Document:

ex10-1.htm

 

EXHIBIT 10.1

EXECUTION VERSION

Morgan Stanley & Co. LLC

1585 Broadway

New York, NY 10036-8293

Attn: Joshua Birbach

Telephone: 212-761-1719

Facsimile:  212-507-8717

 

April 29, 2015

 

Capped Accelerated Share Repurchase Transaction

Express Scripts Holding Company

One Express Way

St. Louis, MO 63121

	
Attention:

	
Timothy Smith

	
Telephone:      

	
314-684-5759

	  	  

 

Dear Sir/Madam:

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between Morgan Stanley & Co. LLC (“Dealer”) and Express Scripts Holding Company (“Issuer”) on the Trade Date specified below (the “Transaction”).  This confirmation, together with any Trade Notification substantially in the form of Exhibit I hereto which references this Confirmation and which shall supplement, form a part of, and be subject to this Confirmation, constitutes a “Confirmation” as referred to in the Agreement specified below.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (as published by the International Swaps and Derivatives Association, Inc. (“ISDA”)) (the “Equity Definitions”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions, this Confirmation and any Trade Notification, the following will prevail for purposes of the Transaction in the order of precedence indicated: (i) the Trade Notification, (ii) this Confirmation and (iii) the Equity Definitions.

 

1.         This Confirmation and any related Trade Notification evidence a complete and binding agreement between Dealer and Issuer as to the terms of the Transaction to which this Confirmation and such Trade Notification relates.  This Confirmation and such Trade Notification shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement as if Dealer and Issuer had executed an agreement in such form without any Schedule but with (i) the election that the “Cross Default” provisions of Section 5(a)(vi) shall apply to Dealer as if (x) the “Threshold Amount” with respect to Dealer were equal to 3% of Dealer’s shareholders’ equity as of the Trade Date and (y) “Specified Indebtedness” had the meaning specified in Section 14 of the Agreement, except that such term shall not include obligations in respect of deposits received in the ordinary course of Dealer’s banking business,

  

  

  

 

and (ii) the other elections set forth in this Confirmation.  For the avoidance of doubt, the Transaction shall be the only Transaction under the Agreement.

 

2.         The terms of the particular Transaction to which this Confirmation relates are as follows:

 

GENERAL TERMS:

 

	
Trade Date:

	 	
As specified in Schedule I

	 	 	 
	
Buyer:

	 	
Issuer

	 	 	 
	
Seller:

	 	
Dealer

	 	 	 
	
Shares:

	 	
Common Stock of Issuer (Ticker: ESRX)

	 	 	 
	
Number of Shares:

	 	
The number of Shares delivered in accordance with Physical Settlement below.

	 	 	 
	
Forward Price:

	 	
As specified in Schedule I

	 	 	 
	
Discount:

	 	
As specified in Schedule I

	 	 	 
	
10b-18 VWAP:

	 	
For each Trading Day during the Hedge Period or the Calculation Period, a price per share (as determined by the Calculation Agent) equal to the volume-weighted average price of the Rule 10b-18 eligible trades in the Shares for the entirety of such Trading Day as determined by reference to the screen entitled “ESRX <Equity> AQR SEC” or any successor page as reported by Bloomberg L.P. (without regard to pre-open or after-hours trading outside of any regular trading session for such Trading Day or block trades (as defined in Rule 10b-18(b)(5) under the Securities Exchange Act of 1934 as amended (the “Exchange Act”) and such Rule 10b-18, “Rule 10b-18”) on such Trading Day) or, in the event such price is not so reported on such day for any reason or is manifestly incorrect, as reasonably determined by the Calculation Agent using a volume weighted method.

	 	 	 
	
Calculation Period:

	 	
The period from, and including, the Calculation Period Start Date to, and including, the Valuation Date.

	 	 	 
	
Calculation Period Start Date:

	 	
As specified in Schedule I

	 	 	 
	
Trading Day:

	 	
Any Exchange Business Day that is not a Disrupted Day or an Excluded Day

 

  

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Excluded Days:

	 	
November 27, 2015 and December 24, 2015

	 	 	 
	
Initial Shares:

	 	
As specified in Schedule I

	 	 	 
	
Initial Share Delivery Date:

	 	
The Trade Date.

	 	 	 
	  	 	
On the Initial Share Delivery Date, Seller shall deliver to Buyer a number of Shares equal to the Initial Shares in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date being deemed to be a “Settlement Date” for purposes of such Section 9.4.

	 	 	 
	
Prepayment:

	 	
Applicable

	 	 	 
	
Prepayment Amount:

	 	
As specified in Schedule I

	 	 	 
	
Prepayment Date:

	 	
The Trade Date.

	 	 	 
	  	 	
On the Prepayment Date, Buyer shall pay to Seller the Prepayment Amount.

	 	 	 
	
Exchange:

	 	
NASDAQ Global Select Market

	 	 	 
	
Related Exchange:

	 	
The primary exchange on which options or futures on the Shares are traded.

	 	 	 
	
Market Disruption Event:

	 	
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by replacing the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Time, Valuation Time or Knock-out Valuation Time, as the case may be” with the words “at any time on any Exchange Business Day during the Hedge Period or the Calculation Period” after the word “material”.

	 	 	 
	  	 	
Notwithstanding anything to the contrary in the Equity Definitions, if any Exchange Business Day in the Hedge Period or the Calculation Period is a Disrupted Day, other than a Disrupted Day that is deemed not to be a Disrupted Day pursuant to the immediately following paragraph, the Calculation Agent shall (i) determine the 10b-18 VWAP for such day based on Rule 10b-18 eligible trades in the Shares on such day taking into account the nature and duration of the relevant Market Disruption Event and determine the weighting of the 10b-18 VWAP for such Disrupted Day using

 

  

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its commercially reasonable judgment for purposes of calculating the Hedge Period Reference Price or the Forward Price, or (ii) extend the Hedge Period End Date or the Scheduled Valuation Date by a number of Exchange Business Days equal to the number of Disrupted Days during the Hedge Period or the Calculation Period.  In each such case, the Calculation Agent shall promptly notify Issuer in writing of (A) circumstances giving rise to such Disrupted Day, and (B) any such weighting, extension or suspension as soon as reasonably practicable after the occurrence of such Disrupted Day.  For the avoidance of doubt, if the Calculation Agent elects the option described in clause (i) above, then such Disrupted Day shall be deemed to be a Trading Day for purposes of calculating the Hedge Period Reference Price or the Forward Price.

 

If a Disrupted Day occurs during the Hedge Period or the Calculation Period and each of the nine immediately following Scheduled Trading Days is a Disrupted Day (a “Disruption Event”), then the Calculation Agent shall, in its good faith and commercially reasonable discretion, deem such ninth Scheduled Trading Day to be a Trading Day and determine the 10b-18 VWAP for such ninth Scheduled Trading Day using its good faith and commercially reasonable estimate of the value of the Shares on such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it deems appropriate.

	
VALUATION:

	 	  
	
Valuation Time:

	 	
The Scheduled Closing Time on the relevant Exchange

	 	 	 
	
Valuation Date:

	 	
The earlier of (i) the Scheduled Valuation Date and (ii) any earlier accelerated Valuation Date as a result of Dealer’s election in accordance with the immediately succeeding paragraph, in either case, subject to extension in accordance with “Market Disruption Event” above or Section 9 or Section 10 below.

 

  

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Dealer shall have the right, in its absolute discretion but subject to the limitations set forth in the immediately succeeding paragraph, to accelerate the Valuation Date, in whole or in part, to any Exchange Business Day that is after the Lock-Out Date and prior to the Scheduled Valuation Date by notice (each such notice, an “Acceleration Notice”) to Issuer by 9:00 p.m., New York City time, on the accelerated Valuation Date.

	 	 	 
	  	 	
Dealer shall specify in each Acceleration Notice the portion of the Prepayment Amount that is subject to acceleration (which may be less than the full Prepayment Amount, but only so long as such portion is not less than 35% of the Prepayment Amount (or, if less, the remainder of the Prepayment Amount for which an Acceleration Notice has yet to be delivered)), and the Calculation Agent shall adjust all terms of the Transaction as it deems appropriate in order to take into account the occurrence of such accelerated Valuation Date (including cumulative adjustments to take into account all prior accelerated Valuation Dates).

	 	 	 
	  	 	
On each Valuation Date, Calculation Agent shall calculate the Settlement Amount.

	 	 	 
	
Scheduled Valuation Date:

	 	
As specified in Schedule I

	 	 	 
	
Lock-Out Date:

	 	
As specified in Schedule I

	 	 	 
	
Hedge Period:

	 	
The period from, and including, the Hedge Period Start Date to, and including, the Hedge Completion Date.

	 	 	 
	
Hedge Period Start Date:

	 	
As specified in Schedule I

	 	 	 
	
Hedge Completion Date:

	 	
As determined by Seller in its sole discretion, but in no event later than the Hedge Period End Date.

	 	 	 
	
Hedge Period End Date:

	 	
As specified in Schedule I

	 	 	 
	
Hedge Period Reference Price:

	 	
The arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Trading Day during the Hedge Period.

	 	 	 
	
Trade Notification:

	 	
Seller shall deliver to Buyer, no later than 5:00 p.m. (New York City time) on the Exchange

 

  

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Business Day immediately following the Hedge Completion Date, a notice substantially in the form of Exhibit I hereto setting forth the Hedge Completion Date, the Calculation Period Start Date, the Hedge Period Reference Price, the Forward Cap Price and the Minimum Shares.

	 	 	 
	
SETTLEMENT TERMS:

	 	  
	 	 	 
	
Physical Settlement:

	 	
Applicable.

	 	 	 
	  	 	
On the Settlement Date, Seller shall deliver to Buyer a number of Shares equal to (a) (i) the Prepayment Amount divided by (ii) the Forward Price as determined on the relevant Valuation Date, minus (b) the sum of the Initial Shares and the number of Shares delivered, if any, pursuant to the provision opposite the caption “Minimum Share Delivery” below (such number of Shares, the “Settlement Amount”), rounded to the nearest whole number of Shares; provided, however, that if the Settlement Amount is less than zero, then Buyer shall deliver to Seller a number of Shares equal to 101% of the absolute value of the Settlement Amount (such number of Shares, the “Payment Shares”).

	 	 	 
	  	 	
Notwithstanding the proviso in the immediately preceding paragraph, if the Settlement Amount is less than zero, Buyer may cash settle its obligation to deliver the Payment Shares by delivering to Seller by no later than the relevant Valuation Date (i) a notice electing to cash settle its obligation to deliver the Payment Shares and (ii) a written representation that, at the time of such notice, Buyer is not in possession of any material non-public information with respect to Buyer or any of its securities.  Any such cash settlement shall be effected in accordance with “Cash Settlement of Payment Shares” below.

	 	 	 
	  	 	
For the avoidance of doubt, upon the date that (i) Buyer satisfies its obligation to deliver the Payment Shares to Seller in accordance with the terms of this paragraph or (ii) the Settlement Balance (as defined below) is reduced to zero in connection with cash settlement of Buyer’s obligation to deliver Payment Shares (as described

 

  

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under “Cash Settlement of Payment Shares” below), Buyer shall have no further delivery or payment obligations under the terms of the Transaction and the Transaction shall be deemed to have been settled as of such date.

	 	 	 
	
Settlement Currency:

	 	
USD

	 	 	 
	
Settlement Date:

	 	
Three Exchange Business Days after the Valuation Date, or if such date is not a Clearance System Business Day or if there is a Settlement Disruption Event on such day, the immediately succeeding Clearance System Business Day on which there is no Settlement Disruption Event.

	 	 	 
	
Minimum Share Delivery:

	 	
Seller shall deliver a number of Shares equal to the excess, if any, of the Minimum Shares over the Initial Shares on the Minimum Share Delivery Date in accordance with Section 9.4 of the Equity Definitions, with such Minimum Share Delivery Date deemed to be a “Settlement Date” for purposes of such Section 9.4.

	 	 	 
	
Minimum Share Delivery Date:

	 	
Three Exchange Business Days after the Hedge Completion Date, or if such date is not a Clearance System Business Day or if there is a Settlement Disruption Event on such day, the immediately succeeding Clearance System Business Day on which there is no Settlement Disruption Event.

	 	 	 
	
Minimum Shares:

	 	
The number of Shares (rounded down to the nearest whole number) equal to (a) the Prepayment Amount, divided by (b) the Forward Cap Price.

	 	 	 
	
Forward Cap Price:

	 	
As specified in Schedule I

	 	 	 
	
Other Applicable Provisions:

	 	
To the extent that either party is obligated to deliver Shares hereunder, the provisions of the last sentence of Section 9.2 and Sections 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Buyer is the issuer of the Shares) and Section 9.12 of the Equity Definitions will be applicable as if “Physical Settlement” applied to the Transaction.

 

  

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Cash Settlement of Payment Shares:

	 	
If Buyer elects to cash settle its obligation to deliver Payment Shares, then on the Valuation Date a balance (the “Settlement Balance”) shall be created with an initial balance equal to the absolute value of the Settlement Amount.  On the Settlement Date, Buyer shall deliver to Seller a U.S. dollar amount equal to the absolute value of the Settlement Amount multiplied by a price per Share as reasonably determined by the Calculation Agent (such cash amount, the “Initial Cash Settlement Amount”).  On the Exchange Business Day immediately following the delivery of the Initial Cash Settlement Amount, Seller shall begin purchasing Shares in a commercially reasonable manner (all such Shares purchased, “Cash Settlement Shares”).  At the end of each Exchange Business Day on which Seller purchases Cash Settlement Shares, Seller shall reduce (i) the Settlement Balance by the number of Cash Settlement Shares purchased on such Exchange Business Day and (ii) the Initial Cash Settlement Amount by an amount equal to the product of (x) the number of Cash Settlement Shares purchased on such Exchange Business Day and (y) the 10b-18 VWAP on such Exchange Business Day. If, on any Exchange Business Day, the Initial Cash Settlement Amount is reduced to or below zero but the Settlement Balance is above zero, the Buyer shall deliver to Seller or as directed by Seller on the next Exchange Business Day after such Exchange Business Day an additional U.S. dollar amount (an “Additional Cash Settlement Amount”) equal to the Settlement Balance as of such Exchange Business Day multiplied by a price per Share as reasonably determined by the Calculation Agent.  This provision shall be applied successively until the Settlement Balance is reduced to zero.  On the Exchange Business Day that the Settlement Balance is reduced to zero, Seller shall return to Buyer any unused portion of the Initial Cash Settlement Amount or any Additional Cash Settlement Amount, as the case may be.  In making any purchases of Cash Settlement Shares contemplated by this paragraph

 

  

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Seller shall use commercially reasonable efforts to purchase such shares in a manner that would comply with Rule 10b-18 under the Exchange Act (“Rule 10b-18”) if such purchases were subject to Rule 10b-18.

	 	 	 
	
SHARE ADJUSTMENTS:

	 	  
	 	 	 
	
Potential Adjustment Event:

	 	
Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

	 	 	 
	
Extraordinary Dividend:

	 	
Any dividend or distribution on the Shares with an ex-dividend date occurring during the term of the Transaction (other than any dividend or distribution of the type described in Section 11.2(e)(i), Section 11.2(e)(ii)(A) or Section 11.2(e)(ii)(B) of the Equity Definitions).

	 	 	 
	
Method of Adjustment:

	 	
Calculation Agent Adjustment

	 	 	 
	
EXTRAORDINARY EVENTS:

	 	  
	 	 	 
	
Consequences of Merger Events:

	 	  
	 	 	 
	
Share-for-Share:

	 	
Modified Calculation Agent Adjustment

	 	 	 
	
Share-for-Other:

	 	
Cancellation and Payment

	 	 	 
	
Share-for-Combined:

	 	
Component Adjustment

	 	 	 
	
Consequences of Tender Offers:

	 	  
	 	 	 
	
Tender Offer:

	 	
Applicable; provided that the definition of “Tender Offer” in Section 12.1(d) of the Equity Definitions will be amended by replacing “10%” with “15%” in the third and fourth line thereof.

	 	 	 
	
Share-for-Share:

	 	
Modified Calculation Agent Adjustment

	 	 	 
	
Share-for-Other:

	 	
Modified Calculation Agent Adjustment

	 	 	 
	
Share-for-Combined:

	 	
Modified Calculation Agent Adjustment

	 	 	 
	
Modified Calculation Agent Adjustment:

	 	
For greater certainty, the definition of “Modified Calculation Agent Adjustment” in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by (i) adding the following italicized language after the stipulated parenthetical

 

  

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provision: “(including adjustments to account for changes in volatility, expected dividends, stock loan rate or liquidity relevant to the Shares or to the Transaction) from the Exchange Business Day immediately preceding the Announcement Date or the Determination Date, as applicable, to the first Exchange Business Day immediately following the Merger Date (Section 12.2) or Tender Offer Date (Section 12.3).”

	 	 	 
	
Composition of Combined Consideration:

	 	
Not Applicable

	 	 	 
	
Announcement Event:

	 	
If, during the term of the Transaction, an Announcement Date occurs in respect of a Merger Event (for the avoidance of doubt, determined without regard to the language in the definition of “Merger Event” following the definition of “Reverse Merger” therein) or Tender Offer (such occurrence, an “Announcement Event”), then on the earliest of the Valuation Date, any Early Termination Date or other date of cancellation (the “Announcement Event Adjustment Date”), the Calculation Agent will determine the economic effect on the Transaction of the Announcement Event and any related, prior announcements by any entity (regardless of whether the Announcement Event actually results in a Merger Event or Tender Offer, and taking into account such factors as the Calculation Agent may determine, including, without limitation, changes in volatility, expected dividends, stock loan rate or liquidity relevant to the Shares or the Transaction whether prior to or after the Announcement Event or for any period of time, including, without limitation, the period from the Announcement Event to the relevant Announcement Event Adjustment Date).  If the Calculation Agent determines that such economic effect on the Transaction is material, then on the Announcement Event Adjustment Date, the Calculation Agent shall make such adjustment to one or more terms of the Transaction, including, without limitation, adjustments to the Settlement Amount, Forward Cap Price and/or Forward Price, as the Calculation Agent determines appropriate to account for such economic effect, which adjustment shall be effective immediately prior to the valuation,

 

  

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termination or cancellation of the Transaction, as the case may be.

	 	 	 
	
Announcement Date:

	 	
The definition of “Announcement Date” in Section 12.1(l) of the Equity Definitions is hereby amended by (i) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (ii) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (iii) inserting the following words at the end of each of clauses (i) and (ii) therein: “and that the Calculation Agent determines is reasonably likely to be completed (which determination may, for the avoidance of doubt, take into account the effect of such announcement on the market price of the Shares or options relating thereto)”, (iv) replacing the words “voting shares” with the words “Shares” in the fifth line thereof and (v) inserting the words “by any party thereto or the Issuer or any affiliate or representative of the foregoing” after the word “announcement” in the second and the fourth lines thereof.

	 	 	 
	
Nationalization, Insolvency or Delisting:

	 	
Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

	 	 	 
	
Cancellation Amount:

	 	
Section 12.8(d) of the Equity Definitions shall be amended by deleting the second sentence thereof and Section 12.8(e) of the Equity Definitions shall be amended by replacing the words “(or any gain resulting from any of them)” at the end thereof with the words “and shall, in calculating any Cancellation Amount, consider any gain resulting from its terminating, liquidating or re-establishing any hedge related to such Transaction”.

 

  

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Additional Disruption Events:

	 	  
	 	 	 
	
Change in Law:

	 	
Applicable; provided Section 12.9(a)(ii) of the Equity Definitions is hereby amended by replacing the parenthetical beginning after the word “regulation” in the second line thereof with the words “(including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute)”.

	 	 	 
	
Failure to Deliver:

	 	
Applicable; provided that, notwithstanding Section 12.9(b)(ii)(B) of the Equity Definitions, Dealer will use commercially reasonable efforts to deliver any Shares not initially delivered on the Initial Share Delivery Date or the Settlement Date as soon as commercially practicable following the Initial Share Delivery Date or the Settlement Date, as applicable.

	 	 	 
	
Insolvency Filing:

	 	
Applicable

	 	 	 
	
Hedging Disruption:

	 	
Not Applicable

	 	 	 
	
Increased Cost of Hedging:

	 	
Not Applicable

	 	 	 
	
Loss of Stock Borrow:

	 	
Applicable

	 	 	 
	
Maximum Stock Loan Rate:

	 	
500 basis points

	 	 	 
	
Increased Cost of Stock Borrow:

	 	
Applicable

	 	 	 
	
Initial Stock Loan Rate:

	 	
35 basis points

	 	 	 
	
Determining Party:

	 	
For all Extraordinary Events, Dealer

	 	 	 
	
Hedging Party:

	 	
For all Additional Disruption Events, Dealer

	 	 	 
	
Non-Reliance:

	 	
Applicable

	 	 	 
	
AGREEMENTS AND ACKNOWLEDGMENTS:

	 	  
	 	 	 
	
Regarding Hedging Activities:

	 	
Applicable

	 	 	 
	
Additional Acknowledgments:

	 	
Applicable

 

3.         Calculation Agent:  Dealer, provided that, notwithstanding anything to the contrary, all determinations, adjustments and calculations performed by Dealer in its capacity as Calculation Agent, as well as any determinations, adjustments or calculations by Dealer in any other

  

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capacity, pursuant to this Confirmation, the Agreement and the Equity Definitions shall be made in good faith and in a commercially reasonable manner, including, without limitation, with respect to calculations, adjustments and determinations that are made in its sole discretion or otherwise. In the event the Calculation Agent or Dealer makes any calculation, adjustment or determination pursuant to this Confirmation, the Agreement or the Equity Definitions, the Calculation Agent or Dealer shall promptly provide an explanation in reasonable detail of the basis for any such determination, adjustment or calculation if requested by Issuer (including any quotations, market data or information from external sources used in making such calculation, adjustment or determination, as the case may be, but without disclosing Calculation Agent’s or Dealer’s proprietary models or other information that is subject to contractual, legal or regulatory obligations to not disclose such information); provided that following the occurrence of an Event of Default pursuant to Section 5(a)(vii) of the Agreement with respect to which Dealer is the Defaulting Party, Issuer shall have the right to designate a nationally recognized third-party dealer in over-the-counter corporate equity derivatives to act, during the period commencing on the date such Event of Default occurred and ending on the Early Termination date with respect to such Event of Default, as the Calculation Agent.

 

4.         Account Details:  To be provided.

 

5.         Miscellaneous.

 

(a)         Additional Termination Event.  The declaration of an Extraordinary Dividend by Issuer during the term of the Transaction shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction, Issuer is the sole Affected Party and Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

 

(b)        Share Forward Transaction.  For the avoidance of doubt, the Transaction shall be deemed to be a “Share Forward Transaction” for purposes of the Equity Definitions; provided, however, that in Section 9.2(a)(iii) of the Equity Definitions the words “the Excess Dividend Amount, if any, and” shall be deleted.

 

(c)        The words “that diluting or concentrative effect” in the fifth and sixth rows from the end of Section 11.2(c) of the Equity Definitions shall be replaced with the words “the economic effect on the Transaction”.

 

(d)        The proviso appearing in parentheses beginning on the fifth row from the end of Section 11.2(c) of the Equity Definitions shall be replaced with the following: “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

6.         Certain Payments and Deliveries by Dealer.

 

Notwithstanding anything to the contrary herein, or in the Equity Definitions, if at any time (i) an Early Termination Date occurs and Dealer would be required to make a payment pursuant to Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer occurs and Dealer would be required to make a payment pursuant to Sections 12.3 and 12.7 of the Equity Definitions, (iii) a Merger Event occurs and Dealer would be required to make a payment pursuant to Sections 12.2

  

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and 12.7 of the Equity Definitions, (iv) an Additional Disruption Event occurs and Dealer would be required to make a payment pursuant to Sections 12.8 and 12.9 of the Equity Definitions or (v) a Nationalization, Insolvency or Delisting occurs and Dealer would be required to make a payment pursuant to Sections 12.6 and 12.7 of the Equity Definitions (any such payment described in Sections 6(i), (ii), (iii), (iv) or (v) above, a “Dealer Payment Amount”), then, in lieu of any payment of such Dealer Payment Amount in cash, unless Issuer makes an election to the contrary no later than 4 p.m., New York City time, on the Early Termination Date or the date on which the Transaction is terminated or cancelled, a balance (the “Settlement Balance”) shall be established equal to the Dealer Payment Amount on the date such Dealer Payment Amount is due.  On such date, Dealer shall commence purchasing Shares for delivery to Issuer.  At the end of each Trading Day on which Dealer purchases Shares pursuant to this Section 6, Dealer shall reduce the Settlement Balance by the amount paid by Dealer to purchase the Shares purchased on such Trading Day.  Dealer shall deliver any Shares purchased on a Trading Day to Issuer on the third Exchange Business Day following the relevant Trading Day.  Dealer shall continue purchasing Shares until the Settlement Balance has been reduced to zero.

 

7.         Certain Payments and Deliveries by Issuer.

 

Notwithstanding anything to the contrary herein, or in the Equity Definitions, if at any time (i) an Early Termination Date occurs and Issuer would be required to make a payment pursuant to Sections 6(d) and 6(e) of the Agreement, (ii) a Tender Offer occurs and Issuer would be required to make a payment pursuant to Sections 12.3 and 12.7 of the Equity Definitions, (iii) a Merger Event occurs and Issuer would be required to make a payment pursuant to Sections 12.2 and 12.7 of the Equity Definitions, (iv) an Additional Disruption Event occurs and Issuer would be required to make a payment pursuant to Sections 12.8 and 12.9 of the Equity Definitions or (v) a Nationalization, Insolvency or Delisting occurs and Issuer would be required to make a payment pursuant to Sections 12.6 and 12.7 of the Equity Definitions (any such payment described in Sections 7(i), (ii), (iii), (iv) or (v) above, an “Early Settlement Payment”), then, in lieu of any payment of such Early Settlement Payment in cash, unless Issuer makes an election to the contrary no later than 4 p.m., New York City time, on the date that is three Exchange Business Days before the date that the Early Settlement Payment is due, Issuer shall settle its payment obligations under Sections 7(i), (ii), (iii), (iv) or (v) above in Shares (such Shares, the “Early Settlement Shares”); provided that if (i) Issuer does not specify whether such Early Settlement Shares are to be sold by means of a registered offering or by means of a private placement or (ii) the conditions described in Section 8 below are not satisfied on each day Early Settlement Shares are to be sold by Seller in connection with Buyer’s election to deliver Early Settlement Shares in connection with the settlement of an Early Settlement Payment, then Issuer shall make the Early Settlement Payment in cash.

 

8.         Conditions to Delivery of Early Settlement Shares.

 

Issuer may only deliver Early Settlement Shares and Make-Whole Shares (as defined below) by means of a registered offering pursuant to clause (a) below or by means of a private placement pursuant to clause (b) below:

 

(a)        If Issuer timely elects to deliver Early Settlement Shares and Make-Whole Shares by means of a registered offering, the following provisions shall apply:

  

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(i)         On the later of (A) the Trading Day following Issuer’s election to deliver Early Settlement Shares and any Make-Whole Shares by means of a registered offering (the “Registration Notice Date”), and (B) the date on which the Registration Statement is declared effective by the SEC or becomes effective (the “Registered Share Delivery Date”), Issuer shall deliver to Dealer a number of Early Settlement Shares equal to the quotient of (I) the relevant Early Settlement Payment divided by (II) a price per Share as reasonably determined by the Calculation Agent.

 

(ii)        Promptly following the Registration Notice Date, Issuer shall file with the SEC a registration statement (“Registration Statement”) covering the public sale by Dealer of the Early Settlement Shares and any Make-Whole Shares (collectively, the “Registered Securities”) on a continuous or delayed basis pursuant to Rule 415 (or any similar or successor rule), if available, under the Securities Act of 1933, as amended (the “Securities Act”); provided that no such filing shall be required pursuant to this paragraph (ii) if Issuer shall have filed a similar registration statement with unused capacity at least equal to the relevant Early Settlement Payment and such registration statement has become effective or been declared effective by the SEC on or prior to the Registration Notice Date and no stop order is in effect with respect to such registration statement as of the Registration Notice Date, in which case such registration statement shall be the Registration Statement.  Issuer shall use its commercially reasonable efforts to file the Registration Statement as an automatic shelf registration statement or have the Registration Statement declared effective by the SEC as promptly as possible.

 

(iii)       Promptly following the Registration Notice Date, Issuer shall afford Dealer a reasonable opportunity to conduct a due diligence investigation with respect to Issuer customary in scope for underwritten offerings of equity securities of similar size by similar issuers (including, without limitation, the availability of senior management to respond to questions regarding the business and financial condition of Issuer and the right to have made available to Dealer for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by Dealer), and Dealer shall be satisfied in all material respects with the results of such due diligence investigation of Issuer.  For the avoidance of doubt, Issuer shall not have the right to deliver Shares pursuant to this Section 8(a) (and the conditions to delivery of Early Settlement Shares specified in this Section 8(a) shall not be satisfied) until Dealer is satisfied in all material respects with the results of such due diligence investigation of Issuer.

 

(iv)       From the effectiveness of the Registration Statement until all Registered Securities have been sold by Dealer, Issuer shall, at the request of Dealer, make available to Dealer a printed prospectus relating to the Registered Securities in form and substance (including, without limitation, any sections describing the plan of distribution) reasonably satisfactory to Dealer (a “Prospectus”, which term shall include any prospectus supplement thereto), in such quantities as Dealer shall reasonably request.

 

(v)        Issuer shall use its commercially reasonable efforts to avoid or prevent the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus and, if any such order is

  

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issued, to obtain the lifting thereof as soon thereafter as is possible.  If the Registration Statement, the Prospectus or any document incorporated therein by reference contains a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make any statement therein not misleading, Issuer shall as promptly as practicable file any required document and prepare and furnish to Dealer a reasonable number of copies of such supplement or amendment thereto as may be necessary so that the Prospectus, as thereafter delivered to the purchasers of the Registered Securities will not contain a misstatement of a material fact or omit to state a material fact required to be stated therein or necessary to make any statement therein not misleading.

 

(vi)       On or prior to the Registered Share Delivery Date, Issuer shall enter into an agreement (a “Transfer Agreement”) with Dealer (or any affiliate of Dealer designated by Dealer) in connection with the public sale of the Registered Securities, substantially similar to underwriting agreements customary for underwritten offerings of equity securities of similar size by similar issuers, in form and substance satisfactory to Dealer (or such affiliate), which Transfer Agreement shall (without limiting of the foregoing) contain provisions substantially similar to those contained in such underwriting agreements relating to:

 

(A)        the indemnification of, and contribution in connection with the liability of, Dealer and its affiliates;

 

(B)        delivery to Dealer (or such affiliate) of customary letters and opinions (including, without limitation, accountants’ comfort letters, opinions relating to the due authorization, valid issuance and fully paid and non-assessable nature of the Registered Securities and the lack of material misstatements and omissions in the Registration Statement, the Prospectus and Issuer’s filings under the Exchange Act); and

 

(C)        the payment by Issuer of all reasonable and documented fees and expenses in connection with such resale, including all registration costs and all reasonable and documented fees and expenses of counsel for Dealer (or such affiliate), but such Transfer Agreement shall not provide for any underwriter discount, commission or fee or any selling concessions.

 

(vii)      On the Registered Share Delivery Date, a notional balance (the “Early Settlement Balance”) shall be established with an initial balance equal to the applicable amount of the relevant Early Settlement Payment.  Following the delivery of Early Settlement Shares or any Make-Whole Shares, Dealer shall sell all such Registered Securities in a commercially reasonable manner.

 

(viii)      At the end of each day on which sales have been made pursuant to paragraph 8(a)(vii) above, the Early Settlement Balance shall be (A) reduced by an amount equal to the aggregate proceeds received by Dealer upon settlement of the sale of such Share, and (B) increased by an amount (as reasonably determined by the Calculation

  

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Agent) equal to Dealer’s funding cost with respect to the then-current Early Settlement Balance as of the close of business on such day.

 

(ix)       If, on any date, the Early Settlement Balance has been reduced to zero but not all of the Early Settlement Shares have been sold, no additional Early Settlement Shares shall be sold and Dealer shall promptly deliver to Issuer (A) any remaining Early Settlement Shares and (B) if the Early Settlement Balance has been reduced to an amount less than zero, an amount in cash equal to the absolute value of the then-current Early Settlement Balance.

 

(x)        If, on any date, all of the Early Settlement Shares have been sold and the Early Settlement Balance has not been reduced to zero, Issuer shall promptly deliver to Dealer an additional number of Shares (“Make-Whole Shares”) equal to (A) the Early Settlement Balance as of such date divided by (B) the price per Share on the date of such delivery as reasonably determined by the Calculation Agent.  This clause (x) shall be applied successively until the Early Settlement Balance is reduced to zero.

 

(xi)       If at any time the number of Shares covered by the Registration Statement is less than the number of Registered Securities required to be delivered pursuant to this Section 8(a), Issuer shall, at the request of Dealer, file additional registration statement(s) to register the sale of all Registered Securities required to be delivered to Dealer.

 

(xii)      Issuer shall cooperate with Dealer and use its reasonable best efforts to take any other action necessary to effect the intent of the provisions set forth in this Section 8(a).

 

(b)        If Issuer timely elects to deliver Early Settlement Shares and Make-Whole Shares by means of a private placement, the following provisions shall apply:

 

(i)         All Early Settlement Shares and Make-Whole Shares shall be delivered to Dealer (or any affiliate of Dealer designated by Dealer) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof.

 

(ii)        Issuer shall afford Dealer and any potential purchaser of any such Shares from Dealer (or any affiliate of Dealer designated by Dealer) identified by Dealer shall have been afforded a commercially reasonable opportunity to conduct a due diligence investigation with respect to Issuer customary in scope for private placements of equity securities of similar size by similar issuers (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them) and Issuer shall not disclose material non-public information in connection with such due diligence investigation.

 

(iii)       Issuer shall enter into an agreement (a “Private Placement Agreement”) with Dealer (or any affiliate of Dealer designated by Dealer) in connection with the private placement of such Shares by Issuer to Dealer (or any such affiliate) and the private resale of such Shares by Dealer (or any such affiliate), substantially similar to private placement purchase agreements customary for private placements of equity

  

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securities of similar size by similar issuers, in form and substance commercially reasonably satisfactory to Dealer and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, Dealer and its affiliates, and shall provide for the payment by Issuer of all fees and expenses in connection with such resale, including all reasonable fees and expenses of one counsel for Dealer but not including any underwriter or broker discounts and commissions, and shall contain representations, warranties and agreements of Issuer and Dealer reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales.

 

(iv)       If Issuer elects to deliver Early Settlement Shares to satisfy its payment obligation of an Early Settlement Payment, neither Issuer nor Dealer shall take or cause to be taken any action that would make unavailable either (A) the exemption set forth in Section 4(a)(2) of the Securities Act for the sale of any Early Settlement Shares or Make-Whole Shares by Issuer to Dealer or (B) an exemption from the registration requirements of the Securities Act reasonably acceptable to Dealer for resales of Early Settlement Shares and Make-Whole Shares by Dealer.

 

(v)        On the date requested by Dealer, (A) Issuer shall deliver a number of Early Settlement Shares equal to the quotient of (I) the relevant Early Settlement Payment divided by (II) a per Share value, determined by Dealer in a commercially reasonable manner and which may be based on indicative bids from institutional “accredited investors” (as defined in Rule 501 under the Securities Act) and (B) the provisions of Section 8(a)(vii) through (x) shall apply to the Early Settlement Shares delivered pursuant to this Section 8(b)(v).  For purposes of applying the foregoing, the Registered Share Delivery Date referred to in Section 8(a)(vii) shall be the date on which Issuer delivers the Early Settlement Shares.

 

(c)        The provisions of Section 8(b) shall apply to any then-current Early Settlement Balance if (i) on any given day, Issuer cannot satisfy any of the conditions of Section 8(a) or (ii) for a period of at least ten (10) consecutive Exchange Business Days, Dealer has determined that it is inadvisable to effect sales of Registered Securities.

 

(d)        If Issuer elects to deliver Early Settlement Shares to settle its delivery obligation of an Early Settlement Payment, then, if necessary, Issuer shall use its commercially reasonable efforts to cause the number of authorized but unissued Shares to be increased to an amount sufficient to permit Issuer to fulfill its obligations under Sections 8(a) and/or 8(b) above.

 

9.           Special Provisions for Merger Events.

 

(a)        Issuer agrees that it:

 

(i)         will not during the period commencing on the Trade Date through the end of the Calculation Period for the Transaction make, or, to the extent within its control, permit to be made, any public announcement (as defined in Rule 165(f) under the

  

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Securities Act) of any Merger Transaction or proposed Merger Transaction that, in the reasonable judgment of Dealer, causes Rule 10b-18 Purchases by or for Issuer or any affiliated purchaser (as defined in Rule 10b-18) to be limited to purchases described in Rule 10b-18(a)(13)(iv)(B) (a “Public Announcement”) unless such Public Announcement is made prior to the opening or after the close of the regular trading session on the Exchange for the Shares;

 

(ii)        shall promptly (but in any event prior to the next opening of the regular trading session on the Exchange) notify Dealer following any such Public Announcement that such Public Announcement has been made; and

 

(b)        Promptly after request from Dealer, Issuer shall provide Dealer with written notice specifying (i) Issuer’s average daily Rule 10b-18 Purchases (as defined in Rule 10b-18) during the three full calendar months immediately preceding the date of such Public Announcement that were not effected through Dealer or its affiliates and (ii) the number of Shares purchased pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the date of such Public Announcement.  Such written notice shall be deemed to be a certification by Issuer to Dealer that such information is true and correct.  Issuer understands that Dealer will use this information in calculating the trading volume for purposes of Rule 10b-18.

 

(c)        Issuer acknowledges that a Public Announcement may cause the terms of the Transaction to be adjusted or the Transaction to be terminated; accordingly, Issuer acknowledges that in making any Public Announcement, it must comply with the standards set forth in Section 12(c) below.

 

(d)        Upon the occurrence of any Public Announcement (whether made by Issuer or a third party), Dealer shall (i) make adjustments in good faith and in a commercially reasonable manner to the terms of the Transaction as appropriate to account for the economic effect on the Transaction of such Public Announcement, including, without limitation, the Scheduled Valuation Date and/or suspend the Hedge Period and/or the Calculation Period and, in each case, determine the effective date of that adjustment, or (ii) if it determines that no such adjustment would produce a commercially reasonable result (and, in any event, if the Scheduled Valuation Date is postponed more than 9 Scheduled Trading Days), and upon consultation with Issuer, treat the occurrence of such Public Announcement as an Additional Termination Event with Issuer as the sole Affected Party and the Transaction hereunder as the Affected Transaction and with the amount under Section 6(e) of the Agreement determined taking into account the fact that the Calculation Period, as the case may be, had fewer Scheduled Trading Days than originally anticipated.

 

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization of Issuer as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act, other than any such transaction in which the consideration consists solely of cash and there is no valuation period.

 

10.        Seller Adjustments.

  

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In the event that Seller determines in good faith and commercially reasonable discretion, based on advice of outside counsel, that it is advisable with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures similarly applicable to transactions of the type of the Transaction contemplated hereby and consistently applied (whether or not such policies or procedures are imposed by law or have been voluntarily adopted by Seller, and including, without limitation, Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E, “Requirements”), for Seller to refrain from purchasing Shares or to purchase fewer than the number of Shares Seller would otherwise purchase on any Trading Day during the duration of the Transaction, then Seller may, in its discretion, elect that a Market Disruption Event shall be deemed to have occurred on such Trading Day and, therefore, without limiting the generality of “Market Disruption Event” above, that the Hedge Period and/or the Calculation Period be suspended and, if appropriate, extended with regard to any Requirements; provided that only the consequences described in clause (ii) of the second paragraph under Market Disruption Event above shall apply.  Seller shall notify Issuer as soon as practicable upon the exercise of Seller’s rights pursuant to this Section 10, but in no event later than the second Business Day following such exercise, that a Market Disruption Event has occurred and the Scheduled Trading Days affected by it and shall subsequently notify Issuer on the day Seller believes that the circumstances giving rise to such exercise have changed.

 

11.        Covenants.

 

Buyer covenants and agrees that:

 

(a)        during the term of this Agreement, neither it nor any of its affiliated purchasers (as defined in Rule 10b-18 under the Exchange Act) shall directly or indirectly (which shall be deemed to include the writing or purchase of any cash-settled derivative instrument) purchase Shares (or any security convertible into or exchangeable for Shares) without the prior written approval of Seller;

 

(b)        it is not relying, and has not relied, upon Seller or any of its representatives or advisors with respect to the legal, accounting, tax or other implications of this Agreement and that it has conducted its own analyses of the legal, accounting, tax and other implications of this Agreement, and that Seller and its affiliates may from time to time effect transactions for their own account or the account of customers and hold positions in securities or options on securities of Buyer and that Seller and its affiliates may continue to conduct such transactions during the term of this Agreement; and

 

(c)        that neither it nor any affiliates shall take any action that would cause the Shares to be subject to a “restricted period” (as defined in Regulation M under the Exchange Act (“Regulation M”)) during the Hedge Period or the Calculation Period, unless Buyer has provided written notice to Dealer of such restricted period not later than the Scheduled Trading Day immediately preceding the first day of such “restricted period”; Buyer acknowledges that any such notice may cause a Disrupted Day to occur pursuant to Section 10 above; accordingly, Buyer acknowledges that its delivery of such notice must comply with the standards set forth in Section 12(c) below.

 

12.        Representations, Warranties and Acknowledgments.

  

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(a)        Buyer hereby represents and warrants to Seller that:

 

(i)         as of the date hereof, Buyer is not in possession of any material, non-public information with respect to Buyer or any of its securities;

 

(ii)        the transactions contemplated by this Confirmation and the performance of the obligations of Buyer hereunder have been authorized by all necessary corporate action of Buyer’s board of directors and/or an authorized committee of Buyer’s board or directors, and are authorized under the terms of Buyer’s publicly announced program to repurchase Shares;

 

(iii)       Buyer is not entering into this Agreement to facilitate a distribution of the Shares (or any security convertible into or exchangeable for Shares) or in connection with a future issuance of securities (it being understood that Buyer may continue to issue Shares or options in the ordinary course under its employee compensation plans);

 

(iv)       Buyer is not entering into this Agreement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress the price of the Shares (or any security convertible into or exchangeable for Shares);

 

(v)        Buyer is as of the date hereof, and after giving effect to the transactions contemplated hereby will be, Solvent; as used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (A) the present fair market value (or present fair saleable value) of the assets of Buyer is not less than the total amount required to pay the liabilities of Buyer on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (B) Buyer is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (C) assuming consummation of the transactions as contemplated by this Agreement, Buyer is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature, (D) Buyer is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which Buyer is engaged and (E) Buyer is not a defendant in any civil action that could reasonably be expected to result in a judgment that Buyer is or would become unable to satisfy;

 

(vi)       on the Trade Date, the Prepayment Date, the Initial Share Delivery Date, the Minimum Share Delivery Date and the Settlement Date, Buyer is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) and Buyer would be able to purchase the Shares hereunder in compliance with the corporate laws of the jurisdiction of its incorporation; and

 

(vii)      Buyer (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security

  

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or securities, (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing and (C) has total assets of at least $50 million.

 

(b)        Each of Seller and Buyer hereby acknowledges that any transactions by Seller in the Shares will be undertaken by Seller as principal for its own account.  Except as expressly set forth herein, all of the actions to be taken by Seller in connection with this Agreement shall be taken by Seller independently and without any advance or subsequent consultation with Buyer.

 

(c)        It is the intent of the parties that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act, and the parties agree that this Confirmation and any Trade Notification shall be interpreted to comply with the requirements of Rule 10b5-1(c).  Without limiting the generality of the preceding sentence, Buyer acknowledges and agrees that (A) Buyer does not have, and shall not attempt to exercise, any influence over how, when or whether Seller effects any purchases of Shares in connection with the Transaction, (B) during the period beginning on (but excluding) the date of this Confirmation and ending on (and including) the last Valuation Date, neither Buyer nor its officers or employees shall, directly or indirectly, communicate any information regarding Buyer or the Shares to any employee of Seller or its Affiliates (such employee identified in writing by Seller) who is responsible for trading the Shares in connection with the transactions contemplated hereby, (C) Buyer is entering into the Transaction in good faith and not as part of a plan or scheme to evade compliance with federal securities laws including, without limitation, Rule 10b-5 promulgated under the Exchange Act and (D) Buyer will not alter or deviate from this Confirmation or any Trade Notification or enter into or alter a “corresponding or hedging transaction” (within the meaning of Rule 10b5-1 under the Exchange Act) with respect to the Shares.  Buyer also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation or any Trade Notification must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act.  Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Buyer or any officer or director of Buyer is aware of any material nonpublic information regarding Buyer or the Shares.

 

13.        Acknowledgements of Buyer Regarding Hedging and Market Activity.

 

Buyer agrees, understands and acknowledges that:

 

(a)        during the period from (and including) the Trade Date to (and including) the Settlement Date, Seller and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its Hedge Positions with respect to the Transaction;

 

(b)        Seller and its affiliates also may be active in the market for the Shares other than in connection with hedging activities in relation to the Transaction;

  

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(c)        Seller shall make its own determination as to whether, when and in what manner any hedging or market activities in Issuer’s securities shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to 10b-18 VWAP; and

 

(d)        any market activities of Seller and its affiliates with respect to the Shares may affect the market price and volatility of the Shares, as well as the 10b-18 VWAP, each in a manner that may be adverse to Buyer.

 

14.        Other Provisions.

 

(a)        The parties hereto agree and acknowledge that Seller is a “financial participant” within the meaning of Section 101(22) of the Bankruptcy Code.  The parties hereto further agree and acknowledge that the Transaction is either (i) a “securities contract” as such term is defined in Section 741(7) of the Bankruptcy Code, in which case each payment and delivery made pursuant to the Transaction is a “settlement payment”, as such term is defined in Section 741(8) of the Bankruptcy Code, and that Seller is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 546(e) and 555 of the Bankruptcy Code, or (ii) a “swap agreement”, as such term is defined in Section 101(53B) of the Bankruptcy Code, in which case each party is a “swap participant”, as such term is defined in Section 101(53C) of the Bankruptcy Code, and that Seller is entitled to the protections afforded by, among other sections, Sections 362(b)(17), 546(g) and 560 of the Bankruptcy Code.

 

(b)        Seller and Buyer hereby agree and acknowledge that Seller has authorized Buyer to disclose the Transaction to any and all persons, and there are no express or implied agreements, arrangements or understandings to the contrary, and authorizes Buyer to use any information that Buyer receives or has received with respect to the Transaction in any manner.

 

(c)        If Buyer becomes the subject of proceedings (“Bankruptcy Proceedings”) under the Bankruptcy Code or any other applicable bankruptcy or insolvency statute from time to time in effect, any rights or claims of Seller hereunder in respect of this transaction shall rank for all purposes no higher than, but on a parity with, the rights or claims of holders of Shares, and Seller hereby agrees that its rights and claims hereunder shall be subordinated to those of all parties with claims or rights against Buyer (other than common stockholders) to the extent necessary to assure such ranking.  Without limiting the generality of the foregoing, after the commencement of Bankruptcy Proceedings, the claims of Seller hereunder shall for all purposes have rights equivalent to the rights of a holder of a percentage of the Shares equal to the aggregate amount of such claims (the “Claim Amount”) taken as a percentage of the sum of (i) the Claim Amount and (ii) the aggregate fair market value of all outstanding Shares on the record date for distributions made to the holders of such Shares in the related Bankruptcy Proceedings.  Notwithstanding any right it might otherwise have to assert a higher priority claim in any such Bankruptcy Proceedings, Seller shall be entitled to receive a distribution solely to the extent and only in the form that a holder of such percentage of the Shares would be entitled to receive in such Bankruptcy Proceedings, and, from and after the commencement of such Bankruptcy Proceedings, Seller expressly waives (i) any other rights or distributions to which it might otherwise be entitled in such Bankruptcy Proceedings in respect of its rights and claims

  

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hereunder and (ii) any rights of setoff it might otherwise be entitled to assert in respect of such rights and claims.

 

(d)        Notwithstanding any provision of this Agreement or any other agreement between the parties to the contrary, neither the obligations of Buyer nor the obligations of Seller hereunder are secured by any collateral, security interest, pledge or lien.

 

(e)        Notwithstanding anything to the contrary herein, Seller may, by prior notice to Buyer, satisfy its obligation to deliver any Shares or other securities on any date due (an “Original Delivery Date”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

 

15.        Share Caps.

 

Notwithstanding any other provision of this Confirmation, any Trade Notification or the Agreement to the contrary, in no event shall Buyer be required to deliver to Seller in the aggregate under the Transaction a number of Shares that exceeds the Share Cap (as specified in Schedule I), subject to reduction by the number of Shares delivered hereunder by the Buyer on any prior date.

 

16.        Additional Termination Event.

 

It shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Buyer is the sole Affected Party and Seller shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement if, for five or more Trading Days in any period of 10 consecutive Trading Days during the Calculation Period, the closing price per Share on the Exchange, as determined by the Calculation Agent, was at or below the Threshold Price (as specified in Schedule I); provided that Seller may only designate an Early Termination Date pursuant to Section 6(b) of the Agreement in respect of such Additional Termination Event if Seller gives notice of such designation during such a period of 10 consecutive Trading Days.

 

17.        Governing Law; Jurisdiction; Waiver

 

THIS CONFIRMATION AND EACH TRADE NOTIFICATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION AND EACH TRADE NOTIFICATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.

  

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EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS CONFIRMATION, EACH TRADE NOTIFICATION OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

18.        Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, nor any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the date of this Confirmation, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation, any Trade Notification or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, any Trade Notification, the Equity Definitions incorporated herein, or the Agreement (including, without limitation, rights arising from Change in Law, Loss of Stock Borrow, Increased Cost of Stock Borrow, or Illegality).

 

19.        Limit on Beneficial Ownership.  Notwithstanding any other provisions hereof, Dealer shall not be entitled to take delivery of any Shares deliverable hereunder to the extent (but only to the extent) that, after such receipt of any Shares hereunder (i) the Section 16 Percentage would exceed 8.0%, or (ii) the Share Amount would exceed the Applicable Share Limit.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery (i) the Section 16 Percentage would exceed 8.0%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Issuer’s obligation to make such delivery shall not be extinguished and Issuer shall make such delivery as promptly as practicable after, but in no event later than one Exchange Business Day after, Dealer gives notice to Issuer that, after such delivery, (i) the Section 16 Percentage would not exceed 8.0%, and (ii) the Share Amount would not exceed the Applicable Share Limit.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Issuer that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding.

  

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20.        Designation by Dealer.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities to or from Issuer, Dealer (the “Designator”) may designate any of its Affiliates (the “Designee”) to deliver or take delivery, as the case may be, and otherwise perform its obligations to deliver, if any, or take delivery of, as the case may be, any such Shares or other securities in respect of the Transaction, and the Designee may assume such obligations, if any.  Such designation shall not relieve the Designator of any of its obligations, if any, hereunder. Notwithstanding the previous sentence, if the Designee shall have performed the obligations, if any, of the Designator hereunder, then the Designator shall be discharged of its obligations, if any, to Issuer to the extent of such performance.

 

21.        Agreements regarding the Trade Notification.

 

(a)        Issuer accepts and agrees to be bound by the contractual terms and conditions as set forth in the Trade Notification for the Transaction, absent manifest error.  Upon receipt of the Trade Notification for the Transaction, Issuer shall promptly execute and return the Trade Notification to Dealer; provided that Issuer’s failure to so execute and return the Trade Notification shall not affect the binding nature of the Trade Notification, and the terms set forth therein shall be binding on Issuer to the same extent, and with the same force and effect, as if Issuer had executed a written version of the Trade Notification.

 

(b)        Issuer and Dealer agree and acknowledge that (A) the Transaction will be entered into in reliance on the fact that this Confirmation and the Trade Notification form a single agreement between Issuer and Dealer, and Dealer would not otherwise enter into the Transaction, (B) this Confirmation is a “qualified financial contract”, as such term is defined in Section 5-701(b)(2) of the General Obligations Law of New York (the “General Obligations Law”); (C) the Trade Notification, regardless of whether the Trade Notification is transmitted electronically or otherwise, constitutes a “confirmation in writing sufficient to indicate that a contract has been made between the parties” hereto, as set forth in Section 5-701(b)(3)(b) of the General Obligations Law; and (D) this Confirmation constitutes a prior “written contract”, as set forth in Section 5-701(b)(1)(b) of the General Obligations Law, and each party hereto intends and agrees to be bound by this Confirmation.

 

(c)        Issuer and Dealer further agree and acknowledge that this Confirmation constitutes a contract “for the sale or purchase of a security”, as set forth in Section 8-113 of the Uniform Commercial Code of New York.

 

[Remainder of Page Intentionally Blank]

  

26

  

 

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to us by facsimile to the number provided on the attached facsimile cover page.

 

Confirmed as of the date first written above:

 

	
EXPRESS SCRIPTS HOLDING COMPANY

	 	
MORGAN STANLEY & CO. LLC

	  	 	  
	  	 	  
	
By:   

	
/s/ Tim Smith

	 	
By:   

	
/s/ Scott McDavid

	  	
Name:   

	
Tim Smith

	 	  	
Name:   

	
Scott McDavid

	  	
Title:

	
VP/Treasurer

	 	  	
Title:

	
Managing Director

 

[Signature Page to Confirmation]

  

  

  

 

SCHEDULE I

 

This Schedule I, dated April 29, 2015 may be amended and/or superseded from time to time by mutual agreement of both parties.  For the purposes of the Transaction, the following terms shall have the following values/meanings:

 

	
1.

	
Trade Date:

	 	
April 30, 2015

	 	 	 	 
	
2.

	
Forward Price:

	 	
A price per Share (as determined by the Calculation Agent) equal to (i) the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Trading Day during the Calculation Period minus (ii) the Discount; provided, however, that if the Forward Price would otherwise be greater than the Forward Cap Price, the Forward Price shall equal the Forward Cap Price.

	 	 	 	 
	
3.

	
Discount:

	 	
[*]

	 	 	 	 
	
4.

	
Calculation Period Start Date:

	 	
As set forth in the Trade Notification for the Transaction, to be the Scheduled Trading Day immediately following the Hedge Completion Date.

	 	 	 	 
	
5.

	
Initial Shares:

	 	
55,136,219

	 	 	 	 
	
6.

	
Prepayment Amount:

	 	
USD 5,500,000,000

	 	 	 	 
	
7.

	
Scheduled Valuation Date:

	 	
[*]

	 	 	 	 
	
8.

	
Lock-Out Date:

	 	
[*]

	 	 	 	 
	
9.

	
Threshold Price:

	 	
USD 21.20

	 	 	 	 
	
10.

	
Share Cap:

	 	
On any date, in the aggregate for the Transaction, the lesser of (i) 129,732,280 Shares and (ii) 20% of the total number of Shares outstanding as of such date.

	 	 	 	 
	
11.

	
Forward Cap Price:

	 	
[*]% of the Hedge Period Reference Price.

	 	 	 	 
	
12.

	
Hedge Period Start Date:

	 	
April 30, 2015

	 	 	 	 
	
13.

	
Hedge Period End Date:

	 	
April 30, 2015

 

* This information has been omitted based on a request for confidential treatment. The omitted portions have been separately filed with the Securities and Exchange Commission.

 

[Remainder of Page Intentionally Blank]

  

  

  

 

AGREED AND ACKNOWLEDGED (as of the date listed above)

 

EXPRESS SCRIPTS HOLDING COMPANY

	
By:   

	
/s/ Tim Smith

	  
	  	  	  
	  	  	  
	  	
Name:   

	
Tim Smith

	  	
Title:

	
VP/Treasurer

	  	  	  
	  	  	  
	
MORGAN STANLEY & CO. LLC

	  	  	  
	  	  	  
	
By:

	
/s/ Scott McDavid

	  
	  	
Name:

	
Scott McDavid

	  	
Title:

	
Managing Director

 

[Signature Page to Schedule I]

  

  

  

 

EXHIBIT I

 

FORM OF TRADE NOTIFICATION

Morgan Stanley & Co. LLC

1585 Broadway

New York, NY 10036-8293

Attn: Joshua Birbach

Telephone: 212-761-1719

Facsimile:  212-507-8717

 

 [            ], 2015

 

	
To:  

	
Express Scripts Holding Company

One Express Way

St. Louis, MO 63121

	  	
Attention:  

	
Timothy Smith

	  	
Telephone:

	
314-684-5759

	
Re:  

	
Trade Notification—Capped Accelerated Share Repurchase Transaction

 

The purpose of this Trade Notification is to notify you of certain terms of the Transaction entered into between Morgan Stanley & Co. LLC (“Seller”) and Express Scripts Holding Company (“Buyer”) under the confirmation specified below.

 

This Trade Notification supplements, forms part of, and is subject to the Confirmation, dated April 29, 2015, between Seller and Buyer, as amended and supplemented from time to time.

	
Hedge Completion Date:

	 	
[            ], 2015

	
Calculation Period Start Date:

	 	
[            ], 2015

	
Hedge Period Reference Price:

	 	
USD [            ]

	
Forward Cap Price:

	 	
USD [            ]

	
Minimum Shares:

	 	
[            ] Shares

	  	
Very truly yours,

	  	  
	  	  
	  	
Morgan Stanley & Co. LLC

	  	  
	  	  	  	  
	  	
By:   

	  
	  	  	
Name:   

	  
	  	  	
Title:

	  

  

  

  

 

AGREED AND ACKNOWLEDGED (as of the date listed above)

EXPRESS SCRIPTS HOLDING COMPANY

	
By:   

	  	  
	  	
Name:   

	  
	  	
Title:

	  

 

 

[Signature Page to Trade Notification]QuickLinks
 -- Click here to rapidly navigate through this document

 
 

  Exhibit 4.6    
    

          TRANSCANADA TRUST  

DECLARATION OF TRUST  

MADE BY

VALIANT TRUST COMPANY

AS SETTLOR AND TRUSTEE  

   

   

Dated as of September 16th, 2014

TABLE
OF CONTENTS 

 

						
	 
	 	 
	 	Page 
	 	  ARTICLE 1    INTERPRETATION 
	 	1
	 	 1.1
	 	Definitions	 	1
	 	 1.2
	 	Gender and Number	 	3
	 	 1.3
	 	Headings	 	3
	 	 1.4
	 	References to Statutes	 	3
	 	 1.5
	 	Governing Law	 	3
	 	 1.6
	 	Unitholder Rights	 	4
	 	 1.7
	 	Invalidity of Provisions	 	4
	 	 1.8
	 	References to Acts of the Trust	 	4
	 	 1.9
	 	Schedule	 	4
	 	  ARTICLE 2    THE TRUST 
	 	

4
	 	 2.1
	 	Establishment and Settlement of the Trust	 	4
	 	 2.2
	 	Head Office	 	4
	 	 2.3
	 	Objective of the Trust	 	5
	 	 2.4
	 	Ownership of Trust Assets	 	5
	 	 2.5
	 	Binding Effect	 	5
	 	 2.6
	 	Legal Character of the Trust	 	5
	 	 2.7
	 	Limitation on Authority of Unitholders	 	6
	 	  ARTICLE 3    DESCRIPTION, CREATION AND ISSUE OF UNITS 
	 	

6
	 	 3.1
	 	Description and Creation of Units	 	6
	 	 3.2
	 	Units are Personal Property	 	6
	 	 3.3
	 	Rights Attaching to Units	 	6
	 	 3.4
	 	Fractional Units	 	6
	 	 3.5
	 	Issue of Units	 	6
	 	 3.6
	 	Right to Reject Subscriptions	 	6
	 	 3.7
	 	Priorities	 	6
	 	 3.8
	 	Subdivision or Consolidation	 	7
	 	 3.9
	 	Voting	 	7
	 	 3.10
	 	Certificates for Units and Registrar	 	7
	 	 3.11
	 	Person Entitled	 	7
	 	 3.12
	 	Successors of Unitholders	 	7
	 	 3.13
	 	Units Held Jointly or in a Fiduciary Capacity	 	7
	 	 3.14
	 	Performance of Trust	 	7
	 	 3.15
	 	Lost Certificates	 	8
	 	 3.16
	 	Death or Insolvency of a Unitholder	 	8
	 	 3.17
	 	Unclaimed Interest or Distribution	 	8
	 	 3.18
	 	Execution of Units	 	8

 

 

 
 

						
	 
	 	 
	 	Page 
	 	  ARTICLE 4    MISCELLANEOUS REDEMPTION AND EXCHANGE 
	 	8
	 	 4.1
	 	Redemption by Trust	 	8
	 	 4.2
	 	Redemption by Unitholders	 	9
	 	  ARTICLE 5    DISTRIBUTIONS TO UNITHOLDERS 
	 	

9
	 	 5.1
	 	Net Distributable Funds	 	9
	 	 5.2
	 	Distributions of Net Distributable Funds	 	9
	 	 5.3
	 	Computation of Trust Income	 	9
	 	 5.4
	 	Tax Liability for Trust	 	9
	 	 5.5
	 	Distributions to Unitholders	 	10
	 	 5.6
	 	Non-taxable Portion of Capital Gains	 	10
	 	 5.7
	 	Character of Distributions	 	11
	 	  ARTICLE 6    UNITHOLDERS 
	 	

11
	 	 6.1
	 	Limitation on Power of Unitholders	 	11
	 	 6.2
	 	Liability of Unitholders	 	11
	 	 6.3
	 	Indemnification of Unitholders	 	11
	 	  ARTICLE 7    THE TRUSTEE 
	 	

12
	 	 7.1
	 	Indefinite Term of Office	 	12
	 	 7.2
	 	Resignation	 	12
	 	 7.3
	 	Removal	 	12
	 	 7.4
	 	Appointment	 	12
	 	 7.5
	 	Qualifications of Trustee	 	12
	 	 7.6
	 	Remuneration of the Trustee	 	13
	 	 7.7
	 	Payment of Remuneration	 	13
	 	 7.8
	 	Costs and Expenses	 	13
	 	 7.9
	 	Other Expenses Payable by the Trust	 	13
	 	 7.10
	 	Indemnification of Trustee	 	13
	 	 7.11
	 	Trustee's Lien	 	14
	 	 7.12
	 	Bond Not Required	 	14
	 	 7.13
	 	Liability of Trustee	 	14
	 	 7.14
	 	Conflict of Interest	 	15
	 	 7.15
	 	Exclusion of Contractual Liability	 	15
	 	 7.16
	 	Reliance on Advice	 	15
	 	 7.17
	 	Trustee to Act as Trustee	 	16
	 	 7.18
	 	Trustee's Standard of Care	 	16
	 	 7.19
	 	Apparent Authority	 	16
	 	 7.20
	 	Executing Agreements	 	16

 

 ii

 
 

						
	 
	 	 
	 	Page 
	 	 7.21
	 	Confidentiality	 	17
	 	 7.22
	 	Third Party Interests	 	17
	 	 7.23
	 	Right Not to Act	 	17
	 	 7.24
	 	Merger, Consolidation and Amalgamation	 	17
	 	 7.25
	 	Vesting in Successor Trustee	 	17
	 	 7.26
	 	Records to be Kept	 	18
	 	 7.27
	 	Method of Keeping Records	 	18
	 	 7.28
	 	Performance in Canada	 	18
	 	  ARTICLE 8    DELEGATION 
	 	

18
	 	 8.1
	 	Delegation and Appointment of Administrative Agent	 	18
	 	 8.2
	 	Relationship between Trustee, Administrative Agent and Unitholders	 	18
	 	  ARTICLE 9    THE ADMINISTRATIVE AGENT 
	 	

19
	 	 9.1
	 	Term of Administration Agreement	 	19
	 	 9.2
	 	Appointment of Successor to Administrative Agent	 	19
	 	 9.3
	 	Payment of Remuneration and Expenses	 	19
	 	 9.4
	 	Limitation of Liability	 	19
	 	 9.5
	 	Indemnification of Administrative Agent	 	19
	 	 9.6
	 	Administrative Agent's Lien	 	20
	 	  ARTICLE 10    OBLIGATIONS AND POWERS OF THE TRUSTEE 
	 	

21
	 	 10.1
	 	General	 	21
	 	 10.2
	 	Powers of the Trustee	 	21
	 	 10.3
	 	Discretion is Absolute	 	24
	 	 10.4
	 	Reliance on Opinions or Advice	 	24
	 	 10.5
	 	Banking Arrangements	 	25
	 	 10.6
	 	Purchase of Trust Notes	 	25
	 	 10.7
	 	Defect in Appointment	 	25
	 	  ARTICLE 11    PAYMENT ARRANGEMENTS 
	 	

25
	 	 11.1
	 	Payments to Unitholders	 	25
	 	 11.2
	 	Withholding Tax	 	26
	 	 11.3
	 	Receipt by Unitholder	 	26
	 	  ARTICLE 12    AUDITORS OR ACCOUNTANTS 
	 	

26
	 	 12.1
	 	Auditors or Accountants	 	26
	 	 12.2
	 	Auditors' or Accountants' Remuneration	 	26
	 	 12.3
	 	Financial Reporting to Unitholders and Noteholders	 	26
	 	 12.4
	 	Fiscal Year	 	26
	 	 12.5
	 	Tax Returns, etc.	 	26
	 	 
	 	 	 	 

 

 iii

 
 

						
	 
	 	 
	 	Page 
	 	  ARTICLE 13    AMENDMENTS 
	 	27
	 	 13.1
	 	Automatic Amendment	 	27
	 	 13.2
	 	Amendments by Unitholders	 	27
	 	 13.3
	 	Amendments by Trustee	 	27
	 	 13.4
	 	Supplemental Declarations of Trust	 	27
	 	  ARTICLE 14    TERMINATION 
	 	

27
	 	 14.1
	 	Termination	 	27
	 	 14.2
	 	Procedure on Termination	 	28
	 	 14.3
	 	Provisions of the Trustee on Termination	 	28
	 	 14.4
	 	Distribution of Trust Assets	 	28
	 	 14.5
	 	Units Rank Pari Passu	 	28
	 	 14.6
	 	Determination of Value	 	28
	 	 14.7
	 	Further Notice to Unitholders	 	28
	 	 14.8
	 	Responsibility of Trustee During Winding-Up	 	29
	 	 14.9
	 	Survival	 	29
	 	  ARTICLE 15    NOTICES 
	 	

29
	 	 15.1
	 	Notice to Unitholders	 	29
	 	 15.2
	 	Notice to the Trustee	 	29
	 	 15.3
	 	Mail Service Interruption	 	29
	 	  ARTICLE 16    POWER TO CHANGE GOVERNING LAW 
	 	

30
	 	 16.1
	 	General	 	30
	 	  SCHEDULE A 
	 	

1

 

 iv

 

 

 
 

  DECLARATION OF TRUST    
    

        DECLARATION OF TRUST, dated as of September 16th, 2014, made by
Valiant Trust Company as Settlor and Trustee; 

        WHEREAS Valiant Trust Company, in its capacity as settlor and trustee, has determined to establish a trust to be known as
"TransCanada Trust", for the purposes of carrying on the activities described in this Declaration of Trust in order to produce net income for the
Unitholders as beneficiaries of the Trust; 

        NOW, THEREFORE, Valiant Trust Company, in its capacity as trustee, hereby declares that it holds in trust, as trustee, the sum of one
thousand U.S. dollars (U.S.$1,000) and all property of every nature and kind which it may acquire in its capacity as trustee of the Trust, and all income, profits and gains which at any time
may be derived from the Trust's property, for the benefit of the Unitholders, in accordance with and subject to the provisions of this Declaration of Trust. 

 
 

  ARTICLE 1    
    
    INTERPRETATION    
    

	1.1
	Definitions

In
this Declaration of Trust: 

"Administration Agreement" means the Administration Agreement dated as of September 16th, 2014 between the Trust and TCPL, as
Administrative Agent (as it may be amended or restated from time to time), under which TCPL has agreed to serve as Administrative Agent to the Trust. 

"Administrative Agent" means TCPL, in its capacity as administrative agent to the Trust under the Administration Agreement, or any successor to TCPL
that may become administrative agent to the Trust in accordance with the Administration Agreement. 

"Affiliate" means, in respect of any Person, any other Person which, directly or indirectly, is in control of, is controlled by or is under common
control with such Person; provided that the Trust and TCPL and its Affiliates shall be Affiliates for so long as TCPL and/or its Affiliates hold at least a majority of the voting trust units of the
Trust. For the purposes of this definition, a Person will be deemed to be "controlled by" another Person if such other Person possesses directly, or indirectly, power to direct or cause the direction
of the management and policies of such Person, whether by contract or otherwise. 

"Assignment and Set-Off Agreements" mean the agreements that may be entered into from time to time among TCPL, the Trust and an Indenture Trustee, and
such other Persons as may be party thereto, in connection with offerings of Trust Notes providing for the investment of cash interest on the Trust Notes in preferred shares of TCPL in certain
circumstances. 

"Business Day" means a day on which TCPL and the Trustee are open for business in the City of Calgary, Alberta, other than a Saturday, Sunday or a
statutory or civic holiday in the City of Calgary, Alberta. 

"CDS" means CDS Clearing and Depository Services Inc. and its nominees or any successor to CDS carrying on the business of a depository. 

"Clearing Agency Agreement" means any agreement, acknowledgment, letter of representation or other instrument provided by the Trust to a Clearing Agency
with respect to clearing, settlement and/or other procedures under the book-entry system. 

1

 

"Clearing Agency" means a clearing agency that may be selected by the Trust to act as clearing agency and/or depository for particular Trust Notes,
which may, for greater certainty, be CDS or DTC. 

"Credit Agreements" means the credit agreements that may be entered into from time to time between TCPL, or an Affiliate thereof, as lender, and the
Trust, as borrower, in connection with offerings of Trust Notes or otherwise. 

"Declaration of Trust" means this Declaration of Trust, including the recitals and schedule (as it may be amended, restated or supplemented from
time to time); and the expressions "hereof", "herein", "hereto", "hereunder", "hereby" and similar expressions refer to this Declaration of Trust in its entirety and each schedule, and not to any
particular Article, section, subsection or other part of this Declaration of Trust. 

"Definitive Units" means certificates representing the Units in the form designated by the Trustee in accordance with this Declaration of Trust. 

"Distribution Date" means the last day in December of each year, commencing December 31, 2014. 

"DTC" means The Depository Trust Company and its nominees or any successor to DTC. 

"Holder" or "Unitholder" means the Person in whose name a Unit is registered in a register kept at the
principal office of the Trustee or the Trust in the City of Calgary, Alberta. 

"Income of the Trust" has the meaning given to it in section 5.3. 

"Indenture Trustee" means a trustee, pursuant to a Trust Indenture, in its capacity as trustee under a Trust Indenture. 

"Interest Payment Date" means a date on which interest on any outstanding Trust Notes is payable to Noteholders. 

"Net Distributable Funds" means, in respect of any Distribution Date, the amount determined by the Trust in the manner provided in section 5.1. 

"Noteholders" means the holders of Trust Notes. 

"Person" is to be broadly interpreted and includes an individual, a corporation, a limited liability company, an unlimited liability company, a limited
or general partnership, a trust, an unincorporated organization, a joint venture and any other organization, whether or not a legal entity, a government of a country or any political subdivision of a
country or any agency or department of any such government and the executors, administrators or other legal representatives of a Person in such capacity. 

"Share Exchange Agreements" mean the agreements that may be entered into from time to time among TCPL, the Trust and an Indenture Trustee, and such
other Persons who may be party thereto, in connection with offerings of Trust Notes providing for, among other things, the right to be issued preferred shares of TCPL in certain circumstances. 

"Subscription Agreements" means each subscription agreement that may be entered into from time to time between TCPL or any of its Affiliates, as
subscriber, and the Trust, as issuer, providing for the subscription by TCPL or such Affiliate for Units. 

"Tax Act" means the Income Tax Act (Canada). 

"Taxation Year" means, in respect of 2014, the financial period from and including the date the Trust was established, to and including
December 31, 2014, and thereafter the financial period from and including January 1 to and including December 31 in each year. 

2

 

"TCPL" means TransCanada PipeLines Limited and its successors and assigns. 

"TCPL Sub Note Purchase Agreements" means the note purchase agreements that may be entered into from time to time between TCPL and the Trust providing
for the purchase by the Trust of TCPL Sub Notes. 

"TCPL Sub Notes" means the junior subordinated unsecured notes of TCPL that may be issued from time to time in connection with offerings of Trust Notes
and constituting a Trust Asset. 

"Termination Date" has the meaning given to it in section 14.1. 

"Trust" means the open-end unit trust established by this Declaration of Trust, known on the date hereof as "TransCanada
Trust". 

"Trust Activities" means the activities of the Trust described in section 2.3. 

"Trust Assets" means the cash, securities (including TCPL Sub Notes) and other property held by the Trustee on behalf of the Trust and all income,
profit and gains which may be derived from the Trust Assets or accrued on the Trust Assets (but not yet paid or distributed by the Trust) from time to time. 

"Trust Indenture" means any trust indenture between the Trust and an Indenture Trustee, and any indentures supplemental thereto entered into among the
Trust, an Indenture Trustee and such other Persons as may be party thereto, in connection with offerings of Trust Notes by the Trust (as they may be amended, restated or supplemented from time
to time). 

"Trust Notes" means the subordinated unsecured debt securities of the Trust that may be issued from time to time under a Trust Indenture. 

"Trustee" means Valiant Trust Company, a trust company existing under the laws of Canada, in its capacity as trustee of the Trust, and its successors,
including any successor to it which may become trustee of the Trust in accordance with section 7.4. 

"Unitholder" has the meaning given to it above at "Holder". 

"Units" has the meaning given to it in section 3.1.  

	1.2
	Gender and Number

        Unless
the context otherwise requires, words importing the singular number only include the plural and vice versa, and words importing
gender include all genders.  

	1.3
	Headings

        The
inclusion of headings and a table of contents is for convenience of reference only and does not affect the construction or interpretation of this Declaration of Trust. 

	1.4
	References to Statutes

        Unless
expressly stated otherwise, reference to any statute will be deemed to be a reference to that statute as in force from time to time, including any regulations, rules, policy
statements or guidelines made under that statute, and to include any statute which may be enacted in substitution of that statute.  

	1.5
	Governing Law

        Subject
to section 16.1, this Declaration of Trust will be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada
applicable therein. 

3

 
	1.6
	Unitholder Rights

        Unitholders
will not have any rights with respect to the Trust or the Trust Assets other than those rights to which they are expressly entitled in this Declaration of Trust. 

	1.7
	Invalidity of Provisions

        Except
for any provision which is fundamental to the subject matter of this Declaration of Trust (including those that relate to the payment of money), the invalidity or unenforceability
of any provision of this Declaration of Trust will not affect the validity or enforceability of any other provision and any invalid or unenforceable provision will be deemed to be severable. 

	1.8
	References to Acts of the Trust

        For
greater certainty, where any reference is made in this Declaration of Trust, or in any other instrument to which the Trust or the Trustee, as trustee of the Trust, is a party, to an
act to be performed by, an appointment to be made by, an obligation or liability of, an asset or right of, a discharge or release to be provided by, a suit or proceeding to be taken by or against, or
a covenant, representation or warranty by or with respect to the Trust or the Trustee, that reference will be
construed and applied for all purposes as if it referred to an act to be performed by, an appointment to be made by, an obligation or liability of, an asset or right of, a discharge or release to be
provided by, a suit or proceeding taken by or against, or a covenant, representation or warranty (other than those relating to the constitution or existence of the Trust) by or with respect to, the
Trustee solely in its capacity as trustee of the Trust.  

	1.9
	Schedule

        The
following Schedule is attached to and forms part of this Declaration of Trust: 

        Schedule A—Form
of Voting Trust Units 

 
 

  ARTICLE 2    
    
    THE TRUST    
    

	2.1
	Establishment and Settlement of the Trust

        The
Trust is hereby established and settled by the Trustee which hereby declares that it holds in trust, as trustee, the sum of one thousand U.S. dollars (U.S.$1,000) and all
property of every nature and kind which it may acquire in its capacity as trustee of the Trust, and all income, profits and gains which at any time may be derived from the Trust's property, for the
benefit of the Unitholders, in accordance with and subject to the provisions of this Declaration of Trust. The Trust will be known as "TransCanada
Trust", or by such other name as the Trustee may determine from time to time to be necessary or appropriate. Should the Trustee determine that the use of any such name is not
practicable, lawful or convenient, the Trustee may use such other designation or adopt such other name for the Trust as the Trustee deems appropriate and the Trust Assets may be held and the affairs
and business of the Trust conducted under any such name.  

	2.2
	Head Office

        The
head office and situs of the administration of the Trust will be at 450 – 1st Street S.W., Calgary, Alberta, T2P 5H1, or at such
other place in Canada as the Trustee may determine from time to time to be necessary or desirable. The Trust may have such other offices and places of administration within Canada as the Trustee may
determine from time to time are necessary or desirable. 

4

 
	2.3
	Objective of the Trust

        The
objective of the Trust is to acquire, hold and reinvest Trust Assets to generate income for payment of principal, interest, redemption price, if any, and any other amount on its debt
securities, including its Trust Notes, and distribute its Net Distributable Funds, if any, to Unitholders according and subject to this Declaration of Trust.  

	2.4
	Ownership of Trust Assets

        The
Trustee in its capacity as trustee and on behalf of the Unitholders will have sole legal title to the Trust Assets. The Trustee will have the sole right to conduct the affairs and
business of the Trust and the Unitholders will not have any interest in the Trust Assets, other than the beneficial interest conferred by their Units under this Declaration of Trust. The Unitholders
will not have any right to call for any partition or division of any part of the Trust Assets nor can they be called on to pay for, contribute toward or assume any losses of the Trust or, except as
expressly provided in this Declaration of Trust or in the Subscription Agreements, to offer an assessment or further payment to the Trust or the Trustee of any kind by virtue of their ownership of
Units. The Trust Assets will be considered at all times as property held in trust by the Trustee, as trustee of the Trust, according and subject to this Declaration of Trust. The Trustee will be
entitled to exercise, in its discretion, all rights and powers of an owner of the Trust Assets, including the power to enter into all agreements which it deems necessary on behalf of the Trust.
Despite the foregoing, the Trustee will have the power to cause any and all Trust Assets to be held by or registered in the name of any Person on such terms and in such manner as the Trustee may
determine and with or without disclosure that the Trust has an interest in the Trust Assets.  

	2.5
	Binding Effect

        Each
Unitholder and all Persons claiming through the Unitholder will be bound by the terms and conditions of this Declaration of Trust and any supplement to it as if each of them were a
party to this Declaration of Trust.  

	2.6
	Legal Character of the Trust

        The
Trust will, at all times, be an open-end "unit trust" within the meaning of the Tax Act and the Trust Assets will be segregated and not commingled with the money and
investments of any other Person. The Trust will be governed by this Declaration of Trust which will form the constating document of the Trust. The relationship of the Unitholders to each other, to the
Trustee and to Trust Assets will be solely the relationship that arises from their capacity as beneficiaries of a trust in accordance with the rights conferred on the Unitholders under this
Declaration of Trust. For greater certainty, the relationship of the Trustee to any Unitholder and the relationship of one Unitholder to another is not and will not be treated as that of principal and
agent, partners or joint venturers or as members of a society, association, limited partnership or corporation or that of shareholders of a corporation or other joint stock company, but will be that
which arises from the trust relationship as provided for in this Declaration of Trust with each Unitholder being a beneficiary of the Trust with no relationship, contractual or otherwise, to any other
Unitholder except that which arises from their capacities as beneficiaries under a trust. For greater certainty, the Trustee will not be nor be deemed to be the agent of the Unitholders. The
beneficial interest of a Unitholder in the Trust will be limited to the right to participate to the extent of the Unitholder's entitlement (if any) to distributions as provided for in this
Declaration of Trust (including the proceeds of liquidation of Trust Assets on termination of the Trust) and to exercise any rights conferred on the Unitholders by this Declaration of Trust. No
Unitholder will have or be deemed to have legal title or ownership in any property of the Trust. 

5

 
	2.7
	Limitation on Authority of Unitholders

        No
Unitholder, in the capacity of a Unitholder, may take part in the control or the affairs and business of the Trust nor will any Unitholder in that capacity have any power to sign for
or bind the Trust. The rights of the Unitholders will be limited to the right to receive distributions (if any) as provided for in this Declaration of Trust and the right to attend meetings and
vote, sign resolutions and give directions to the Trustee, all as provided in this Declaration of Trust. 

 
 

  ARTICLE 3    
    
    DESCRIPTION, CREATION AND ISSUE OF UNITS    
    

	3.1
	Description and Creation of Units

        The
beneficial interest in the Trust will be divided into an unlimited number of units designated as "Voting Trust Units" (referred to herein as the
"Units"), each with a face amount and issue price of U.S.$1,000. The Trustee may authorize the issuance of Units on such terms as the Trustee may
determine. All Units will be identical in all respects except for the date of issue. All Units created and issued by the Trustee under this Declaration of Trust will in all respects be entitled,
equally and rateably with all other Units, to the benefits of this Declaration of Trust and any related instrument supplemental to this Declaration of Trust without preference, priority or distinction
on account of the actual time or times of creation and delivery, all in accordance with the terms and provisions of this Declaration of Trust and any related instrument supplemental to this
Declaration of Trust.  

	3.2
	Units are Personal Property

        The
Units will be personal property and moveable property for all purposes of the Trust.  

	3.3
	Rights Attaching to Units

        The
rights attaching to all Units are as set out in this Declaration of Trust.  

	3.4
	Fractional Units

        Units
may not be issued in fractions.  

	3.5
	Issue of Units

        The
Trustee may allot and issue Units at such time or times and in such manner and for such consideration, whether in cash or in kind or fully paid or partially paid, and to such Persons
as the Trustee may determine, provided that any such Person is a "taxable Canadian corporation" as defined in subsections 89(1) and 248(1) of the Tax Act and such Person is
required to notify the Trustee of any change in such status. Each Unit will be deemed to be outstanding when the subscription price, or if any Unit is issued as partially paid, when the initial
subscription price, for the Unit has been received, whether in cash or in kind, in accordance with the agreement between the Trust and the Holder of such Units pursuant to which the Units are issued
or sold. Subscriptions for Units must be in writing and may be contained in such underwriting, agency, subscription or other agreement as the Trust may determine from time to time. 

	3.6
	Right to Reject Subscriptions

        The
Trust, at its sole discretion, will be entitled to accept or reject subscriptions for purchases of Units at any time in whole or in part.  

	3.7
	Priorities

        No
Unit will have any preference, conversion, exchange or pre-emptive right over any other Unit. 

6

 
	3.8
	Subdivision or Consolidation

        The
Units may be consolidated or subdivided in such manner and at such time or times as the Trust may determine, but no such consolidation or subdivision may increase or reduce the
proportionate interest of any Unitholder in the Trust Assets or in the Net Distributable Funds or the voting rights (if any) of any Unitholder relative to those of any other Unitholder. 

	3.9
	Voting

        The
Units will be voting in all circumstances.  

	3.10
	Certificates for Units and Registrar

        The
Units will be issued as Definitive Units. The form of certificate evidencing the Units will be substantially in the form of Schedule A or in such form as the Trustee or
the Administrative Agent may approve from time to time. The Trustee may act as registrar for the Units or may delegate such duties to the Administrative Agent or another Person. 

	3.11
	Person Entitled

        The
Person registered as a Unitholder on a register kept by or on behalf of the Trust will be treated as the Holder and owner of such Unit for all purposes, including payment of any
distribution and delivery of property, giving notice to Unitholders and determining the right to attend and vote at meetings of Unitholders.  

	3.12
	Successors of Unitholders

        Any
Person becoming entitled to any Units as a consequence of the death, bankruptcy or incompetence of any Unitholder or otherwise by operation of law, will be entitled to be registered
as the Holder of such Units on production of evidence of such entitlement satisfactory to the Trustee and, if the Trustee so requests, an opinion of legal counsel satisfactory to the Trustee that such
registration will not violate any applicable securities or other laws. Until such Person is registered as the Unitholder, the Unitholder of record will continue to be and be deemed to be the Holder of
such Units for all purposes of this Declaration of Trust whether or not the Trustee has actual or other notice of such death, bankruptcy, incompetence or other event. 

	3.13
	Units Held Jointly or in a Fiduciary Capacity

        Two
or more Persons holding any Units as joint owners of the entire interest in those Units may be treated as joint owners of those Units unless their ownership is expressly recorded
otherwise on the register of units, but no entry will be made in the register or on any certificate that any Person is entitled in any other manner to any future, limited or contingent interest in any
Units; however, any Person recorded as a Unitholder may be described in the register or on any certificate, subject to the provisions of this Article, as a fiduciary of any kind and any customary
words may be added to the description of the Holder to identify the nature of such fiduciary relationship.  

	3.14
	Performance of Trust

        The
Trustee, the Unitholders and any of their respective directors, officers or agents will not be bound to see to the performance of any trust, express, implied or constructive, or of
any charge, pledge, security interest, or equity to which any of the Units or any interest in the Units is or may be subject, or to ascertain or enquire whether any sale or transfer of any Units or
interest in the Units by any Unitholder or by his or her personal representatives is authorized by such trust, charge, pledge, security
interest, or equity, or to recognize any Person as having any interest in the Units except for the Person recorded as the Unitholder. 

7

 
	3.15
	Lost Certificates

        If
any certificate for Units is lost, stolen, destroyed or mutilated, the Trustee may authorize the issuance of a new certificate for the same number of Units in lieu of the certificate
lost, stolen, destroyed or mutilated. The Trustee, in its discretion, before the issuance of such new certificate, may require the owner of the lost, stolen, destroyed or mutilated certificate or the
legal representative of the owner to provide an affidavit or statutory declaration setting out such facts as to the loss, theft, destruction or mutilation as the Trustee may require. It may also
require the applicant, at the expense of the applicant, to supply to the Trust a "lost certificate bond" or a similar bond in an amount and form satisfactory to the Trustee, in its discretion, and in
accordance with standard industry practice as the Trustee may direct indemnifying the Trust, the Trustee and their respective agents for so doing. The Trustee will have the power, but will not be
obligated, to require from an insurer a blanket lost security bond or bonds in respect of the replacement of lost, stolen, destroyed or mutilated certificates. The Trustee will pay all premiums and
other amounts payable for such purpose out of the Trust Assets with such contribution (if any) by those insured as the Trustee may determine. If a blanket lost security bond is required, the
Trustee may authorize and direct (on such terms and conditions as the Trustee may impose from time to time) any agent to whom the indemnity of such bond extends to take such action to replace
any lost, stolen, destroyed or mutilated certificate without further action or approval by the Trustee. The applicant shall pay all expenses incidental to the issuance of any such new certificate. 

	3.16
	Death or Insolvency of a Unitholder

        The
death or insolvency of a Unitholder during the continuance of the Trust will not terminate the Trust or any of the mutual or respective rights and obligations created by or arising
under this Declaration of Trust nor give that Unitholder's personal representatives, trustee or liquidator a right to an accounting or to take any action in court or otherwise against other
Unitholders or the Trustee or the Trust Assets.  

	3.17
	Unclaimed Interest or Distribution

        If
the Trustee holds any amount or other distributable property which is unclaimed or which cannot be paid for any reason, including any such amount payable to any of the Unitholders
under Article 11, the Trustee will not be under any obligation to invest or reinvest the property, but will be obligated only to hold the property in a current or other non-interest-bearing
account pending payment to the Person or Persons entitled to the property. The Trustee, as and when required by law, will pay, and at any time prior to such required time, may pay, all or part of such
interest or other distributable amount so held to the public trustee of the Province of Alberta (or other appropriate government official or agency) whose receipt will be a good discharge and
release of the Trustee.  

	3.18
	Execution of Units

        The
Trustee on behalf of the Trust, or the Administrative Agent on its behalf, will execute certificates evidencing Units as provided in section 7.20. 

 
 

  ARTICLE 4    
    
    MISCELLANEOUS REDEMPTION AND EXCHANGE    
    

	4.1
	Redemption by Trust

        Subject
to compliance with applicable laws, the Trust, with the prior consent of the Unitholders, may redeem the Units in part at any time at the fair market value, as determined by the
Trustee, of each Unit to be redeemed. Subject to compliance with applicable laws, the Trust, with the prior written consent of the Unitholders, may redeem all the Units at any time at the fair market
value, as 

8

 

determined
by the Trustee, of each Unit to be redeemed, provided that, at the time of redemption, there are no Trust Notes outstanding and held by any Person other than TCPL or any of
its Affiliates.  

	4.2
	Redemption by Unitholders

        Subject
to compliance with applicable laws, a Unitholder shall be entitled to require the Trust to redeem the Units held by such Unitholder at any time at the fair market value, as
determined by the Trustee, of each Unit to be redeemed, provided that if at the time of redemption there are Trust Notes outstanding and held by any Person other than TCPL or any of its Affiliates and
such redemption would have resulted in all of the issued Units being redeemed, then a Unitholder will not be entitled to require all of its Units to be redeemed but will be required to retain
one Unit. 

 
 

  ARTICLE 5    
    
    DISTRIBUTIONS TO UNITHOLDERS    
    

	5.1
	Net Distributable Funds

        The
Trust will determine an amount in respect of each Distribution Date in a Taxation Year which will be the sum of the Income of the Trust and the non-taxable portion of realized
capital gains for such Taxation Year less the amount of tax determined to be payable by the Trust for such Taxation Year on its "non-portfolio earnings" (as defined in the Tax Act),
if any.  

	5.2
	Distributions of Net Distributable Funds

        On
each Distribution Date and to the extent of the Net Distributable Funds determined by the Trust in respect of such Distribution Date, the Net Distributable Funds will be due and
payable to the Unitholders on such Distribution Date on a pro rata basis, and shall be paid by the Trust on a pro rata basis to the Unitholders. If a Distribution Date does not fall on a
Business Day, then the Net Distributable Funds shall be paid by the Trust on the Business Day immediately following such Distribution Date.  

	5.3
	Computation of Trust Income

        Where
required under this Declaration of Trust or for the purposes of the Tax Act, the Trust will determine the income of the Trust, including any net taxable capital gains
(the "Income of the Trust"), and the non-taxable portion of realized capital gains for each Taxation Year of the Trust in accordance with the
provisions of the Tax Act (but without regard to paragraph 82(1)(b) and subsection 104(6) of the Tax Act) regarding the calculation of income for the purposes of
determining the "taxable income" of the Trust under the Tax Act.  

	5.4
	Tax Liability for Trust

        It
is intended that all the Income of the Trust and the non-taxable portion of realized capital gains for each Taxation Year be distributed to Unitholders in respect of the Taxation Year
so that, but for any tax payable by the Trust on any "non-portfolio earnings" (as defined in the Tax Act), the Trust is not liable for income tax under Part I of the
Tax Act for the Taxation Year. To this end, and without limiting the generality of the foregoing, from time to time in each Taxation Year the Trust will borrow funds under the Credit
Agreements, as are necessary to ensure that in such Taxation Year the Trust will have, in aggregate, cash available for distribution at each Distribution Date that equals the Income of the Trust
(and the non-taxable portion of realized capital gains) less the amount of any tax determined to be payable by the Trust for such Taxation Year, if any, and cash to pay the amount of such tax,
if any. If there is any change in the treatment under the Tax Act of the Income of the Trust for a Taxation Year which would frustrate this intention, then, notwithstanding any provision of
this Declaration of Trust, and without notice to or the vote or assent of the Unitholders or any supplement or amendment to this Declaration of Trust, the Trust may alter the method of distribution
for the 

9

 

purpose
of minimizing the taxes payable by the Trust and/or the Unitholders, provided that no such alteration is prejudicial to Unitholders.  

	5.5
	Distributions to Unitholders

        The
Trust will pay the Income of the Trust (including net taxable capital gains) and the related non-taxable portion of realized capital gains (if any) for each Taxation Year,
less the amount of tax determined to be payable by the Trust, if any, to the Unitholders, on each Distribution Date, to the same extent, at the same time and in the same manner as, but without
duplication of, distributions on the Units payable to such Holders on each Distribution Date in accordance with section 5.2.  

	5.6
	Non-taxable Portion of Capital Gains

        For
greater certainty, where net taxable capital gains of the Trust for a Taxation Year or part of a Taxation Year become payable by the Trust to Unitholders in the Taxation Year in
accordance with section 5.2 or 5.5, the related non-taxable portion of the capital gain will become due and payable to the Unitholders at the same time and manner as such net taxable
capital gains or part of such net taxable capital gains. 

10

 

 

	5.7
	Character of Distributions

        To
the extent permitted under the Tax Act, it is intended that the character of the Income of the Trust be maintained when it is distributed to Unitholders. The Trustee, in its
absolute discretion, may designate the proportion of the amounts due and payable to Unitholders which is attributable to net taxable capital gains, dividends, foreign source income or such other
source or sources of income as may be received by the Trust and may make such other designations for tax purposes in respect of distributions as the Trustee considers advisable or appropriate. 

 
 

  ARTICLE 6    
    
    UNITHOLDERS    
    

	6.1
	Limitation on Power of Unitholders

        Except
as otherwise provided in this Declaration of Trust, no Unitholder or Unitholders will be entitled to interfere with or give any direction to the Trustee with respect to the
affairs and business of the Trust or in connection with the exercise of any power or authority conferred on the Trustee under this Declaration of Trust, and all such powers and authorities will be
exercised by the Trustee or its duly appointed agents or attorneys in its capacity as trustee and in accordance with the standard of care set out in section 7.18.  

	6.2
	Liability of Unitholders

        No
Unitholder will incur or be subject to any liability in contract or in tort or of any other kind to any Person in connection with the Trust Assets or the obligations or the affairs
and business of the Trust or with respect to any act performed by the Trustee or by any other Person pursuant to this Declaration of Trust or with respect to any act or omission of the Trustee or any
other Person in the performance or exercise, or purported performance or exercise, of any obligation, power, discretion or authority conferred on the Trustee or such other Person under this
Declaration of Trust or with respect to any transaction entered into by the Trustee or by any other Person pursuant to this Declaration of Trust, except in respect of any such act or omission which is
taken or omitted to be taken at the direction of such Unitholder as provided in this Declaration of Trust in respect of which the Unitholders have expressly indemnified the Trustee in writing or in
respect of which this Declaration of Trust provides for such indemnification of the Trustee by the Unitholders. No Unitholder will be liable to indemnify the Trustee or any other Person with respect
to any such liability or liabilities incurred by the Trustee or by any such other Person or with respect to any taxes payable by the Trust or by the Trustee or any other Person on behalf of or in
connection with the Trust. To the extent that any such liabilities of Unitholders may arise, they will be enforceable only against, and will be satisfied only out of, the Trust Assets and not out of
any of the property of any Unitholder.  

	6.3
	Indemnification of Unitholders

        If,
contrary to the provisions of section 6.2, any Unitholder is held personally liable as such to any other Person in respect of any debt, liability or obligation incurred by or
on behalf of the Trust, or any action taken on behalf of the Trust, such Unitholder will be entitled to indemnity and reimbursement out of the Trust Assets to the full extent of such liability and to
the costs of any litigation or other proceedings in which such liability has been determined, including the reasonable fees and disbursements of counsel and any amount paid to settle an action or
satisfy a judgment, but not from any other Unitholder or the property of any other Unitholder or from the Trustee in its personal capacity. The rights accruing to a Unitholder under this section will
not exclude any other right to which such Unitholder may be lawfully entitled, nor will anything in this Declaration of Trust restrict the right of the Trustee to indemnify or reimburse a Unitholder
out of the Trust Assets in any appropriate situation even though not specifically provided for in this Declaration of Trust but, for greater certainty, the Trustee will not have any liability to
reimburse any Unitholder for taxes assessed 

11

 

against
such Unitholder by reason of its ownership of Units, nor any liability for any losses suffered by reason of changes in the market value of investments forming part of the Trust Assets, and any
right to indemnity or reimbursement of a Unitholder under this section will be subordinated in all respects to the Trustee's and Administrative Agent's rights of payment, reimbursement and indemnity
under sections 7.6, 7.7, 7.8, 7.9, 7.10, 9.3 and 9.5, respectively, and to the liens of the Trustee and Administrative Agent under sections 7.11 and 9.6, respectively. 

 
 

  ARTICLE 7    
    
    THE TRUSTEE    
    

	7.1
	Indefinite Term of Office

        The
Trustee will hold office until the earlier of (i) the termination of the Trust in accordance with the terms of this Declaration of Trust, or (ii) its resignation or
removal and the appointment of a successor Trustee pursuant to this Article.  

	7.2
	Resignation

        Except
as provided in Section 7.23, the Trustee may resign at any time after giving at least 60 days' prior written notice to the Unitholders and the Administrative Agent,
but no such resignation will be effective until the appointment of a successor to the Trustee pursuant to section 7.4.  

	7.3
	Removal

        The
Unitholders may remove the Trustee at any time if (i) the Trustee becomes bankrupt or insolvent, (ii) the assets of the business of the Trustee become liable to seizure
or confiscation by any public or governmental authority, (iii) the Trustee ceases to have the qualifications set out in sections 7.5 or 7.28, (iv) the Trustee has a
conflict of interest that, in the opinion of the Unitholders, is seriously detrimental to the interests of the Trust and the Unitholders or (v) the Unitholders determine, acting reasonably,
that the Trustee is otherwise incapable of performing its responsibilities under this Declaration of Trust. The removal of a Trustee under this section will not be effective until the appointment of a
successor pursuant to section 7.4, unless the removal of the Trustee is due to the Trustee ceasing to have the qualifications set out in sections 7.5 or 7.28 in which case the
removal of the Trustee shall be automatically effective on the date the Trustee ceases to satisfy any such qualifications and Unitholders shall immediately and in no case later than the next Interest
Payment Date appoint a successor Trustee pursuant to section 7.4. No vacancy in the office of Trustee shall operate to annul or terminate this Declaration of Trust or affect the continuity of
the Trust.  

	7.4
	Appointment

        The
Unitholders will appoint a successor to any Trustee who has resigned under section 7.2 or who has been removed under section 7.3. If no successor to a Trustee
who has resigned under section 7.2 or who has been removed under section 7.3 has accepted an appointment under this section within 60 days after such notice of resignation
or removal, as the case may be, the Trustee or the Administrative Agent or any Unitholders, at the expense of the Trust, may apply to a court of competent jurisdiction for an appointment of a
successor to the Trustee.  

	7.5
	Qualifications of Trustee

        No
Person will be eligible to be appointed as a Trustee pursuant to section 7.4, or to continue to act as a Trustee at any time, other than a company incorporated under the
laws of Canada or of a province or territory of Canada that, at such time, is resident in Canada for purposes of the Tax Act and is registered or licensed under the laws of Ontario
(or the applicable laws of such other province or territory of Canada pursuant to Article 16) to carry on the business of a trust company. 

12

 
	7.6
	Remuneration of the Trustee

        The
Trustee, in its capacity as trustee of the Trust, will be entitled to such fees or other reasonable remuneration from the Trust Assets as is agreed from time to time by TCPL and
the Trustee.  

	7.7
	Payment of Remuneration

        Any
fees or other remuneration payable to the Trustee under section 7.6 will be paid out of the Income of the Trust and, to the extent that the income is insufficient, out of the
capital of the Trust Assets.  

	7.8
	Costs and Expenses

        On
or as soon as practicable after an offering of Trust Notes, the Trust, at its option, will pay out of the subscription proceeds for Units all costs and expenses incurred in respect of
the preparation, organization and establishment of the Trust (to the extent not previously paid) and all costs and expenses related to the offering of the Trust Notes (including to the extent
that the Trust is liable for them, the costs of creating and organizing the Trust, the costs of printing and preparing any registration statement, prospectus or similar document, legal expenses of the
Trust, marketing expenses and other incidental expenses for which the Trust is liable). The Trust may enter into any arrangements in respect of the reimbursement of any such expenses. To the extent
that the subscription proceeds for Units are less than any of the Trust's costs and expenses, subject to any such costs and expenses for which the Trust has received reimbursement, the Trust, at its
option, will borrow under the Credit Agreements to pay or pay out of other Trust Assets such excess costs and expenses.  

	7.9
	Other Expenses Payable by the Trust

        The
Trust, at its option, will use the Credit Agreements to pay or pay out of the Trust Assets all administrative and operating expenses of the Trust, including mailing and printing
expenses for periodic reports to Unitholders or Noteholders, if applicable, fees payable to the Trustee for acting as trustee of the Trust, fees payable to an Indenture Trustee for performing
financial, recordkeeping, Noteholder reporting and general administrative services, fees payable to the auditors, valuators and legal advisors to the Trust, debt service fees (including setup,
stand-by and commitment fees), ongoing regulatory filing fees and listing and other fees, any reasonable out-of-pocket expenses incurred by the Administrative Agent or its agents in connection with
their ongoing obligations to the Trust, and any expenditures that may be incurred on the termination of the Trust.  

	7.10
	Indemnification of Trustee

        In
connection with the Trustee acting as trustee of the Trust under this Declaration of Trust, and in priority to any rights of the Administrative Agent or the Unitholders, the Trust
will indemnify and save harmless the Trustee and its directors, officers, employees, representatives and agents at all times from and against all claims of any kind, including costs (including legal
costs on a solicitor and client basis), charges, liabilities, losses, damages, penalties, actions, suits, demands, levies, disbursements and expenses in connection therewith, brought, commenced or
prosecuted against it for or in respect of any act, deed, matter or thing of any kind made, done, acquiesced in or omitted in or about or in relation to the execution of its duties as Trustee and also
from and against all other costs (including legal costs on a solicitor and client basis), charges, liabilities, losses, damages, penalties, actions, suits, demands, levies, disbursements and expenses
which it sustains or incurs in or about or in relation to the affairs and business of the Trust whether groundless or otherwise, except such as may be incurred as a result of the gross negligence,
wilful misconduct, dishonesty or bad faith of the Trustee or breach by it of its standard of care as set out in section 7.18. Notwithstanding any other provisions of this Declaration of Trust,
this indemnity will survive the removal or resignation of the Trustee, the termination of this Declaration of Trust and the termination of the Trust. Any claim made under this section will be 

13

 

satisfied
only out of the Trust Assets and no Unitholder will be personally liable with respect to any claim for such indemnity or reimbursement.  

	7.11
	Trustee's Lien

        The
Trustee will have a first charge and lien on the Trust Assets to enforce payment of all amounts to which it is entitled under this Declaration of Trust, including the fees or other
remuneration referred to in section 7.6 and the costs and expenses referred to in sections 7.8 and 7.9, and to enforce or satisfy its right to indemnification under
section 7.10. Any such amounts will be payable first out of the Income of the Trust and, to the extent the income is insufficient, out of the capital of the Trust. 

	7.12
	Bond Not Required

        Unless
otherwise required by law, the Trustee will not be required to give any bond, surety or other security in any jurisdiction for the performance of its obligations under this
Declaration of Trust.  

	7.13
	Liability of Trustee

	(a)
	The
Trustee will not be subject to any liability of any kind, in tort, contract or otherwise, in connection with the Trust Assets or the Trust Activities,
to the Unitholders or to any other Person, for any action taken or permitted by it to be taken or for its failure to take any action, including the failure to compel in any way any former or acting
Trustee to redress any breach of trust in respect of the execution of the duties of its office or in respect of the Trust Assets or the Trust Activities. This limitation will not apply in respect of
any action or failure to act arising from or in connection with the gross negligence, willful misconduct, dishonesty or bad faith of the Trustee or breach by it of its standard of care set out in
section 7.18. The Trustee, in doing anything or permitting anything to be done in respect of the execution of the duties of its office or in respect of the Trust Assets or the Trust Activities,
is and will be conclusively deemed to be acting as trustee of the Trust and not in any other capacity. Except to the extent provided in this section, the Trustee will not be subject to any liability
for any debts, liabilities, obligations, claims, demands, judgments, costs, charges or expenses against or with respect to the Trust, arising out of anything done or permitted by it to be done or its
failure to take any action in respect of the execution of the duties of its office or for or in respect of the Trust Assets or the Trust Activities, and resort will be had solely to the Trust Assets
for the payment or performance thereof. No property or assets of the Trustee, owned in its personal capacity or otherwise, will be subject to levy, execution or other enforcement procedure with regard
to any obligation under this Declaration of Trust.

	(b)
	Any
written instrument creating an obligation of the Trust or the Trustee, will contain a provision to the effect that the obligations thereunder are not
binding upon the Trustee except in its capacity as trustee of the Trust, nor will resort be had to the property of the Trustee except in its capacity as the Trustee, but that the Trust property or a
specific portion thereof only will be bound, and may contain any further provisions which the Trustee may deem appropriate, but the omission of any such provisions will not operate to impose liability
on the Trustee except as provided above.

	(c)
	The
Trustee will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of its duties under this
Declaration of Trust and will only disburse funds to the extent that funds have been deposited with it.

	(d)
	In
performing its duties and exercising its powers hereunder, the Trustee may rely and act or not act, and shall be fully protected in relying and acting or
not acting, upon (1) any statement, telecopy or other electronic means of communication, writing, notice, resolution, report, opinion or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person and (2) any opinion or advice 

14

 

received
or information obtained from auditors, solicitors, or other professional advisers, whether retained by the Trustee or otherwise, and shall not be responsible or held liable for any loss or
damage resulting from so relying or acting or not acting. For greater certainty, it shall not be necessary for the Trustee to ascertain whether or not the Persons who have executed, signed or
otherwise issued, authenticated or receipted such papers, writings or documents have authority to do so or that they are the same Persons named therein or otherwise to pass upon any requirement of
such papers, writing or documents that may be essential for their validity or effectiveness or upon the truth and acceptability.  

	7.14
	Conflict of Interest

        Subject
to section 7.21 and to the requirement that no information obtained by the Trustee with respect to the Trust and its investments will be disclosed to any Person,
except to the extent that such disclosure is necessary or expedient for the purpose of the proper administration of the Trust or is otherwise authorized under this Declaration of Trust or required by
law, in exercising its responsibilities, powers and authorities under this Declaration of Trust, the Trustee is authorized from time to time in its discretion to appoint, employ or deal with any
Person, including itself and any Person with which it may be directly or indirectly affiliated or in which it may be directly or indirectly interested, whether on its own account or for the account of
another (in a fiduciary capacity or otherwise) and may purchase, hold, sell, invest in or otherwise deal with securities or other property of the same class and nature as may be held in the
Trust Assets, whether on its own account or for the account of another (in a fiduciary capacity or otherwise) and may make investments in the securities or other property of any corporation
with which or in which the Trustee may be directly or indirectly associated, affiliated or interested and the Trustee will not be liable to account to the Trust or to any Unitholder with respect to
any loss to the Trust or in respect of any profit arising out of, or in connection with, the exercise of any authority conferred on the Trustee in this section.  

	7.15
	Exclusion of Contractual Liability

        Any
written instrument creating an obligation of the Trustee will be conclusively deemed to have been executed by the Trustee only in its capacity as Trustee. Any written instrument
creating an obligation of the Trustee may contain a provision to the effect that the obligations under it are not binding on the Trustee except in its capacity as Trustee, nor will there be any resort
to the property of the Trustee except in its capacity as Trustee, but that the Trust Assets or a specific part of them only will be bound, and may contain any further provisions which the Trustee may
deem appropriate, but the omission of any such provision will not operate to impose liability on the Trustee except as previously set out. 

        This
Declaration of Trust will be deemed and construed for all purposes as if made by the Trustee in and only in its capacity as trustee of the Trust. Subject to the exceptions set out
in this Declaration of Trust: (i) any liability, debt or obligation of the Trustee under this Declaration of Trust is non-recourse to the Trustee in its personal capacity and limited solely to
the Trust Assets; (ii) no other property or assets of the Trustee, whether owned by it in its personal capacity or otherwise, will be subject to levy, execution or other enforcement procedure
with regard to any obligation under this Declaration of Trust; and (iii) no recourse may be had or taken, directly or indirectly, against the Trustee in its personal capacity or against any
incorporator, shareholder, director, officer, representative, employee, agent or advisor of the Trustee or any predecessor or successor of the Trustee.  

	7.16
	Reliance on Advice

        The
Trustee may rely and act on any statement, report or opinion prepared by or any advice received from the Administrative Agent, auditors, counsel or other professional advisors of the
Trust or independent auditors, counsel or professional advisors or experts retained by the Trustee or the 

15

 

Administrative
Agent in respect of its duties under the Trust and will not be responsible or held liable for any misconduct on the part of any of them or for any loss resulting from so relying or
acting if the Trustee acted reasonably in relying on that statement, report or opinion and if the professional advisor was aware that the Trustee was receiving and relying on the advice in its
capacity as Trustee. Such auditors, counsel or professional advisors or experts of the Trust may be such Persons as are retained by the Trustee, or by the Administrative Agent. The Trustee is entitled
to rely and act on the genuineness and authenticity of any document in writing submitted to it that it in good faith believes to be genuine.  

	7.17
	Trustee to Act as Trustee

        In
the exercise or purported exercise of any of its powers under this Declaration of Trust and in the performance or purported performance of any of the obligations imposed on, or
undertaken by, the Trustee under this Declaration of Trust, the Trustee will act as trustee and will not be the agent of all or any of the Unitholders or of any other Person. 

	7.18
	Trustee's Standard of Care

        The
Trustee will exercise its powers and carry out its obligations under this Declaration of Trust as Trustee honestly, in good faith and in the best interests of the Trust and the
Unitholders and in connection therewith will exercise that degree of care, diligence and skill that a reasonable and prudent trustee would exercise in comparable circumstances. To the extent that the
Trustee has delegated or subcontracted the performance of all or a part of its duties to the Administrative Agent under the Administration Agreement as contemplated by section 8.1, it will be
deemed to have satisfied this standard of care. Unless otherwise required by law, the Trustee will not be required to give a bond, surety or security in any jurisdiction for the performance of any
duties or obligations under this Declaration of Trust. The Trustee will not be required to devote its entire time to the Trust Activities. For greater certainty, the entering into of the agreements
referred to in section 10.2 by the Trust and the performance by the Trust of its obligations under this Declaration of Trust and the agreements
referred to in section 10.2 will be deemed to be in the best interests of the Trust and the Unitholders.  

	7.19
	Apparent Authority

        No
Person dealing with the Trustee or with any officer, employee, representative or agent of the Trustee will be bound to make any enquiry concerning the validity of any transaction
purporting to be made by the Trustee or by such officer, employee, representative or agent or make enquiry concerning, or be liable for, the application of money or property paid, loaned or delivered
to or on the order of the Trustee or of such officer, employee, representative or agent. Any Person dealing with the Trustee in respect of any matter pertaining to the Trust Assets and any right,
title or interest in the Trust Assets will be entitled to rely on a certificate, statutory declaration or resolution executed or certified on behalf of the Trustee as to the capacity, power and
authority of any officer, employee, representative, agent or any other Person to act for and on behalf and in the name of the Trust.  

	7.20
	Executing Agreements

        The
Trustee, by specific or general resolution, may appoint or authorize from time to time any one or more officers of the Trustee to sign on behalf of the Trust contracts, documents,
certificates (including for Units), prospectuses, registration statements or other written instruments. Any signature of the Trustee, or officer authorized to sign on behalf of the Trustee, may be
mechanically reproduced on all contracts, certificates, documents or instruments in writing or Units or other securities of the Trust executed or issued on behalf of the Trust. All contracts,
certificates, documents or instruments in writing or Units or other securities of the Trust on which the signature of any of the Trustee or officers are so reproduced will be as valid as if they had
been manually signed, even though the Trustee or officers whose signatures are reproduced may have ceased to hold such office at the date of delivery or 

16

 

issue
of the contracts, certificates, documents or instruments in writing or Units or other securities of the Trust. This section will apply with necessary modification to the Administrative Agent. 

	7.21
	Confidentiality

        While
it is trustee under this Declaration of Trust and at any time after the Trustee resigns or is removed as trustee under this Declaration of Trust, the Trustee will treat as
confidential all information obtained by it in its capacity as Trustee relating to the Trust, the Trust Activities and the activities or transactions contemplated or evidenced by the agreements,
instruments and other documents referred to in section 10.2. If the Trustee receives a request or is or believes it is required by law, regulatory requirement or court order to disclose all or
any part of such confidential information, the Trustee shall (a) immediately notify the Administrative Agent and TCPL of the existence, terms and circumstances surrounding the request or
requirement, (b) consult with the Administrative Agent and TCPL on the advisability of taking legally available steps to resist or narrow the request or lawfully avoid the requirement, and
(c) assist the Administrative Agent and TCPL, if requested, to take steps to contest such a request or requirement or seek a protective order or other appropriate remedy. If a request or
requirement is not successfully contested, or a protective order or other remedy is not obtained, the Trustee may disclose to the Person requiring disclosure only that portion of the confidential
information which the Trustee is advised by written opinion of counsel is legally required to be disclosed.  

	7.22
	Third Party Interests

        Any
account to be opened by, or interest to be held by, the Trustee in connection with this Declaration of Trust, is not intended to be used by or on behalf of any non-specified third
party or beneficiary who is not known to the Trustee.  

	7.23
	Right Not to Act

        The
Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole
judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee,
in its sole judgment, determine at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation,
regulation or guideline, then it shall have the right to resign on ten days written notice to the Unitholders and the Administrative Agent, provided that: (a) the Trustee's written notice shall
describe the circumstances of such non-compliance; (b) if such circumstances are rectified to the Trustee's satisfaction within such ten day period, then such resignation shall not be
effective, and (c) no such resignation will be effective until the appointment of a successor to the Trustee pursuant to section 7.4.  

	7.24
	Merger, Consolidation and Amalgamation

        Any
company into which the Trustee may be merged, consolidated or amalgamated, or any company resulting from any merger, consolidation or amalgamation to which the Trustee is a party, or
any company to which all or substantially all of its corporate trust business has been transferred, provided that the company resulting or continuing from such merger, consolidation or amalgamation or
the transferee of the corporate trust business is a company incorporated under the laws of Canada or of a province or territory of Canada that is resident in Canada for purposes of the Tax Act
and is registered or licensed under the laws of Ontario to carry on the business of a trust company, will automatically become a successor trustee under this Declaration of Trust without any further
act or formality.  

	7.25
	Vesting in Successor Trustee

        Any
successor trustee will become vested with all the estates, properties, rights, powers, duties, responsibilities and trusts of its predecessors in the trusts under this Declaration of
Trust as if it had 

17

 

been
originally named as Trustee under this Declaration of Trust. On written request of the successor trustee and payment of all fees and expenses owing to the current trustee, the trustee ceasing to
act will do, make, execute, deliver or cause to be done, made, executed or delivered all such acts, documents, deeds or other instruments and things as may be necessary or desirable in order to more
effectually assign, transfer and deliver to, and vest in, the successor trustee, all the rights, powers and trusts of, and all property and money held by, the trustee so ceasing to act. The expense of
any act, document, deed or other instrument or thing required under this section will be satisfied from the Trust Assets.  

	7.26
	Records to be Kept

        The
Trustee will keep or cause to be kept at the situs of administration of the Trust or at such other place designated by it, proper
records and books of account as required by law or good business practice. Such books or records will be available for inspection by the Administrative Agent upon reasonable notice during the normal
business hours of the Trustee.  

	7.27
	Method of Keeping Records

        Where
this Declaration of Trust requires the Trustee to cause a record to be kept, it may be kept in written form or by means of a mechanical, electronic or other device. 

	7.28
	Performance in Canada

        The
Trustee is and will continue at all times to be a resident of Canada for purposes of the Tax Act and will carry out its functions of managing the Trust in Canada and will
exercise the main powers and discretions in respect of its duties as trustee of the Trust in Canada. 

 
 

  ARTICLE 8    
    
    DELEGATION    
    

	8.1
	Delegation and Appointment of Administrative Agent

        The
Trustee will have full power and authority, exercisable in its sole discretion, to appoint an administrative agent of and an advisor to (who may be the same Person) the Trust
and to delegate all or any of the Trustee's responsibilities, powers, discretions and authorities under this Declaration of Trust. Pursuant to this power and authority, the Trustee hereby appoints the
Administrative Agent and
delegates to the Administrative Agent such of the responsibilities, powers, discretions and authorities imposed or conferred on the Trustee under this Declaration of Trust as are set out in the
Administration Agreement. Subject to the Administration Agreement, the Administrative Agent will have full power and authority, exercisable in its sole discretion, to appoint third parties and to
delegate all or any of its responsibilities, powers, discretions and authorities to third parties, at no additional cost to the Trust, where, in the discretion of the Administrative Agent, it would be
in the best interest of the Trust to do so provided that the Administrative Agent will remain responsible. The appointment of any Administrative Agent by the Trustee will not require the approval of
or ratification by the Unitholders or any other Person.  

	8.2
	Relationship between Trustee, Administrative Agent and Unitholders

        The
relationship between the Trustee and the Unitholders will be solely that which is set out in section 2.6. The Administrative Agent will be, and will act as, the agent of the
Trustee for all purposes set out in the Administration Agreement. In the performance of their respective responsibilities, obligations, powers, discretions and authorities, neither the Trustee nor the
Administrative Agent will be, nor will act as, the agent of the Unitholders or any of them. The relationship of the Unitholders among themselves will not be that of partners, joint venturers or
members of a society, company or association. 

18

 
 
 

  ARTICLE 9    
    
    THE ADMINISTRATIVE AGENT    
    

	9.1
	Term of Administration Agreement

        The
Administration Agreement has an initial term of 10 years and will be automatically renewed each year afterwards subject to the rights of the Administrative Agent and the
Trustee set forth therein.  

	9.2
	Appointment of Successor to Administrative Agent

        If
the Administrative Agent is removed pursuant to the terms of the Administration Agreement, the Trustee will promptly appoint a successor administrative agent that is a resident of
Canada under the Tax Act to carry out the activities of the Administrative Agent. No such removal will become effective until a successor Administrative Agent has assumed the responsibilities
and obligations of the Administrative Agent under the Administration Agreement.  

	9.3
	Payment of Remuneration and Expenses

        The
fees and remuneration payable to the Administrative Agent with respect to the administration of the Trust, and the amounts for which the Administrative Agent is entitled to be
reimbursed or indemnified, will be as set out in the Administration Agreement. The Administrative Agent will be responsible for all expenses incurred by it, other than those for which it is entitled
to be reimbursed under the Administration Agreement and those payable or to be reimbursed out of the Trust Assets pursuant to this Declaration of Trust.  

	9.4
	Limitation of Liability

        The
Administrative Agent, its directors, officers, agents, representatives and employees will not be liable to the Trust or to any Unitholder for any insufficiency of income from, or any
depreciation in the value of, any investments in or on which any of the money of or belonging to the Trust is invested, or by virtue of the acquisition, retention or disposition of any such
investments, or for any loss or damage arising out of the act or omission of any Person with or by whom or in whose name any such investments are deposited or held, or for any loss or damage
occasioned by any error in judgment on the part of the Administrative Agent with respect to such investments, or for any other loss or damage to the Trust Assets which may occur during, or in the
course of, the performance of its obligations, responsibilities, powers, discretions or authorities under this Declaration of Trust or the Administration Agreement with respect to such investments,
unless the particular loss, damage or expense is attributable to the gross negligence, wilful misconduct, dishonesty, bad faith or fraud of the Administrative Agent in the performance of such
obligations, responsibilities, powers, discretions or
authorities under this Declaration of Trust or the Administration Agreement or to the Administrative Agent's failure to perform such obligations, responsibilities, powers, discretions or authorities.
In performing all other obligations, responsibilities, powers, discretions or authorities under this Declaration of Trust and the Administration Agreement, the Administrative Agent will act in
accordance with the standard of care set out in section 2.16 of the Administration Agreement.  

	9.5
	Indemnification of Administrative Agent

	(a)
	Except
for costs, charges, expenses or liabilities for which the Administrative Agent's liability would not be limited by section 9.4 or the
Administration Agreement, and subject to subsection (b), the Trust will indemnify and hold harmless the Administrative Agent and its directors, officers, employees, agents and representatives
in respect of:

	(i)
	any
liability and all costs, charges and expenses sustained or incurred in respect of any action, suit or proceeding that is or is proposed to be brought or
commenced against the Administrative Agent or any such director, officer, agent, representative or employee, as the case may be, for or in respect of anything done or permitted to be done in respect
of 

19

 

the
execution of the obligations, responsibilities, powers, discretions and authorities of the Administrative Agent under this Declaration of Trust or the Administration Agreement; and 

	(ii)
	all
other costs, charges, taxes, penalties and interest in respect of unpaid taxes and all other expenses and liabilities sustained or incurred by the
Administrative Agent in respect of the administration or termination of the Trust.

	(b)
	The
Administrative Agent and its directors, officers, agents, representatives or employees will not be entitled to satisfy any right to indemnification or
reimbursement under this Declaration of Trust, including this section, or otherwise existing under law, except out of the Trust Assets, and neither the Trustee, in its personal capacity, nor any
Unitholder will be personally liable with respect to any claim for such indemnification or reimbursement, and in no event will this indemnity apply to expenses for which the Administrative Agent is
responsible under the Administration Agreement.

 

	9.6
	Administrative Agent's Lien

        Subject
to section 7.11, the Administrative Agent will have a charge and lien on the Trust Assets to enforce payment of all amounts to which it is entitled under this Declaration
of Trust or the Administration Agreement and to enforce or satisfy its right to indemnification under section 9.5 or under the Administration Agreement. Any such amounts will be payable
first out of the income of the Trust and, to the extent the income is insufficient, out of the capital of the Trust. 

20

 

 
 

  ARTICLE 10    
    
    OBLIGATIONS AND POWERS OF THE TRUSTEE    
    

	10.1
	General

        Subject
to section 8.1, the Trustee will have the exclusive responsibility, power, discretion and authority to manage and administer the Trust Assets in accordance with this
Declaration of Trust.  

	10.2
	Powers of the Trustee

        Subject
only to any express limitations on its powers and its right to delegate such powers in this Declaration of Trust, the Trustee, without the necessity of authorization by, and free
from any power of control on the part of Unitholders, will have all of the powers of a natural person, including full, absolute and exclusive power, control and authority exercisable in its sole
discretion over the Trust
Assets and over the activities and affairs of the Trust, to the same extent as if the Trustee were the sole beneficial owner of the Trust Assets. By way of supplement to the provisions of any
applicable law for the time being relating to trustees and in addition to any other provision of this Declaration of Trust for the relief of the Trustee, it is expressly declared that, except as
otherwise provided in this Declaration of Trust and without limiting the foregoing, the Trustee will have the power: 

	(a)
	to
employ and contract with, for and on behalf of the Trust, managers, investment advisers, brokers, underwriters, agents, bankers, chartered accountants,
legal counsel, notaries, officers, servants and other experts and advisors, that the Trustee in its sole discretion may determine to be necessary or advisable for the proper discharge of its duties
under this Declaration of Trust;

	(b)
	to
pay reasonable remuneration for all services performed for the Trust without taxation of any costs or fees of legal counsel, solicitor
or attorney;

	(c)
	to
execute and deliver any Clearing Agency Agreement;

	(d)
	to
invest and reinvest any money from time to time forming part of the Trust Assets, even though any such investments may not be securities, property,
assets, investments or instruments in which trustees are by law authorized to invest trust assets or are securities or instruments of the Trustee or direct or indirect Affiliates of the Trustee, to
the extent that the Trustee will have the same full and unrestricted powers of investing and reinvesting in securities, property, assets, investments and instruments in all respects as if the Trustee
were the beneficial owner, and for greater certainty, in so doing the Trustee is not restricted to, or required to consider, any specific investment criteria (whether statutory or otherwise), nor will
the Trustee be required to diversify the investment of such assets;

	(e)
	to
enter into leases, contracts, obligations and other agreements for a term extending beyond the term of office of the Trustee or beyond the possible
termination of the Trust or for a lesser term;

	(f)
	to
deposit funds of the Trust in banks, trust companies and other depositories (including in the Trustee and direct or indirect Affiliates of the Trustee),
whether or not the deposits are interest-bearing, the funds to be subject to withdrawal on such terms and in such manner and by such Persons as the Trustee may determine;

	(g)
	to
possess and exercise all the rights, powers and privileges appertaining to the ownership of or interest in any of the Trust Assets, including
(1) the right to vote or give any consent, request or notice or waive any notice, either in person or by proxy or power of attorney, with or without power of substitution, given to one or more
Persons, which proxies and powers of attorney may be for meetings or action generally or for any particular meeting or action, and may include the exercise of discretionary power, (2) the right
to exercise any conversion 

21

 

privilege,
subscription right, warrant or other right or option available in connection with any property of the Trust created hereunder at any time held by it and to make any payments incidental
thereto, (3) the right to consent to, or otherwise participate in or dissent from, the reorganization, consolidation, amalgamation, merger or readjustment of the finances of any Person, any of
the securities of which may at any time be held by it or to the sale, mortgage or lease of the property of any such Person and (4) to do any act with reference to the foregoing, including the
delegation of discretionary powers, the exercise of options, the making of agreements or subscriptions and the payment of expenses, assessments or subscriptions which it may consider necessary or
advisable in connection therewith;  

	(h)
	to
collect, sue for and receive all amounts of money due to the Trust; to initiate, intervene in, prosecute, join, defend, compromise, abandon or adjust, by
legal proceedings, arbitration or otherwise, any actions, suits, proceedings, disputes, claims or demands relating to the Trust, the Trust Assets or the activities and affairs of the Trust; to enter
into agreements therefor, whether or not any suit is commenced or claim accrued or asserted; and, in advance of any controversy, to enter into agreements regarding the arbitration, adjudication or
settlement of any such controversy;

	(i)
	to
renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Trust created under this Declaration
of Trust;

	(j)
	to
prescribe any instrument, certificate or notice provided for or contemplated by this Declaration of Trust; to make, adopt, amend or repeal regulations
relating to the activities of the Trust, the conduct of its affairs and the rights or powers of the Trustee and of the Unitholders not inconsistent with law or with this Declaration of Trust; and to
make any decisions, designations or determinations not contrary to this Declaration of Trust which it may determine are necessary or desirable in interpreting, applying or administering this
Declaration of Trust or in administering, managing or operating the Trust (including the Trust Assets) and any regulations, decisions, designations or determinations so made will be conclusive and
binding on all Persons including Unitholders affected thereby;

	(k)
	to
borrow, raise funds (including by way of issuance of bankers acceptances) or incur indebtedness on behalf of the Trust from any financial institution,
including the Trustee or the Administrative Agent, or any other Person and to provide a security interest to that financial institution or other Person in the Trust Assets to secure such borrowings
or obligations;

	(l)
	to
redeem, purchase for cancellation and exchange Trust Notes as contemplated in a Trust Indenture;

	(m)
	to
pay the principal, interest, the redemption price, if any, and any other amounts due on the Trust Notes as contemplated in a Trust Indenture;

	(n)
	to
determine the Net Distributable Funds as contemplated in section 5.1 and the Income of the Trust as contemplated in section 5.3;

	(o)
	to
apply for and arrange for the listing and posting of any securities on The Toronto Stock Exchange, the New York Stock Exchange or such other
exchange or market as the Trustee, in its sole discretion, may determine to be in the best interests of the Trust;

	(p)
	to
sign any registration statement, prospectus or similar or related document offering the Trust Notes for sale, issue the Trust Notes required to be issued
pursuant to any offering of such securities, issue Units to TCPL or its Affiliates, issue any other securities from time to time and obtain a rating or ratings in respect of any securities of the
Trust from any rating agency or agencies that the Trustee, in its sole discretion, may determine; 

22

 

	(q)
	to
apply any funds from time to time forming all or part of the capital of the Trust Assets to the purchase from time to time of any investments from, or
issued by, any Person, including any of the Unitholders, as the Trustee, in its sole judgment and discretion, determines will best fulfill the objectives of the Trust, at such price or prices as the
Trustee, in its sole judgment and discretion, determines appropriate in the circumstances, whether such funds represent amounts paid by Unitholders on any subscription for Units, Noteholders or any
subscription for Trust Notes or amounts representing the proceeds of the sale of investments;

	(r)
	to
sell any investments forming all or part of the capital of the Trust Assets to any Person, including any of the Unitholders, as in the sole judgment and
discretion of the Trustee will best fulfill the objectives of the Trust, at such times and for such consideration as the Trustee in its sole judgment and discretion deems to be appropriate in the
circumstances;

	(s)
	to
subscribe for and acquire debt obligations of TCPL or its Affiliates;

	(t)
	to
make, execute, acknowledge and deliver any and all deeds, agreements, waivers, releases, documents of transfer and any and all other documents or
instruments in writing necessary or proper for the accomplishment of any of the powers granted under this Declaration of Trust;

	(u)
	to
exercise any rights, privileges, voting rights, options or authorities attached to or available in connection with any investments at any time forming
part of the Trust Assets, and to make any payments incidental thereto;

	(v)
	to
register in the name of the Trust or any nominee of the Trustee or in any other name any investments or other property comprising the Trust Assets with
or without the addition of words indicating that they are held in a fiduciary capacity and to deposit any investments or other property or the certificates or documents of title thereto with such
nominee at any place or places in Alberta, Ontario or in any other jurisdiction as the Trustee or such nominee, in its sole discretion, may determine;

	(w)
	to
pay out of the Trust Assets or from borrowings all reasonable expenses of the Trust;

	(x)
	to
determine all questions and matters of doubt which may arise in the course of the management, administration or distribution of the Trust Assets or Net
Distributable Funds or on the termination of the Trust in accordance with Article 14;

	(y)
	to
take any other action or to enter into any covenant or agreement that, in the sole judgment of the Trustee, is necessary, expedient or desirable for the
protection of the Trust Assets or otherwise for the protection or enhancement of the interests of the Unitholders;

	(z)
	with
respect to the Trust Notes, to enter into and, if entered into, terminate arrangements with any Clearing Agency for use of its depository, clearing
and/or book-entry system;

	(aa)
	to
enter into any arrangements or transactions with any Person, including a Unitholder or any Affiliate of a Unitholder, to manage risks arising from any
funding mismatch so as to reduce the likelihood that a decline in the value of any investments will have an adverse impact on the ability of the Trust to pay the principal, interest, redemption price,
if any, and any other amount payable under the terms of the Trust Notes;

	(bb)
	to
enforce any obligation of the Unitholders to pay any instalments from time to time in respect of the Units in accordance with the Subscription
Agreements as the Trustee, in its sole discretion, determines necessary or expedient;

	(cc)
	to
indemnify or enter into agreements with respect to indemnification with any Person with whom the Trust deals to such extent as the Trustee, in its sole
discretion, determines necessary or desirable; 

23

 

	(dd)
	to
prepare and file or issue, as applicable, disclosure documents of the Trust and any other documents, applications for relief, press releases and reports
as may be required under applicable securities laws and rules issued by securities authorities;

	(ee)
	to
enter into and perform its obligations (including taking any action it is entitled to take) and enforce the obligations of others under any agreement or
instrument to which the Trust is a party, including each of the following:

	(i)
	this
Declaration of Trust;

	(ii)
	the
Administration Agreement;

	(iii)
	the
Credit Agreements;

	(iv)
	the
TCPL Sub Note Purchase Agreements;

	(v)
	any
Trust Indenture;

	(vi)
	the
Subscription Agreements;

	(vii)
	the
Assignment and Set-Off Agreements;

	(viii)
	the
Share Exchange Agreements; and

	(ix)
	any
underwriting, agency, purchase or similar agreements in relation to the Trust Notes;

	(ff)
	make
elections and determinations as the Trustee considers reasonable and appropriate pursuant to or as contemplated by the Tax Act or equivalent
provincial legislation in order to facilitate the application of losses, deductions and credits in respect of Trust Assets and to prepare and file tax returns in respect thereof;

	(gg)
	to
do all other such acts and things as are incidental to the foregoing; and to exercise all powers which are necessary or useful to carry on the
activities of the Trust, to promote the purposes for which the Trust is formed and to carry out the provisions of this Declaration of Trust. 

        The
enumeration of any specific power or authority in this section will not be construed as limiting the general power or authority, or any other specific power or authority, conferred
on the Trustee in this Declaration of Trust. Every discretion or power conferred on the Trustee will be an absolute and uncontrolled discretion or power.  

	10.3
	Discretion is Absolute

        Except
as is otherwise provided in this Declaration of Trust, the Trustee, as regards all the trusts, powers, authorities and discretions vested in it, will have absolute and
uncontrolled discretion as to the exercise of those trusts, powers, authorities and discretions, whether in relation to the manner of or as to the mode of and time for the exercise of those trusts,
powers, authorities and discretions.  

	10.4
	Reliance on Opinions or Advice

        The
Trustee may act and rely on the opinion or advice of or information obtained from any investment adviser, legal counsel, chartered accountant or other expert or advisor, whether
obtained by the Trustee or otherwise, that the Trustee in its sole discretion may determine to be necessary or advisable for the proper discharge of its duties under this Declaration of Trust, but
will not be bound to act upon such opinion or advice, provided the Trustee has acted in its capacity as Trustee in accordance with any applicable standard of care. 

24

 
	10.5
	Banking Arrangements

        The
banking business of the Trust may be transacted with any one or more chartered banks or trust companies in Canada or one or more other banks or financial institutions in the
United States or their respective Affiliates, including Affiliates of the Trustee. All such banking business will be transacted by any one or more officers of the Trustee or any other Persons
(including the Administrative Agent) as the Trustee or the Administrative Agent may designate, appoint or authorize from time to time and will include but not be
limited to: 

	(a)
	the
execution of account operating documents;

	(b)
	the
operation of the accounts of the Trust;

	(c)
	the
making, signing, drawing, accepting, endorsing, negotiating, lodging, depositing or transferring of any cheques, promissory notes, drafts, acceptances,
bills of exchange and orders for the payment of money on behalf of the Trust;

	(d)
	the
giving of receipts for and orders relating to any property of the Trust;

	(e)
	the
execution of any agreement relating to any such banking business and defining the rights and powers of the parties to that agreement; and

	(f)
	the
authorizing of any officer of such financial institution to do any act or thing on the Trustee's behalf to facilitate such banking business.

 

	10.6
	Purchase of Trust Notes

        The
Trustee may acquire and hold Trust Notes both in its own capacity (other than as Trustee) and its fiduciary capacity.  

	10.7
	Defect in Appointment

        Despite
anything to the contrary in this Declaration of Trust, no action taken by the Trustee will be invalid by reason only of any defect that is discovered in its appointment after the
action has been taken. 

 
 

  ARTICLE 11    
    
    PAYMENT ARRANGEMENTS    
    

	11.1
	Payments to Unitholders

        Except
as otherwise provided in this Declaration of Trust, any payment required to be made to a Unitholder will be payable in United States or Canadian dollars by cheque, bank
draft, wire payment or electronic funds transfer to the order of the registered Unitholder and may be mailed by ordinary mail to the last address appearing on the books of the Trust, but may also be
payable in such other manner as the Unitholder has designated to the Trust and the Trust has accepted. In the case of joint Unitholders, any payment required to be made to a Unitholder will be deemed
to be required to be made to such Unitholders jointly and will be payable by cheque, bank draft, wire payment or electronic funds transfer but may also be payable in such other manner as the joint
Unitholders or any one of the joint Unitholders has designated to the Trust and the Trust has accepted. For greater certainty, a Unitholder or any one of the joint Unitholders may designate and the
Trust may accept that any payment required to be made under this Declaration of Trust will be made by deposit to an account of such Unitholder or to a joint account of such Unitholder and any other
Person or in the case of joint Unitholders to an account of joint Unitholders or to an account of any one of the joint Unitholders. A cheque or bank draft will be made payable to the order of all the
joint Unitholders, and if more than one address appears on the register in respect of such joint holdings, the cheque or bank draft will be mailed to the first address so appearing. The mailing of the
cheque or bank draft or payment in other 

25

 

acceptable
manner will satisfy and discharge all liability of the Trustee and the Trust for the amount so required to be paid (plus any tax required to be deducted or withheld) unless the cheque or
bank draft is not paid in full on presentation at Calgary, Alberta or at any other place where by its terms it is payable. If any such cheque or bank draft is not received by the Person to whom it was
mailed, the Trustee, on proof of non-receipt and on satisfactory indemnity being given to it and to the Trust, will issue to the Person a replacement cheque or bank draft for a like amount. 

	11.2
	Withholding Tax

        The
Trust may deduct or withhold from any payment, distribution or delivery to any Unitholder amounts required or permitted by law to be deducted or withheld from such Unitholder's
payment, distribution or delivery and will remit such amounts to the relevant tax authority in the manner and within the time and otherwise as required by law or administrative practice. 

	11.3
	Receipt by Unitholder

        The
receipt by the Unitholder of any payment mailed or paid in another acceptable manner in accordance with section 11.1, or withholding and remittance of amounts in accordance
with section 11.2, will be a valid and binding discharge to the Trust and to the Trustee for any payment made in respect of the Units of which such Person is the Holder and if several Persons
are registered as joint Unitholders or, in consequence of the death or bankruptcy of a Unitholder, one or several Persons are entitled so to be registered, receipt of payment by any one of them will
be a valid and binding discharge to the Trust and to the Trustee for any such payment. 

 
 

  ARTICLE 12    
    
    AUDITORS OR ACCOUNTANTS    
    

	12.1
	Auditors or Accountants

        Until
changed by the Trustee at the direction of the Unitholders, the auditors (if an auditor is required) or accountants for the Trust will be KPMG LLP, Chartered
Accountants, Licensed Public Accountants, Calgary, Alberta.  

	12.2
	Auditors' or Accountants' Remuneration

        The
Trustee, in consultation with the Administrative Agent, will fix the auditors' or accountants' remuneration from time to time and charge it as an expense to the Trust. 

	12.3
	Financial Reporting to Unitholders and Noteholders

        Unless
exempted under applicable law or by applicable securities authorities, the Trust will forward to each Unitholder and Noteholder the financial statements and other additional
financial information required by any applicable statute or any applicable rules issued by securities authorities.  

	12.4
	Fiscal Year

        The
Trustee, in its discretion, may change the fiscal year and Taxation Year of the Trust. Until changed, the fiscal year and Taxation Year of the Trust will end at midnight on
December 31 in each year.  

	12.5
	Tax Returns, etc.

        The
Trust will duly prepare and file, or will cause to be duly prepared and filed, on a timely basis and in prescribed form all tax returns, declarations, reports, information returns
and statements with tax authorities and will duly prepare and deliver, or cause to be duly prepared and delivered, all information slips to Unitholders and holders of debt issued by the Trust that it
is required by law to 

26

 

prepare
and file or deliver, and pay at the time and in the manner required all taxes or instalments it is required to pay to the relevant tax authorities. 

 
 

  ARTICLE 13    
    
    AMENDMENTS    
    

	13.1
	Automatic Amendment

        On
the Trustee ceasing to be the Trustee of the Trust, this Declaration of Trust will be automatically amended to delete any reference to the name of the trustee so ceasing to be the
trustee of the Trust and to substitute the name of the successor trustee of the Trust.  

	13.2
	Amendments by Unitholders

        Subject
to section 13.3, the Unitholders, by a written resolution of Holders of all Units, may authorize and direct the Trustee to execute an instrument supplemental to this
Declaration of Trust to amend any term of this Declaration of Trust or to take or omit to take any action. Without limiting the foregoing, the Unitholders, by written resolution may approve,
(i) subject to section 14.1, the termination of the Trust, (ii) the removal and replacement of the Trustee as provided in section 7.3, and (iii) the removal and
replacement of the Administrative Agent as provided in the Administration Agreement.  

	13.3
	Amendments by Trustee

        The
Trustee, without the consent of Unitholders, may amend this Declaration of Trust for the purpose of: 

	(a)
	making
any additions to, deletions from or alterations of the terms of this Declaration of Trust or the Units, which, in the opinion of the Trustee, relying
upon the opinion of Counsel, will not be prejudicial to the interests of the Holders or, in the opinion of counsel to the Trustee, are necessary or advisable in order to incorporate, reflect or comply
with any legislation the provisions of which apply to the Trust, the Trustee or TCPL, or any of their respective Affiliates or this Declaration of Trust;

	(b)
	making
any changes as may be required, in the opinion of counsel to the Trustee, to conform with applicable law from time to time or that are necessary or
desirable for the Trust to qualify for a particular status under, or as a result of change in, tax or other laws or the interpretation thereof; and

	(c)
	for
any other purposes not inconsistent with the terms of this Declaration of Trust, including correcting or rectifying any ambiguity, defective provisions,
errors, omissions or inconsistencies, provided that, in the opinion of counsel to the Trustee, the rights of the Trustee and the Unitholders will not be prejudiced by that amendment.

 

	13.4
	Supplemental Declarations of Trust

        The
Trustee is authorized to execute any supplement to this Declaration of Trust to give effect to any amendments to this Declaration of Trust made pursuant to this Article. 

 
 

  ARTICLE 14    
    
    TERMINATION    
    

	14.1
	Termination

        If
any Trust Notes are outstanding and not held by any Person other than TCPL or any of its Affiliates, or if no Trust Notes are outstanding, with the approval of the Unitholders, the
Trustee on a 

27

 

date
specified by it (the "Termination Date") may terminate the Trust. The Trustee may not terminate the Trust if any Trust Notes are outstanding
and held by any Person other than TCPL or any of its Affiliates. No approval of the Unitholders to the termination will be effective unless TCPL has satisfied the Trustee that the Trust has sufficient
funds to pay to holders of Trust Notes the redemption price thereof and other amounts owing thereunder.  

	14.2
	Procedure on Termination

        The
Trust will give notice, either before or after the Termination Date, of the winding-up of the affairs and business of the Trust and such notice will designate the time or times on
which Unitholders may surrender their Units for cancellation and the date at which the register of Units will be closed.  

	14.3
	Provisions of the Trustee on Termination

        After
the Termination Date, the Trustee will not carry on any activities in relation to the Trust except for the purpose of winding-up the affairs and business of the Trust and, for this
purpose, the Trustee will continue to be vested with and may exercise all or any of the powers conferred on the Trustee under this Declaration of Trust.  

	14.4
	Distribution of Trust Assets

        After
paying, retiring or discharging or making provision for the payment, retirement or discharge of all known liabilities and obligations of the Trust, including the indebtedness and
obligations of the Trust under the Trust Notes, any Trust Indenture and the Credit Agreements and any liability owed to the Trustee under this Declaration of Trust or to the Administrative Agent under
the Administration Agreement, and providing for indemnity against any other outstanding liabilities and obligations, the Trustee will distribute the net Trust Assets to Unitholders, in the manner
described in section 14.5. The Trustee, in its sole discretion, may determine the manner in which distributions will be made, including the time or times of any distribution and whether it is
made in cash or in kind or partly in both. In the case of the final distribution of Trust Assets, Unitholders must surrender certificates representing their Units and will not be entitled to any final
distribution except against delivery to the Trustee of such certificates and such form of releases as the Trustee, in its absolute discretion, may require. After all liabilities and obligations of the
Trust have been paid, retired, discharged or satisfied to the satisfaction of the Trustee in its sole discretion, the Trust will be deemed to be terminated.  

	14.5
	Units Rank Pari Passu

        Unitholders
will rank pari passu in the distribution of the property of the Trust after the discharge of claims of creditors (if any) in the event of the termination of
the Trust.  

	14.6
	Determination of Value

        In
addition to the powers of the Trustee specified in section 10.2, the value of the net Trust Assets for the purpose of any distribution to Unitholders on the termination of the
Trust will be the fair value of
those Trust Assets as determined in such manner as the Trustee, in its sole discretion, may determine. In so doing, the Trustee will be entitled to rely on the valuations, fairness opinions, price
quotations or other similar professional opinions as to fair value, of the Administrative Agent or any other Person selected by the Trustee.  

	14.7
	Further Notice to Unitholders

        If
all Unitholders do not surrender their Units for cancellation after the time specified in the notice referred to in section 14.2, the Trust will give further notice to the
remaining Unitholders to surrender their Units for cancellation and, if within 30 days after the further notice all the Units have not been surrendered for cancellation, such remaining Units
will be deemed to be cancelled without prejudice to the rights of the Holders of such Units to receive their entitlement to the amounts referred to in section 14.4 and the Trust may
either take appropriate steps, or appoint an agent to take 

28

 

appropriate
steps, to contact such Unitholders (deducting all expenses incurred from the amounts to which such Unitholders are entitled) or, in the discretion of the Trustee, may pay such amounts
into court.  

	14.8
	Responsibility of Trustee During Winding-Up

        The
Trust will be under no obligation to invest the proceeds of any sale of investments or other assets or cash forming part of the Trust Assets after the date of notice referred to in
section 14.2 and, after such sale, the sole obligation of the Trustee under this Declaration of Trust will be to hold such proceeds in trust for distribution under section 14.4. 

	14.9
	Survival

        Notwithstanding
any other provision of this Declaration of Trust, sections 7.10 and 9.5 will survive the termination of the Trust and any removal or resignation of the
Trustee or the Administrative Agent, as the case may be. 

 
 

  ARTICLE 15    
    
    NOTICES    
    

	15.1
	Notice to Unitholders

        Any
notice, communication or document required or permitted to be given under this Declaration of Trust to Unitholders or with respect to the Units will be valid and effective if that
notice, communication or document is delivered personally to, or, subject to section 15.3, sent by first class mail, postage prepaid, addressed to Unitholders at their last addresses appearing
in the register or to any electronic mailing address provided in writing to the Trust by a Unitholder. Any notice, communication or document so delivered or sent by mail will be deemed to have been
given on the day on which it is delivered or mailed, as the case may be. Any accidental error, omission or failure in giving or in delivering or mailing any such notice, communication or document or
the non-receipt of any such notice, communication or document by any one or more Unitholders will not invalidate or otherwise prejudicially affect any action or proceeding founded on that notice,
communication or document.  

	15.2
	Notice to the Trustee

        Any
notice, communication or document to be given to the Trustee under this Declaration of Trust will be valid and effective if delivered personally to, or, subject to
section 15.3, sent by registered mail, postage prepaid, addressed to, the Trustee, Valiant Trust Company at 310, 606 4th St. S.W, Calgary, Alberta, T2P 1T1,
Attention: Senior Manager, Corporate Trust, with a copy to TransCanada PipeLines Limited, as Administrative Agent, at 450 – 1st Street S.W., Calgary,
Alberta, T2P 5H1, Attention: Corporate Secretary, Facsimile: (403) 920-2467. It will be deemed to have been given on the date of delivery or on the third Business Day after it has been
mailed, as the case may be. The Trustee may from time to time notify the Unitholders of a change of address, which, until changed by further
notice, will be the address of the Trustee for all purposes of this Declaration of Trust.  

	15.3
	Mail Service Interruption

        If
the Trust determines that mail service is or is threatened to be interrupted at the time when the Trustee is required or elects to give any notice, communication or document to the
Unitholders by first class mail, the Trust may give that notice, communication or document by means of publication in at least one newspaper of general circulation in Canada or in any other newspaper
or newspapers, and any notice, communication or document so published will be deemed to have been given by first class mail on the date on which publication first takes place. If by reason of any
actual or threatened interruption of mail service due to a strike, lock-out or otherwise any notice to be given to the Trust 

29

 

would
be unlikely to reach its destination in a timely manner, that notice will be valid and effective only if delivered personally in accordance with section 15.2. 

 
 

  ARTICLE 16    
    
    POWER TO CHANGE GOVERNING LAW    
    

	16.1
	General

        Notwithstanding
anything in this Declaration of Trust, the Trustee at any time and from time to time during the existence of the trust created by this Declaration of Trust, by supplement
to this Declaration of Trust, may declare that, from the date of such declaration, the Trust will take effect in accordance
with the law of some other province of Canada (not being a province under the law of which this Trust would not be irrevocable) and that the forum for the administration of the Trust will then
be the courts of that province. As from the date of such declaration, the law of the province will be the law applicable to the Trust and the courts of that province will be the forum for the
administration of the Trust but subject to the powers conferred by this section and until any further declaration is made under this section. The Trustee will not exercise its right under this section
without first taking advice as to the implications associated with the exercise of this right, including any tax implications. 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

30

 

        IN WITNESS WHEREOF, the Trustee has caused this Declaration of Trust to be executed by its duly authorized officers as of
September 16th, 2014. 

 

 

							
	 	 	 Valiant Trust Company as trustee of TRANSCANADA TRUST,

with no personal liability; liability limited to the Trust Assets
	
 	
 	

 	
 	

 	
 	

 
	 	 	 By:	 	/s/ DAN SANDER

 
	 	 	 	 	Name:	 	Dan Sander
	 	 	 	 	Title:	 	Director, Trust Services
	
 	
 	

 	
 	

 	
 	

 
	 	 	 By:	 	/s/ TARA BOUCHARD

 
	 	 	 	 	Name:	 	Tara Bouchard
	 	 	 	 	Title:	 	Senior Manager, Corporate Actions

 

 [Signature page to Declaration of Trust] 

 

 
 

  SCHEDULE A    
    

 CERTIFICATE NO. [    •    ]  

 NUMBER OF VOTING TRUST UNITS: [    •    ]  

 
 

  TRANSCANADA TRUST
  (a trust established under the laws of Ontario)
  
    VOTING TRUST UNITS—CERTIFICATE    
    

        THE VOTING TRUST UNITS TO WHICH THIS INSTRUMENT RELATES (i) ARE NOT "DEPOSITS" WITHIN THE MEANING OF THE CANADA DEPOSIT
INSURANCE CORPORATION ACT AND ARE NOT INSURED PURSUANT TO THAT ACT OR SIMILAR LEGISLATION AND (ii) DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED BY,
TRANSCANADA CORPORATION, TRANSCANADA PIPELINES LIMITED, VALIANT TRUST COMPANY, OR ANY OF THEIR RESPECTIVE AGENTS OR AFFILIATES. 

        This
Voting Trust Units certificate certifies that
                                         
                                is the registered holder (the "Registered
Holder") of the number of Voting Trust Units set forth above. 

        Each
of the Voting Trust Units evidenced by this certificate is one of a duly authorized issue of Voting Trust Units of TransCanada Trust
(the "Trust") designated as "Voting Trust Units" issued under a Declaration of Trust dated as of
September 16th, 2014 by Valiant Trust Company (the "Trustee"), as it may be amended, restated or supplemented from time to
time (the "Declaration of Trust"), the terms and conditions of which are incorporated in this certificate by reference, all to the same effect as
if the provisions of the Declaration of Trust were set forth in this certificate, to all of which provisions the Registered Holder of this certificate, by acceptance of this certificate, assents.
Reference is hereby made to the Declaration of Trust for a description of the rights, limitation of rights, obligations, duties and immunities under the Declaration of Trust of the Trust, the Trustee
and the Registered Holder. If there is any inconsistency between this certificate and the Declaration of Trust, the Declaration of Trust will prevail. All capitalized terms used in this certificate
without definition have the meanings given to them in the Declaration of Trust. 

        The
Registered Holder is entitled to distributions on Distribution Dates in the amounts and subject to the restrictions set out in the Declaration of Trust. The Registered Holder is also
entitled to a distribution from the Trust Assets in the manner set out in the Declaration of Trust on termination of the Trust. This certificate and all Voting Trust Units evidenced by this
certificate will be governed by and construed in accordance with the laws of Ontario and the laws of Canada applicable in Ontario. 

        The
obligations under this certificate are not binding on the Trustee except in its capacity as Trustee, nor will resort be had to the property of the Trustee except in its capacity as
Trustee, but the Trust Assets only will be bound. 

        Entry
of the transfer of the Voting Trust Units represented by this certificate may be made in the books of the Trust only on surrender of this certificate with a duly executed transfer
form endorsed on or delivered with it. 

        IN
WITNESS WHEREOF, Valiant Trust Company, in its capacity as Trustee of the Trust, has caused this Voting Trust Units certificate to be signed by its duly authorized officers. 

DATED: 

 

							
	 	 	 [Valiant Trust Company, in its capacity as Trustee of
 TRANSCANADA TRUST] [TransCanada PipeLines Limited, as administrative agent on behalf of TRANSCANADA TRUST]
	
 	
 	

 	
 	

 	
 	

 
	 	 	 By:	 	

 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 
	
 	
 	

 	
 	

 	
 	

 
	 	 	 By:	 	

 
	 	 	 	 	Name:	 	 
	 	 	 	 	Title:	 	 

 

 

 
 

  FORM OF TRANSFER    
    

Valiant
Trust Company

310, 606 4th St. S.W, Calgary, Alberta, T2P 1T1 

FOR
VALUE RECEIVED the undersigned hereby sells, assigns and transfers to 

(print name and address) 

the
Voting Trust Units of TransCanada Trust represented by this Voting Trust Units Certificate and hereby irrevocably constitutes and appoints
                                     as its
attorney with full power of substitution to transfer the said securities on the appropriate register of TransCanada Trust. 

DATED
this                          day of
                                    ,
20            .
 

 

			
	 
	 	

  (Signature of Transferor)
	 
	 	 

  (Name of Transferor)

 

 

QuickLinks

Exhibit 4.6

DECLARATION OF TRUST

ARTICLE 1 INTERPRETATION

ARTICLE 2 THE TRUST

ARTICLE 3 DESCRIPTION, CREATION AND ISSUE OF UNITS

ARTICLE 4 MISCELLANEOUS REDEMPTION AND EXCHANGE

ARTICLE 5 DISTRIBUTIONS TO UNITHOLDERS

ARTICLE 6 UNITHOLDERS

ARTICLE 7 THE TRUSTEE

ARTICLE 8 DELEGATION

ARTICLE 9 THE ADMINISTRATIVE AGENT

ARTICLE 10 OBLIGATIONS AND POWERS OF THE TRUSTEE

ARTICLE 11 PAYMENT ARRANGEMENTS

ARTICLE 12 AUDITORS OR ACCOUNTANTS

ARTICLE 13 AMENDMENTS

ARTICLE 14 TERMINATION

ARTICLE 15 NOTICES

ARTICLE 16 POWER TO CHANGE GOVERNING LAW

SCHEDULE A

TRANSCANADA TRUST (a trust established under the laws of Ontario) VOTING TRUST UNITS—CERTIFICATE

FORM OF TRANSFER

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