applicability of Article.  Repayment of Securities of any series before
their stated maturity at the option of Holders thereof shall be made in
accordance with the terms of such Securities and (except as otherwise specified
as contemplated by Section 2.3 for Securities of any series) in accordance
with this Article.

 

SECTION 13.2  Repayment of Securities.  Securities of any series subject to repayment
in whole or in part at the option of the Holders thereof will, unless otherwise
provided in the terms of such Securities, be repaid at a price equal to the
principal amount thereof, together with interest, if any, thereon accrued to
the Repayment Date specified in or pursuant to the terms of such
Securities.  The Issuer covenants that on
or before the Repayment Date it will deposit with the Trustee or with a paying
agent (or, if the Issuer is acting as its own paying Agent, segregate and hold
in trust as provided in Section 3.4) an amount of money in the Currency in
which the Securities of such series are payable (except as otherwise specified
pursuant to Section 2.3 for the Securities of such series and except, if
applicable, as provided in Sections 2.12(b), 2.12(d) and 2.12(e))
sufficient to pay the principal (or, if so provided by the terms of the
Securities of any series, a percentage of the principal) of, and (except if the
Repayment Date shall be an interest payment date) accrued interest on, all the
Securities or portions thereof, as the case may be, to be repaid on such date.

 

SECTION 13.3  Exercise of Option.  Securities of any series subject to repayment
at the option of the Holders thereof will contain an “Option to Elect Repayment”
form on the reverse of such Securities. 
To be repaid at the option of the Holder, any Security so providing for
such repayment, with the “Option to Elect Repayment” form on the reverse of
such Security duly completed by the Holder (or by the Holder’s attorney duly
authorized in writing), must be received by the Issuer at the place of payment
therefore specified in the terms of such Security (or at such other place or
places of which the Issuer shall from time to time notify the Holders of such
Securities) not earlier than 45 days nor later than 30 days prior to the
Repayment Date.  If less than the entire
principal amount of such Security is to be repaid in accordance with the terms
of such Security, the principal amount of such Security to be repaid, in increments
of the minimum denomination for Securities of such series, and the denomination
or denominations of the Security or Securities to be issued to the Holder for
the portion of the principal amount of such Security surrendered that is not to
be repaid, must be specified.  The
principal amount of any Security providing for repayment at the option of the
Holder thereof may not be repaid in part if, following such repayment, the
unpaid principal amount of such Security would be less than the minimum
authorized denomination of Securities of the series of which such Security to
be repaid is a part.  Except as otherwise
may be provided by the terms of any Security providing for repayment at the
option of the Holder thereof, exercise of the repayment option by the Holder
shall be irrevocable unless waived by the Issuer.

 

68

 

SECTION 13.4  When Securities Presented for Repayment
Become Due and Payable.  If
Securities of any series providing for repayment at the option of the Holders
thereof shall have been surrendered as provided in this Article and as
provided by or pursuant to the terms of such Securities, such Securities or the
portions thereof, as the case may be, to be repaid shall become due and payable
and shall be paid by the Issuer on the Repayment Date therein specified, and on
and after such Repayment Date (unless the Issuer shall default in the payment
of such Securities on such Repayment Date) such Securities shall, if the same
were interest-bearing, cease to bear interest and, except to the extent
provided below, shall be void.  Upon
surrender of any such Security for repayment in accordance with such
provisions, the principal amount of such Security so to be repaid shall be paid
by the Issuer, together with accrued interest, if any, to the Repayment Date;
provided, however,  that
installments of interest, if any, whose stated maturity is on or prior to the
Repayment Date shall be payable to the Holders of such Securities, or one or
more predecessor Securities, registered as such at the close of business on the
relevant record dates according to their terms and the provisions of
Section 3.1.

 

If
the principal amount of any Security surrendered for repayment shall not be so
repaid upon surrender thereof, such principal amount (together with interest,
if any, thereon accrued to such Repayment Date) shall, until paid, bear
interest from the Repayment Date at the rate of interest or Yield to Maturity
(in the case of Original Issue Discount Securities) set forth in such Security.

 

SECTION 13.5  Securities Repaid in Part.  Upon surrender of any Security which is to be
repaid in part only, the Issuer shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge
and at the expense of the Issuer, a new Security or Securities of the same
series, of any authorized denomination specified by the Holder, in an aggregate
principal amount equal to and in exchange for the portion of the principal of
such Security so surrendered which is not to be repaid.

 

69

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of September 15, 2010.

 

	
   

  	
  TRANSCANADA
  PIPELINES LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Donald R. Marchand

  
	
   

  	
   

  	
  Name:

  	
  Donald
  R. Marchand

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice-President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Joel E. Hunter

  
	
   

  	
   

  	
  Name:

  	
  Joel
  E. Hunter

  
	
   

  	
   

  	
  Title:

  	
  Vice-President,
  Finance

  

 

70

 

IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed as of September 15, 2010.

 

 

	
   

  	
  THE
  BANK OF NEW YORK MELLON, AS TRUSTEE

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Vanessa Mack

  
	
   

  	
   

  	
  Name:

  	
  Vanessa
  Mack

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  

 

71Exhibit 10.1

 

	
  

  	
  TECHNOLOGY FINANCE

   

  MASTER LEASE AGREEMENT

  

 

THIS LEASE (“Lease”), dated as of September 17, 2010, is made by
and between U.S. Bancorp Equipment
Finance, Inc. - Technology Finance Group, having its principal
office at 801 Larkspur Landing, Larkspur, CA 94939 (“Lessor”), and OVERSTOCK.COM, INC. having its
principal office at 6350 South 3000 East,
Salt Lake City,  UT 84121
(“Lessee”).

 

LESSOR AND LESSEE COVENANT AND AGREE AS FOLLOWS:

 

1.     PROPERTY
LEASED.  Lessee hereby leases from
Lessor the personal property (“Property”) together with any replacements,
additions, repairs, now or hereafter incorporated therein and finances the
licensed software and/or services, which may include training, installation,
maintenance, custom programming and technical consulting (collectively, “Financed
Items”) as described in any Schedule to Master Lease Agreement (“Schedule”) or
Certificate of Delivery and Acceptance now or hereafter executed by the parties
hereto.  Each Schedule shall incorporate
all of the terms and conditions of the Lease and contain such additional terms
and conditions, as the parties shall agree.

 

2.     TERM.  The Lease shall be effective upon the
execution hereof by Lessor.  The Lease
may consist of an “Installation Period” and an “Initial Term”. The Installation
Period for each Schedule shall begin on the date set forth on the first
Certificate of Delivery and Acceptance (“Acceptance Certificate”) executed by
Lessee as the “Installation Date” and continue to the “Commencement Date” as
set forth in the Schedule.  The Initial
Term of the Lease shall begin on the Commencement Date and shall continue for
the period as set forth in the Schedule. At the expiration of the Initial Term
(or any Extension Term), the Lease shall automatically extend with respect to
all Property for a new six (6) month
term (an “Extension Term”) under the same terms as contained herein (except
that Lessor may reduce the rent to reflect that the Extension Term does not
include any Financed Items) unless terminated by either party upon three (3) months prior written notice.

 

3.     RENT
AND PAYMENT.  During the
Initial Term of the Lease, Lessee shall pay Lessor rent as indicated on the
Schedule, which shall be due and payable in advance each month on or before the
payment date shown in each Schedule (the “Rent Payment Date”).  The term “rent” includes amounts due Lessor
for Financed Items.  During any
Installation Period, for each Acceptance Certificate, Lessee shall pay rent on
the Property from the Installation Date on the Acceptance Certificate to the
Commencement Date of the Lease.  All rent
and other amounts due hereunder shall be paid to Lessor at Lessor’s address set
forth above or at such place as Lessor shall designate.   Whenever any payment (of rent or otherwise)
is not made within ten (10) days after the date such payment is due,
Lessee shall pay a late charge calculated at one and one-half percent (1.5%) of
the amount overdue for each month or portion thereof that such amount remains
unpaid.  The parties agree that the amount
of such late charge represents a reasonable estimate of the cost Lessor will
incur in processing a delinquent payment and that such late charge shall be
paid as liquidated damages and not as a penalty. Acceptance of any late charge
by Lessor shall not constitute a waiver of default with respect to any overdue
amount or prevent Lessor from exercising any other available rights and
remedies.

 

This
Lease is a net lease, it being the intention of the parties that all costs,
expenses and liabilities associated with the Property or its lease shall be
borne by Lessee.  EXCEPT AS OTHERWISE
PROVIDED IN ANY SCHEDULE, THIS LEASE IS NON-CANCELABLE.  Lessee’s obligation to pay rent and any other
amounts due under the Lease shall be absolute and unconditional, and shall not
be subject to any abatements, reductions, defenses, counterclaims, deferments
or any recoupment or set-off against Lessor or any assignee for any reason
whatsoever.  Upon Lessee’s execution of
the Acceptance Certificate for each Schedule, to the extent permitted by
applicable law, Lessee hereby waives any and all rights and remedies under Article 2A-508
through 522 of the Uniform Commercial Code (“UCC”).

 

4.     SELECTION, INSTALLATION
AND ACCEPTANCE OF PROPERTY.  Lessee acknowledges, represents and warrants
that it: (i) has selected the Property and any Financed Items; (ii) has
relied on its own skill and experience in selecting the Property and Financed
Items suitable to its particular needs or purposes and has neither relied upon
the skill or judgment of Lessor nor believes that Lessor or its agents possess
any special skill or judgment in the selection of the Property or Financed
Items for Lessee’s particular purposes; (iii) has not informed Lessor of
its particular needs in using the Property or Financed Items; (iv) has not
relied on any statement, if any, made by Lessor as to the suitability of the
Property or Financed Items; and (v) acknowledges that Lessor is neither
the manufacturer nor seller of the Property nor an agent of any such person.

 

Upon
delivery and installation of the Property and Financed Items, Lessee shall
inspect the Property and Financed Items and if the Property and Financed Items
conform to Lessee’s specification, Lessee agrees to accept the Property and
Financed Items and execute and deliver to Lessor an Acceptance Certificate,
which shall irrevocably establish Lessee’s acceptance of the Property and
Financed Items for all purposes of the Lease. If the Property is not properly
installed, does not operate as represented or warranted by the supplier or
manufacturer, or the Property or Financed Items are unsatisfactory for any
reason whatsoever and Lessee has not signed an Acceptance Certificate as a
result thereof, Lessee shall (i) notify Lessor within ten (10) days
after delivery and installation of the Property and Financed Items of the
nature and extent of such defect or problem and (ii) make a claim on
account thereof solely against the supplier or manufacturer.  Lessor shall not have any obligation to pay
the supplier of the Property or Financed Items until a duly-executed Acceptance
Certificate is received from Lessee.  If
Lessee has not furnished Lessor with an Acceptance Certificate within twenty
(20) days after delivery and installation of the Property or Financed Items,
Lessee shall, upon Lessor’s request, assume Lessor’s rights and obligations as
purchaser, reimburse Lessor in full for any amounts paid by Lessor on account
of the Property or Financed Items, indemnify and defend Lessor against all
claims, liabilities, damages and expenses in connection with the Property or
Financed Items, and have all rights to pursue remedies that may be available
against the carrier, supplier or manufacturer thereof.

 

5.     LESSOR’S
DISCLAIMERS.  Lessor has
obtained the Property and Financed Items based on specifications furnished by
the Lessee.  Lessor does not deal in
Property of this kind or otherwise hold itself or its agents out as having
knowledge or skill particular to the Property. Provided Lessee is not in
default under the Lease, Lessor hereby assigns to Lessee, to the extent
assignable, the benefit of any applicable manufacturer’s warranties.  Lessee’s sole remedy for the breach of any
such warranty shall be against the manufacturer of the Property and not against
Lessor.  Lessor warrants that, so long as
Lessee shall not be in default under the Lease, Lessor will not disturb Lessee’s
right of quiet enjoyment to possess and use the Property for its intended 

 

 

purpose.  To the extent the Lease includes the
financing of Financed Items, (i) ownership of any software shall remain
with the licensor thereof and Lessee’s rights with respect to such software
shall be governed by a separate license agreement between the licensor and the
Lessee, which shall not be affected by the Lease; and (ii) any services
shall be performed by a third-party service provider unrelated to Lessor.  IN NO EVENT SHALL LESSOR HAVE ANY OBLIGATION
TO PERFORM ANY SERVICES, AND ANY FAILURE OF SUCH THIRD-PARTY SERVICE
PROVIDER TO PROVIDE ANY SERVICES FINANCED HEREUNDER SHALL NOT EXCUSE LESSEE’S
OBLIGATIONS UNDER THE LEASE.

 

LESSOR
ASSUMES NO RESPONSIBILITY FOR AND MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, AS TO THE TITLE, DESIGN, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY, SAFETY, ADEQUACY,
OPERATION, USE OR PERFORMANCE OF THE PROPERTY OR FINANCED ITEMS, OR THEIR
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR AS TO PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT.  LESSOR
SHALL NOT BE LIABLE TO LESSEE, NOR SHALL THERE BE ANY ABATEMENT OR OTHER
REDUCTION OR SETOFF IN RENT, FOR ANY LIABILITY, CLAIM, LOSS, DAMAGE OR EXPENSE
OF ANY KIND OR NATURE (INCLUDING NEGLIGENCE OR STRICT LIABILITY) CAUSED,
DIRECTLY OR INDIRECTLY, BY THE PROPERTY OR FINANCED ITEMS, OR BY THE USE,
MAINTENANCE, INTERRUPTION/LOSS OF SERVICE, OR ANY DELAY OR FAILURE TO
PROVIDE ANY PART THEREOF, OR BY ANY REPAIRS, SERVICES, OR ADJUSTMENTS
THERETO, OR FOR ANY LOSS OF BUSINESS OR OTHER DAMAGES WHATSOEVER.  LESSOR SHALL NOT BE LIABLE FOR ANY LOST PROFITS
OF LESSEE OR ANY DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGE TO, OR ANY LOSS OR EXPENSE OF LESSEE RESULTING FROM,
RELATING TO OR IN ANY WAY BASED ON THE LEASE, THE PROPERTY OR THE FINANCED
ITEMS.

 

6.     TITLE,
ASSIGNMENT AND CHANGE IN CONTROL.  The Property shall at all times remain the
personal property of Lessor.  Lessee
shall have no right, title or interest in the Property, except for the express
rights granted hereunder.  Lessee shall
hold all Property subject and subordinate to the rights of Lessor.  Notwithstanding the foregoing, Lessee hereby
grants to Lessor a security interest in the Property and in the rights of
Lessee under any license agreements with respect to any software included in
any Financed Items (but only if and to the extent the grant of such security
interest with respect to such software does not result in the creation or
breach of any legal obligations on the part of Lessee) as security for all
Lessee’s obligations to Lessor of every kind or nature.  Lessee authorizes Lessor to file a financing
statement(s) and agrees to execute and deliver any instruments reasonably
requested by Lessor in order to protect Lessor’s interest in the Property, the
Financed Items and any proceeds thereof. 
Lessee shall, at its sole expense, (i) defend Lessor’s title to the
Property against all persons claiming against or through Lessee, (ii) at
all times keep the Property free and clear from any claim, suit, liens or
encumbrances whatsoever (except any placed thereon by Lessor and arising from
the Lease), and (iii) give Lessor immediate notice of any such claim,
suit, lien or encumbrance.

 

LESSEE
SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ANY OR ALL OF ITS RIGHTS OR
OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF
THE PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR.  In the event Lessor has consented to any
sublease of the Property, Lessee hereby assigns and grants to Lessor a security
interest in any and all rights under any sublease(s), to secure all obligations
to Lessor, and Lessee shall deliver to Lessor the original of such
sublease(s).  Lessee shall not
consolidate or merge with or into any other entity, liquidate or dissolve,
distribute, transfer, sell or dispose of all of its ownership interests,
properties or assets or any substantial portion thereof other than in the
ordinary course of its business, without the prior consent of Lessor.

 

LESSEE AGREES THAT LESSOR MAY ASSIGN OR
TRANSFER THIS LEASE OR LESSOR’S INTEREST IN THE PROPERTY OR FINANCED ITEMS
WITHOUT NOTICE TO LESSEE. In connection with any change in control of Lessor (a
“Change Control Event”), defined as a circumstance whereby Lessor merges, or
sells substantially all of the assets of Lessor, or another entity comes to
acquire more than 25% of the ownership interests in Lessor or Lessor’s parent,
and Lessor’s successor, assignee or entity acquiring the specified ownership
interest (collectively referred to as the “Change Control Entity”) is a
materially adverse party in any currently pending litigation involving Lessee,
then Lessor (or Lessor’s successor or assignee) shall provide Lessee with
notice of the Change Control Event as soon as reasonably practicable following
such Change Control Event identifying the Change Control Entity, and within
sixty (60) days of the notice, Lessee shall have the right to elect to prepay
the Lease by paying Lessor’s assignee an amount equal to the sum of: (i) all
amounts currently due and owing under the Lease; (ii) the present value of
all future payments to become due under the Lease for the remaining term,
discounted at four percent (4%); (iii) the Purchase Price for the Property
as specified in the Schedule; and (iv) all applicable sales, use and
property taxes (whether estimated or actual). 
Any assignee of Lessor shall have all of the rights, but none of the
obligations, of Lessor under this Lease and Lessee shall not assert against any
assignee of Lessor any defense, counterclaim or offset that Lessee may have
against Lessor.  Lessee acknowledges that
any assignment or transfer by Lessor will not materially change Lessee’s duties
or obligations under this Lease nor materially increase the burdens or risks
imposed on Lessee.  Lessee will cooperate
with Lessor in executing any documentation reasonably required by Lessor or any
assignee of Lessor to effectuate any such assignment.

 

7.     TAXES
AND FEES.  Lessee
agrees to pay when due or reimburse and indemnify and hold Lessor harmless from
and against all taxes, fees or other charges of any nature whatsoever now or
hereafter imposed or assessed against Lessor, Lessee the Property or any
Financed Items by any federal, state, county or local governmental authority
upon the ordering, purchase, sale, delivery, leasing, possession, use,
operation, return or other disposition of the Property or Financed Items or
upon the rents, receipts or earnings arising therefrom or with respect to the
Lease (other than taxes based on or measured by the net income of Lessor). If
Lessee directly pays any such taxes, fees or other charges, upon the request of
Lessor, Lessee shall furnish written evidence of Lessee’s payment to
Lessor.  Lessor shall be responsible for
the preparation and filing of all personal property tax returns on the Property
and Lessee shall timely reimburse Lessor for all taxes paid by Lessor.

 

8.     MAINTENANCE,
ADDITIONS AND UPGRADES.  Lessee shall,
at its sole expense: (i) maintain the Property in good operating order,
repair, condition and appearance and protect the Property from deterioration,
other than normal wear and tear, and furnish all required labor, parts,
replacements and repairs; (ii) enter into and maintain in force, for the
term of each Lease (after the expiration of any applicable manufacturer’s
warranty), a maintenance contract with the manufacturer of the Property or with
a service organization satisfactory to Lessor and provide Lessor with a copy of
such contract and all supplements thereto upon Lessor’s request;
(iii) take all actions necessary to cause the Property to remain eligible
for any maintenance program of the manufacturer, including the purchase of all
replacements, upgrades and enhancements relating to the Property and the
software used on or with the Property, that are required by the manufacturer
for such eligibility; and (iv) at all times during the Term, otherwise
keep the Property in “Eligible Condition” as defined hereafter.  Lessee shall at reasonable times during
business hours make the Property and Lessee’s log and maintenance records
pertaining to the Property available to Lessor for inspection.  Lessee shall be entitled to acquire and
install, at Lessee’s expense, Additions to the Property 

 

 

if
such Additions: (i) do not interfere with or impair the operation of the
Property; (ii) are readily removable without damage to the Property; (iii) are
removed by Lessee before the Property is returned to Lessor; and (iv) do
not interfere with Lessee’s ability to keep the Property eligible for
manufacturer’s maintenance.  Subject to
compliance with the foregoing requirements, such Additions (but not Upgrades or
other attachments) shall remain the property of Lessee upon termination of the
Lease.  Except as authorized herein,
Lessee shall not, without the prior written consent of Lessor, make any alterations
or install any attachments or Upgrades to the Property.  Any permitted alterations, attachments or
Upgrades, and all items and materials related thereto, shall automatically
become the property of Lessor.  “Additions”
shall be defined as new items of equipment acquired by Lessee that are
connected to or work with the Property but which have a unique identification
or serial number and do not require the removal or replacement of any of the
Property or any Component in order for the Addition to function with the
Property.  “Upgrades” shall be defined as
technical improvements to the Property the installation of which requires
replacement of Components or other parts or requires the rewiring or other
physical or permanent alteration of the Property on which the Upgrade is
installed.  “Components” shall be defined
as those parts and other separately identifiable devices that are contained in
the Property and that are useful or necessary in the function of the Property.

 

Lessee
may obtain Upgrades for the Property if (i) installation of such Upgrades
will not interfere with Lessor’s title to the Property, and (ii) when
returned to Lessor in compliance with return provisions hereunder, the Property
shall include all such Upgrades or shall have been returned to its original
condition in a manner acceptable to Lessor. Any Upgrades to be leased from
Lessor shall be upon such terms as the parties shall agree and subject to
credit approval.  At its option and
expense, Lessee may obtain and install replacement Components for the Property
if all such replacement Components are, in Lessor’s opinion, of comparable type
and value as the Component being replaced. 
All such replacement Components shall immediately become the property of
Lessor.

 

9.     LESSEE
REPRESENTATIONS AND WARRANTIES.  Lessee hereby represents, warrants and
covenants that: (i) Lessee has adequate power and capacity to enter into
the Lease, any Schedule, and any other documents required to be delivered in
connection with this Lease (collectively, the “Documents”); (ii) the
Documents have been duly authorized, executed and delivered by Lessee and
constitute valid, legal and binding agreements, enforceable in accordance with
their terms; there are no proceedings presently pending or, to the best
knowledge of Lessee, threatened against Lessee which will impair its ability to
perform under the Lease; and all information supplied to Lessor is accurate and
complete; (iii) Lessee’s entering into the Lease and leasing the Property
and financing any Financed Items does not and will not (a) violate any
judgment, order or law applicable to the Lease, Lessee or Lessee’s
organizational documents; or (b) result in the creation of any lien,
security interest or other encumbrance upon the Property, other than as granted
hereunder; (iv) all information and representations furnished by Lessee to
Lessor concerning the Property and Financed Items are accurate and correct; (v) the
Property is personal property and when placed in use by Lessee will not be or
become fixtures under applicable law; (vi) if Lessee is a business entity,
it is and shall be validly existing and in good standing under laws of the
state of its organization, and Lessee shall give written notice to Lessor
within 30 days of any termination or revocation of Lessee’s existence by its
state of organization.  Lessee shall not
change its state of organization, headquarters or residence without providing
prior written notice to Lessor; (vii) the persons signing the Documents
are acting with all necessary authority and hold the offices indicated below their
signatures, which are genuine; (viii) all financial data of Lessee or of
any consolidated group of companies of which Lessee is a member (“Lessee Group”)
delivered to Lessor have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis with prior periods and
fairly present the financial position and results from operations of Lessee, or
of the Lessee Group, as of the stated date and period(s); (ix) since the
date of the most recently delivered financial data, there has been no material
adverse change in the financial or operating condition of Lessee or of the
Lessee Group;  (x) Lessee has not
received any tax or accounting advice from Lessor, and Lessor shall have no
liability for Lessee’s failure to secure any particular tax benefits or
accounting treatment with respect to the Property, the Financed Items or the
Lease; and (xi) Lessee is not and, during the Initial Term and any
extension or renewal thereof, will not be, in breach or default of any material
term of any loan agreement or other agreement concerning Lessee’s primary line
of credit or similar loan facility with any bank or other financial
institution.

 

10.  RETURN
OF PROPERTY.  If Lessee has
not exercised any purchase option granted in connection with the Lease upon
expiration of the Initial Term (or any Extension or Renewal Term), Lessee shall
return all, but not less than all, of the Property to Lessor at a location
designated by Lessor.  Lessee shall prepare
the Property for shipping according to manufacturer’s instructions using
approved packing materials and shall bear all risk of damage or loss until the
Property is returned to Lessor at the designated location.  All costs and expenses associated with the
packing, shipping, delivery and inspection of the Property shall be paid by
Lessee, including any costs incurred by Lessor for de-installation of
alterations, attachments or Additions to the Property.

 

Lessee
shall return the Property to Lessor in Eligible Condition.  The Property shall be in “Eligible Condition”
if each of the following conditions is satisfied:  (i) the Property is in good working
order (normal wear and tear excepted) and is capable of performing all
functions that the Property could perform when delivered to Lessee; (ii) the
Property as returned includes (a) all engineering modifications, (b) all
software required by the manufacturer to operate the Property, (c) all
Upgrades, and (d) other alterations required by the manufacturer for
maintenance eligibility during the term of the Lease; (iii) the Property
includes only Components and other parts from the manufacturer or an authorized
supplier; (iv) if maintenance of the Property has been provided under a
service contract, the Property is certified as eligible for a service contract
by the manufacturer of the Property or by a service organization satisfactory
to Lessor; and (v) all data and other information stored on hard drives
and other media storage devices (“Resident Data”) shall have been securely
overwritten and destroyed beyond recovery using advanced wiping techniques
(such process being referred to as “Data Erasure”), or if Lessee does not wish
to perform the Data Erasure itself, Lessee shall so notify Lessor within four (4) months
prior to termination of the Lease, and Lessee shall return the Property to a
location designated by Lessor, and Lessor will arrange for the Data Erasure to
be performed at such location at Lessee’s sole risk and expense.  If Data Erasure is not technically feasible,
Lessee may remove and destroy the affected hard drives and other media storage
devices, and in such event the drives and devices shall be deemed to have
suffered an Event of Loss and shall be replaced by Lessee as required
hereunder.  IN NO EVENT SHALL LESSOR BE
RESPONSIBLE FOR ANY DAMAGES OR CLAIMS IN CONNECTION WITH RESIDENT DATA OR DATA
ERASURE, INCLUDING WITHOUT LIMITATION, THE SUFFICIENCY OF ANY DATA ERASURE
PROCEDURES OR SERVICES, ANY ALLEGED OR ACTUAL VIOLATION OF PRIVACY LAWS, LOST
OR COMPROMISED PROPRIETARY INFORMATION, LOSS OF PROFITS, BUSINESS OR USE, OR
INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES, AND LESSEE
SHALL INDEMNIFY AND HOLD LESSOR HARMLESS FROM AND AGAINST ANY SUCH DAMAGES AND
CLAIMS.  LESSOR MAKES NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO DATA ERASURE OR
THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY DATA ERASURE
PROCEDURES OR SERVICES.  Lessee shall
arrange or pay for any inspections and any repairs or modifications as are
required to cause the Property to be in Eligible Condition.  If Lessee fails to return the Property in
Eligible Condition upon expiration of the Initial Term (or any Extension or
Renewal Term), the Lease shall continue and Lessee 

 

 

shall
remain obligated to pay rent and all other amounts due under the Lease for all
Property and otherwise perform all obligations hereunder, until such time as
Lessee causes the Property to be in Eligible Condition or Lessor elects to
terminate the Lease.

 

For
avoidance of doubt and notwithstanding anything to the contrary, to the extent
Lessee is required to return, or Lessor is otherwise entitled to take
possession of, any Property that includes any software, ownership of such
software shall remain with the licensor thereof and the rights of Lessor and
Lessee, if any, with respect to such software shall be governed by a separate
license agreement between the licensor and Lessor or Lessee, as applicable,
which shall not be affected by the Lease.

 

11.  GENERAL
INDEMNITY.  Except for
claims arising solely from Lessor’s gross negligence or willful misconduct,
Lessee shall indemnify and hold Lessor harmless from and against any and all
losses, claims, costs, expenses, damages and liabilities, including reasonable
attorney’s fees and costs, of any kind or nature incurred by or to any person
whomsoever and/or property whatsoever, regardless of the basis, including
allegations (by third parties) of wrongful, negligent or improper act or misuse
by Lessor arising out of or in connection with the leasing, financing,
manufacture, delivery, ownership, use, selection, possession, operation,
maintenance, inspection, condition, removal, return or storage of the Property
or Financed Items.  Upon request of
Lessor, Lessee shall assume the defense of all demands, claims, actions, suits
and proceedings against Lessor for which indemnity is provided and shall allow
Lessor to participate in the defense thereof.

 

12.  INSURANCE
AND RISK OF LOSS.  Lessee shall obtain insurance coverage for the
Property. The expense of such insurance coverage shall be borne by Lessee and
is not covered by Lessee’s rental payments hereunder.  Lessee shall maintain in force, at all times
from shipment of the Property to Lessee until surrender thereof, property
damage and risk insurance and liability insurance with such coverage and from
such insurance carriers as shall be satisfactory to Lessor.  The
Property must be insured against all risks that are customarily insured against
on the type of equipment leased hereunder. 
Such insurance policies must name Lessor as additional insured and
lender’s loss payee, and provide for thirty (30) days advance written notice to
Lessor of any modification or cancellation. 
Upon request, Lessee shall deliver to Lessor satisfactory evidence of
insurance coverage.

 

Lessee
hereby assumes the entire risk of damage to or loss of the Property and any
Financed Items from any cause whatsoever, whether or not insured against, while
in transit or during the term hereof.  In
the event of any loss or damage, the Lease shall continue in full force and
effect, without any modification or reduction of any obligation of Lessee
unless otherwise provided.  In the event
of damage of any kind to any of the Property (unless damaged beyond repair),
Lessee shall continue to pay rent and place the Property in good repair,
condition and working order to the satisfaction of Lessor within ninety (90)
days of the date of damage.  If the
Property or any portion of the Property is determined by Lessee to be lost,
stolen, destroyed or damaged beyond repair and is a documented casualty or if
any Property is destroyed or damaged beyond repair in connection with Data
Erasure (an “Event of Loss”), Lessee at its option may (a) continue to pay
rent and replace the Property with equipment acceptable to Lessor and of
identical manufacture and equal or greater capacity, utility and value to that
of the original Property (in which case Lessee shall transfer title to the
replacement equipment to Lessor free and clear of all liens and encumbrances of
any kind) and take such further action as Lessor may request in order to effect
such substitution, or (b) pay Lessor on the next Rent Payment Date the
stipulated loss value for the Property as set forth in the relevant Schedule
(the “Stipulated Loss Value”) as of the date of the Event of Loss and all rent
accrued up to the date of payment and all other amounts then due in connection
with the Property.  Upon payment of the
foregoing amounts, the Lease shall terminate with respect to such Property, and
Lessor shall transfer ownership and title to such Property to Lessee free and
clear of all encumbrances arising by or through Lessor.

 

13.  DEFAULT.  Time is of the essence under
this Lease, and Lessee shall be in default in the event of any of the following
(an “Event of Default”): (i) any failure of Lessee to pay when due any
installment of rent or any other amount due under the Lease; (ii) failure
of Lessee to perform any term, covenant or condition of the Lease; (iii) the
inaccuracy in any material respect of any representation or warranty made by
Lessee in the Lease or in any document or certificate furnished to Lessor in
connection therewith; (iv) if any of the following actions or proceedings
are not dismissed within sixty (60) days after commencement: Lessee’s
insolvency, becoming the subject of a petition in bankruptcy, either voluntary
or involuntary, or in any other proceeding under federal bankruptcy laws;
making an assignment for benefit of creditors; or being named in, or the
Property being subjected to, a suit for the appointment of a receiver;  (v) the death, dissolution or
termination of existence of Lessee; (vi) any removal, sale, transfer,
sublease, encumbrance, seizure or levy of or upon the Property; and (vii) any
default under any agreement between Lessee and Lessor (other than this Lease)
or between Lessee and any affiliate of Lessor, including any default under
section 12.1(k) of the Financing Agreement dated as of December 22,
2009 between U.S. Bank National Association and Overstock.com, Inc..

 

14.  REMEDIES.
 Upon the occurrence of any Event
of Default which continues for more than twenty (20) days following notice
thereof by Lessor and at any time thereafter, Lessor shall have all the
remedies provided by law; and without limiting the generality of the foregoing
and without terminating this Lease, Lessor, at its sole option, shall have the
right at any time to exercise concurrently, or separately, without further
notice to Lessee, any one or all of the following remedies: (i) proceed by
appropriate court action, either at law or in equity, to enforce performance by
Lessee of the Lease; (ii) request Lessee to assemble the Property and make
it available to Lessor at a place designated by Lessor; (iii) immediately
and without legal proceedings or notice to Lessee, enter the premises, take
possession of, remove and accept the Property or render it unusable (any such
taking shall not terminate this Lease); (iv) declare the entire amount of
rent and other sums payable hereunder immediately due and payable; however, in
no event shall Lessor be entitled to recover any amount in excess of the
maximum permitted by applicable law; (v) cancel the Lease as to any or all
items of Property or Financed Items. 
Such cancellation shall occur only upon notice by Lessor and only as to
such items as Lessor specifically elects to cancel.  The Lease shall continue in full force and
effect as to any remaining items; (vi) recover all of the following: (a) all
accrued and unpaid rent; plus (b) as liquidated damages for loss of a
bargain and not as a penalty, an amount equal to the Stipulated Loss Value as
of the date of default, and (c) all commercially reasonable costs incurred
by Lessor in any repossession, recovery, storage, repair, sale, re-lease or
other disposition of the Property, including attorney’s fees and costs of
collection of any amounts hereunder, including any collection agency fee, plus
interest on each of the foregoing at a rate of eighteen percent (18%) per annum
until paid, or the maximum rate permitted by law, whichever is less; and (vii) Lessor
may, but is not required to, re-lease or sell the Property, or any portion
thereof, at public or private sale on such terms and to such persons as Lessor
shall elect.  The proceeds of any such
lease or sale, after deducting all costs and expenses incurred in connection
with the recovery, repair, storage, leasing and sale of the Property, will be
applied to payment of all amounts owed hereunder.  If the proceeds from any sale or lease of the
Property is not sufficient to pay the amounts owed Lessor under this Section,
Lessee shall pay the deficiency.  Lessor
shall keep any excess.

 

 

In
exercising its remedies, Lessor may require Lessee to return the Property.  The Property as returned shall be in
accordance with the terms of the Lease. 
If Lessee fails to return the Property in the required condition, Lessor
may cause the Property to be placed in such condition, at Lessee’s expense. In
the event Lessor takes possession of the Property, Lessor shall make
commercially reasonable efforts to mitigate its damages and Lessee agrees that
Lessor’s proceeding in accordance with the remedies herein shall be sufficient
effort for such purposes.  Lessee shall
be liable, and shall promptly reimburse Lessor, for all costs and expenses
(including reasonable attorney’s fees and costs) incurred by Lessor as a result
of an Event of Default or the exercise or enforcement of any of Lessor’s
remedies, or otherwise arising from or related in any way to the Lease or any
guaranty thereof.  Lessee agrees that,
upon any Event of Default, Lessee will immediately cease and refrain from
further use of any software included as a Financed Item.  No omission or delay by Lessor at any time to
enforce any right or remedy reserved to it, or to require performance of any of
the terms, covenants or provisions hereof by Lessee at any time designated,
shall be a waiver of any such right or remedy to which Lessor is entitled, nor
shall it in any way affect the right of Lessor to enforce such provisions
thereafter.  If Lessor elects to take
possession of the Property, Lessor shall provide Lessee with a reasonable
amount of time to complete any required Data Erasure.

 

15.  FINANCIAL
REPORTS.   Within thirty (30) days  after Lessor’s
request, Lessee shall deliver all information (including tax returns) requested
by Lessor which Lessor deems reasonably necessary to determine Lessee’s current
financial condition and faithful performance of the terms hereof. This
may include: (i) reviewed or audited annual financial statements
(including, without limitation, a balance sheet, a statement of income, a
statement of cash flow, a statement of changes in equity, and notes to
financial statements) within 120 days after Lessee’s
fiscal year end, and (ii) management-prepared interim financial statements
within 45 days after the requested reporting period(s).   Annual statements shall set forth the
corresponding figures for the prior fiscal year in comparative form, all in
reasonable detail without any qualification or exception deemed material by
Lessor.  Unless otherwise accepted by
Lessor, each financial statement submitted to Lessor shall be prepared in
accordance with generally accepted accounting principles consistently applied
and shall fairly and accurately present the Lessee’s financial condition and
results of operations for the period to which it pertains.

 

If
Lessee has executed a Financial Covenants Rider, Lessee shall maintain the
financial ratios set forth on the most recently executed Financial Covenants
Rider, the terms of which are hereby incorporated herein by this
reference.  Within 120 days after the
close of each fiscal year Lessee shall deliver to Lessor an annual
financial-covenants compliance certificate, and within 45 days after the close
of each other quarter Lessee shall deliver to Lessor a quarterly
financial-covenants compliance certificate, in each case certifying the
then-current calculations of the covenants that are required under the
Financial Covenants Rider then in effect hereunder.

 

16.  ENTIRE
AGREEMENT, SUCCESSORS AND NOTICE.  There are no agreements or understandings,
written or oral, between Lessor and Lessee with respect to the Property or
Financed Items, other than as set forth herein and in any Schedule.  This Lease, and accompanying documents,
contains the entire agreement between Lessor and Lessee.  The Lease may not be altered, modified,
terminated or discharged except as evidenced by a writing signed by a duly
authorized representative of Lessor and Lessee. 
All of Lessor’s rights, privileges and indemnities contained herein
shall survive the expiration or earlier termination of the Lease and any
Schedules, and the right, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by Lessor, its
successors and assigns.  All notices,
demands and requests sent to either party shall be in writing and given by
depositing same in the United States mail, postage prepaid, registered or
certified mail with return receipt requested, overnight courier service or by
facsimile transmission.  All notices,
demands and requests shall be sent to the address or facsimile number for such
party as set forth in the Lease or at such other address or number as a party
may provide in writing from time to time.

 

17.  GOVERNING
LAW.  This Lease, and the rights and
liabilities of the parties shall be governed by applicable federal law and the
laws of the State of Utah.  Any legal
action or proceeding with respect to this Lease shall be brought in state court
sitting in Salt Lake City, UT, and, by execution and delivery of this Lease,
each of the parties consents to the jurisdiction of such court and waives any
defense of lack of jurisdiction or inconvenient forum.  LESSOR AND LESSEE EACH IRREVOCABLY WAIVE ALL
RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING FROM OR RELATED TO THIS
LEASE.

 

18.  SEVERABILITY.  In the event any of the
provisions of the Lease shall be held invalid, illegal or unenforceable, that
provision shall be considered inapplicable and omitted, but shall not
invalidate the remaining provisions of the Lease.  In no event shall the Lease be enforced in
any way that permits Lessor to charge or collect interest in excess of the
maximum lawful rate. Lessee agrees that Lessor shall not be subject to any
penalties provided by law for contracting for or collecting interest in excess
of the maximum lawful rate and Lessor agrees to return any such excess to
Lessee.

 

19.  FURTHER
ASSURANCES.  Lessee
agrees to do or perform any such further acts and to promptly execute and
deliver to Lessor such additional certificates, instruments or other documents
as Lessor may request to effect the purposes of the Lease, to complete and
evidence the transactions contemplated hereunder, or to protect the title,
interest and rights of Lessor in the Lease or the Property.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Lease on or as of the
day and year first above written.

 

	
  U.S. BANCORP EQUIPMENT FINANCE, INC. - 

  	
   

  	
  OVERSTOCK.COM, INC.

  
	
  TECHNOLOGY FINANCE GROUP

  	
   

  	
  (LESSEE)

  
	
  (LESSOR)

  	
   

  	
   

  
	
  By:

  	
  /s/ Paul J.
  Frisch

  	
   

  	
  By:

  	
  /s/ Jonathan E. Johnson III

  
	
   

  	
  An Authorized Officer Thereof

  	
   

  	
  Jonathan
  E. Johnson III, President

  

 

ADDRESS FOR ALL NOTICES TO
LESSOR:

801 Larkspur Landing   
Larkspur, CA 94939

 

 

	
  

  	
  FINANCIAL COVENANTS RIDER

  

 

This
Financial Covenants Rider (this “Rider”) is attached to the Master Lease
Agreement dated September 17, 2010, as applicable (the “Agreement(s)”),
between OVERSTOCK.COM, INC. (“Obligor”) and U.S. Bancorp Equipment Finance, Inc. — Technology Finance Group (“Creditor”)
and amends such Agreement(s) to add the following terms and
conditions.  Capitalized terms used but
not defined herein are used with the respective meanings specified in the
Agreement(s).  If any terms hereof are
inconsistent with the terms of the Agreement(s) or any previous Financial
Covenants Rider, the terms hereof shall prevail.

 

Obligor
agrees that, so long as any obligations remain outstanding under any of the
Agreement(s), Obligor shall:

 

(a)                                             Fixed Charge
Coverage:  maintain a
minimum Total Fixed Charge Coverage annualized ratio of at least 1.20:1.00,
based on operating results, measured at the end of each fiscal quarter of
Obligor.  “Total Fixed Charge Coverage”
is defined as:  Obligor’s EBITDAR minus
the aggregate amount of federal, state, local and/or foreign income taxes
accrued minus declared dividends minus 50% of depreciation expense divided by
Obligor’s (rental expense plus interest expense plus required principal
payments including capitalized leases on a trailing basis).

 

(b)                                             Liquidity:  maintain a minimum liquidity (defined as cash
plus marketable securities) of $30,000,000 in the aggregate (which amount
includes any minimum liquidity required under the Financing Agreement dated December 22,
2009 with U.S. Bank National Association) at all times on deposit with U.S.
Bank National Association until all amounts owed under the Agreement are paid
in full.  Creditor acknowledges that
funds on deposit at U.S. Bank National Association are not legally restricted,
and Obligor is permitted to withdraw those funds at Obligor’s discretion.  Obligor acknowledges that not maintaining a
minimum liquidity of $30,000,000 will be an Event of Default under the
Lease.  Upon request of Obligor, Creditor
will review Obligor’s current financial condition to determine (in Creditor’s
sole discretion) whether release of this covenant or a reduction in minimum
liquidity is prudent; provided, however, that Creditor shall not unreasonably
withhold Creditor’s release or reduction of this covenant.

 

As used herein, “EBITDAR” means earnings before interest expense, tax
expense, depreciation expense, amortization expense and rent (defined as
payments for real property leases and other operating leases), and “EBITDA”
means earnings before interest expense, tax expense, depreciation expense and
amortization expense.  The “annualized
ratio” shall be based on a four-quarter, rolling average of the then-current
fiscal quarter and the immediately preceding three (3) fiscal quarters of
Obligor.

 

In Witness Whereof, the parties hereto have
caused this Financial Covenants Rider to be duly executed as of September 17,
2010.

 

	
  U.S.
  Bancorp Equipment Finance, Inc. —Technology Finance Group

  	
   

  	
  OVERSTOCK.COM, INC.

  
	
  (CREDITOR)

  	
   

  	
  (OBLIGOR)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Paul J.
  Frisch

  	
   

  	
  By:

  	
  /s/ Jonathan E. Johnson III

  
	
  An Authorized Officer Thereof

  	
   

  	
  Jonathan
  E. Johnson III, President

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