0001193125-13-357092.txt : 20130904 0001193125-13-357092.hdr.sgml : 20130904 20130904171532 ACCESSION NUMBER: 0001193125-13-357092 CONFORMED SUBMISSION TYPE: F-10/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20130904 DATE AS OF CHANGE: 20130904 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HYDRO ONE INC CENTRAL INDEX KEY: 0001114445 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: F-10/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-190657 FILM NUMBER: 131078568 BUSINESS ADDRESS: STREET 1: 483 BAY ST STREET 2: 10TH FL TORONTO CITY: ONTARIO CANADA STATE: A6 ZIP: M5G 2P5 F-10/A 1 d587664df10a.htm F-10/A F-10/A
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As filed with the Securities and Exchange Commission on September 4, 2013

Registration No. 333-190657

 

 

 

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to

FORM F-10

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

HYDRO ONE INC.

(Exact name of Registrant as specified in its charter)

 

 

 

Ontario, Canada   4911   Not Applicable

(Province or Other Jurisdiction

of Incorporation or Organization)

 

(Primary Standard Industrial Classification)

Code Number (if applicable))

  (I.R.S. Employer Identification Number
(if applicable))

483 Bay Street

North Tower, 15th Floor

Toronto Ontario M5G 2P5

Canada

(416) 345-6301

(Address and telephone number of the Registrant’s principal executive offices)

 

 

CT Corporation System

111 Eighth Avenue, New York, NY 10011, (212) 894-8440

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

 

 

Copies to:

 

Joseph Agostino

General Counsel

483 Bay Street
North Tower, 15th Floor
Toronto Ontario M5G 2P5
Canada

 

Robert C. Lando, Esq.

Osler, Hoskin & Harcourt LLP

620 Eighth Avenue – 36th Floor

New York, New York 10018

Approximate date of commencement of proposed sale of the securities to the public:

From time to time after the effective date of this Registration Statement.

 

 

Province of Ontario, Canada

(Principal jurisdiction regulating this offering (if applicable))

 

 

It is proposed that this filing shall become effective (check appropriate box):

 

A.  ¨ Upon the filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada)

 

B.  x At some future date (check the appropriate box below):

 

  1.  ¨ Pursuant to Rule 467(b) on (date) at (time) (designate a time not sooner than 7 calendar days after filing)

 

  2.  ¨ Pursuant to Rule 467(b) on (date) at (time) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (date).

 

  3.  x Pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority or the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.

 

  4.  ¨ After the filing of the next amendment to this Form (if preliminary material is being filed).

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction’s shelf prospectus offering procedures, check the following box.  x

 

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registration statement shall become effective as provided in Rule 467 under the Securities Act of 1933 or on such date as the Commission, acting pursuant to Section 8 (a) of the Act, may determine.

 

 

 


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PART 1 – INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS


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No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.

This short form prospectus has been filed under legislation in each of the provinces of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities. All shelf information omitted from this shelf prospectus will be contained in one or more shelf prospectus supplements that will be delivered to purchasers together with the base shelf prospectus.

This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. See “Plan of Distribution”.

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Each shelf prospectus supplement will be incorporated by reference into this shelf prospectus for the purposes of securities legislation as of the date of the shelf prospectus supplement and only for the purposes of the distribution of the securities to which the shelf prospectus supplement pertains. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Secretary of Hydro One Inc., 483 Bay Street, North Tower, 15th Floor, Toronto, Ontario, M5G 2P5, (416) 345-6044 and are also available electronically at www.sedar.com.

SHORT FORM BASE SHELF PROSPECTUS

 

New Issue   September 4, 2013

 

LOGO

HYDRO ONE INC.

$3,000,000,000

Medium Term Notes

(unsecured)

Hydro One Inc. (“our company,” “we” or “us”) may offer and issue from time to time medium term notes (the “Notes”) in an aggregate principal amount of up to $3.0 billion in Canadian currency (or the equivalent thereof in other currencies or currency units at the time of issue) during the twenty-five months from the date of issuance of the receipt for this short form prospectus.

The Notes will have a term to maturity of not less than one year and will be issuable in Canadian currency (or in other currencies or currency units) in fully registered definitive or global form, in which case the Notes will be exchangeable only under certain conditions for definitive Notes.

 

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Notes issued hereunder will be direct unsecured obligations of our company, will be issued under a trust indenture in any number of series or separate issues thereof, and will at their respective dates of issue rank pari passu with all other unsecured and unsubordinated Indebtedness (as defined below) of our company then outstanding, except as to any sinking fund which pertains exclusively to any particular Indebtedness of our company.

The specific variable terms of an offering of Notes (including the aggregate principal amount of the Notes being offered, the currency or currencies, the issue and delivery date, the form, the maturity date, the interest rate (either fixed or floating and, if floating, the manner of calculation thereof), the issue price, the interest payment date(s), any redemption or repayment provisions, any provisions entitling our company to extend the maturity date of the Notes, the name(s) of the dealer(s) offering the Notes, the commission payable to such dealer(s), the method of distribution and the net proceeds to our company) will be set forth in a prospectus supplement or pricing supplement which will accompany this short form prospectus. Unless otherwise indicated in a prospectus supplement or pricing supplement, the Notes will not be listed on any securities exchange.

This short form prospectus does not qualify the issuance of Notes: (i) entitling the holder to exchange or convert the Notes into other securities issued by our company or into securities issued by another entity; or (ii) in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to one or more underlying interests including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price or mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items. For greater certainty, however, this short form prospectus does qualify for issuance Notes in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to published rates of a central banking authority or one or more financial institutions, such as a prime rate or a bankers’ acceptance rate, or to recognized market benchmark interest rates, such as CDOR, LIBOR or EURIBOR. For purposes of applicable Canadian securities laws, this short form prospectus only qualifies the distribution of the Notes in each of the provinces of Canada.

We are permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare this short form prospectus in accordance with the disclosure requirements of Canada. Prospective investors should be aware that such requirements are different from those of the United States.

Prospective investors should be aware that the acquisition of the Notes may have tax consequences to them. Such consequences may not be described fully herein or in any prospectus supplement or pricing supplement. Prospective investors should review the tax disclosure contained in this short form prospectus, which may be amended or supplemented in any prospectus supplement or pricing supplement, and should consult with their tax advisors before purchasing the Notes.

The enforcement by investors of civil liabilities under the federal securities laws of the United States may be affected adversely by the fact that we are incorporated under the laws of the Province of Ontario, that all of our officers and directors are Canadian residents, that all of the experts named in the Registration Statement (as defined below) are Canadian residents and that substantially all of our assets and the assets of said persons may be located outside of the United States.

THE NOTES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE OR PROVINCIAL SECURITIES COMMISSION OR REGULATOR NOR HAS THE SEC OR ANY STATE OR PROVINCIAL SECURITIES COMMISSION OR REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Investing in the Notes involves risks. See the section entitled “Risk Factors” in this short form prospectus, which may be amended or supplemented in any prospectus supplement or pricing supplement.

Unless otherwise indicated in a prospectus supplement or pricing supplement, there is no market through which these securities may be sold and purchasers may not be able to resell securities purchased under this short form prospectus. This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity of the securities, and the extent of issuer regulation. See “Risk Factors”.

 

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Prospective investors should rely only on the information contained in or incorporated by reference into this short form prospectus and any prospectus supplement or pricing supplement. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted. Prospective investors should not assume that the information contained in this base shelf prospectus and any prospectus supplement or pricing supplement is accurate as of any date other than the date on the front of those documents.

 

 

RATES ON APPLICATION

 

 

The Notes may be offered severally by one or more of BMO Nesbitt Burns Inc., Casgrain & Company Limited, CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. pursuant to the dealer agreement referred to under the heading “Plan of Distribution” or such other dealers as may be selected from time to time by our company (the “Dealers”), in each case acting as agent of our company or as principal. Where the Notes are offered by the Dealer(s) as agent, the commissions payable in connection with sales of such Notes shall be agreed from time to time between our company and any such Dealers. Where the Notes are purchased by the Dealer(s) as principal, the Notes shall be purchased at such prices and with such commissions as may be agreed from time to time between our company and any such Dealer(s) for resale to the public at prices to be negotiated with each purchaser. Such resale prices may vary during the distribution period and as between purchasers. In each case, the commissions payable, if any, will be set forth in a prospectus supplement or pricing supplement that will accompany and be incorporated by reference in this short form prospectus. Each Dealer’s compensation will increase or decrease by the amount by which the aggregate price paid for Notes by purchasers exceeds or is less than the price paid by the Dealer, acting as principal, to our company. We may also offer the Notes directly to potential purchasers pursuant to applicable statutory exemptions at prices and upon terms negotiated between the purchaser and our company.

BMO Nesbitt Burns Inc., CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. are subsidiaries or affiliates of lenders (the “Lenders”) that have made an unsecured revolving credit facility available to our company (the “Credit Facility”). As of September 4, 2013, there is no outstanding indebtedness under the Credit Facility. However, if and when there is outstanding indebtedness to any of the Lenders under the Credit Facility or under any future credit facility with one or more of the Lenders, our company may be considered a connected issuer of those Dealers who are affiliates of such Lenders for purposes of securities laws in Canada. See “Plan of Distribution”.

The offering of Notes is subject to the approval of certain legal matters on behalf of our company by Osler, Hoskin & Harcourt LLP in respect of both Canadian and United States legal matters and on behalf of the Dealers by Blake, Cassels & Graydon LLP in respect of Canadian legal matters and by Skadden, Arps, Slate, Meagher & Flom LLP in respect of United States legal matters.

Our company’s head and registered office is located at 483 Bay Street, North Tower, 15th Floor, Toronto, Ontario, M5G 2P5.

Our consolidated financial statements incorporated by reference in this short form prospectus have been prepared in accordance with US generally accepted accounting principles. Unless otherwise specified or the context otherwise requires, all references herein to currency are references to Canadian dollars.

 

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TABLE OF CONTENTS

 

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

     4   

DOCUMENTS INCORPORATED BY REFERENCE

     4   

AVAILABLE INFORMATION

     5   

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

     6   

ENFORCEABILITY OF CIVIL LIABILITIES

     6   

OUR COMPANY

     7   

EARNINGS COVERAGE RATIOS

     7   

DESCRIPTION OF THE NOTES

     8   

PLAN OF DISTRIBUTION

     19   

USE OF PROCEEDS

     21   

PRIOR SALES

     21   

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     21   

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     24   

RISK FACTORS

     27   

LEGAL MATTERS

     29   

AUDITORS, REGISTRAR AND TRANSFER AGENT

     29   

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

The following documents are being filed with the SEC as part of the Registration Statement (as defined below): (i) the documents referred to under the heading “Documents Incorporated by Reference”; (ii) the consent of KPMG LLP; (iii) the Trust Indenture described under the heading “Description of the Notes”, including any applicable supplements thereto; and (iv) the powers of attorney from our directors and officers.

DOCUMENTS INCORPORATED BY REFERENCE

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions and similar regulatory authorities in Canada and with the SEC.

The following documents, which have been filed with the securities commission or similar regulatory authority in each of the provinces of Canada, and filed with or furnished to the SEC, are specifically incorporated by reference in this short form prospectus:

 

  (a) the annual information form of our company dated March 28, 2013;

 

  (b) the comparative audited consolidated financial statements of our company, and the notes thereto, as at and for the fiscal years ended December 31, 2012 and 2011, together with the report of the auditors thereon dated February 14, 2013;

 

  (c) management’s discussion and analysis of financial results (“MD&A”) for the year ended December 31, 2012; and

 

  (d) the comparative unaudited consolidated financial statements of our company, and the notes thereto, as at June 30, 2013 and for the three and six month periods ended June 30, 2013 and June 30, 2012 together with MD&A for those periods.

Updated earnings coverage ratios, as required, will be filed quarterly with the appropriate securities regulatory authorities either as prospectus supplements or as part of our company’s unaudited interim and audited annual consolidated financial statements and will be deemed to be incorporated by reference into this short form prospectus for the purposes of the offering of Notes hereunder.

 

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Any documents of the type required by National Instrument 44-101 – Short Form Prospectus Distributions to be incorporated by reference in a short form prospectus, including documents of the types referred to in paragraphs (a) through (d) above, and any material change reports (except confidential material change reports) and business acquisition reports filed by our company with the securities regulatory authorities in Canada since the end of the financial year in respect of which our then current annual information form is filed, shall be deemed to be incorporated by reference into this short form prospectus. Upon a new annual information form and new annual financial statements and related MD&A being filed by our company with, and where required, accepted by, the applicable securities regulatory authorities during the currency of this short form prospectus, the previous annual information form, previous annual financial statements and related MD&A, and all previous interim financial statements and related MD&A filed prior to the commencement of our company’s financial year in which the new annual information form, new annual financial statements and related MD&A are filed shall be deemed no longer to be incorporated into this short form prospectus for purposes of future offers and sales of Notes hereunder. To the extent that any document or information incorporated by reference into this short form prospectus is included in a report that is filed with or furnished to the SEC, such document or information shall be deemed to be incorporated by reference as an exhibit to the Registration Statement (as defined below). In addition, any other report filed with or furnished to the SEC by our company shall be deemed to be incorporated by reference as an exhibit to the Registration Statement (as defined below), if and to the extent that such report expressly so provides.

A pricing supplement or prospectus supplement containing the specific variable terms for an issue of Notes will be delivered to purchasers of such Notes together with this short form prospectus and will be deemed to be incorporated by reference into this short form prospectus as of the date of the pricing supplement or prospectus supplement, solely for the purposes of the Notes issued under that pricing supplement or prospectus supplement. Any template version of marketing materials for an issue of Notes filed by our company with the securities regulatory authorities in Canada after the date of the pricing supplement or prospectus supplement in respect of such issue of Notes and before the termination of the distribution of such Notes will be deemed to be incorporated by reference into that pricing supplement or prospectus supplement.

Any statement contained in this short form prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded and not incorporated by reference, for purposes of this short form prospectus, to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this short form prospectus, except as so modified or superseded.

AVAILABLE INFORMATION

This short form prospectus is part of a registration statement on Form F-10 relating to the Notes (the “Registration Statement”) that we have filed with the SEC under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”). This short form prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the SEC. United States investors should refer to the Registration Statement and the exhibits to the Registration Statement for further information with respect to us and the Notes. We will file annual and quarterly reports, material change reports and other documents with the securities commissions or similar regulatory authorities in each of the provinces of Canada and will file such documents with, or furnish such documents to, the SEC. Under a multi-jurisdictional disclosure system adopted by the United States and Canada, these reports and other documents (including financial statements) may be prepared in accordance with the disclosure requirements in Canada, which differ from those in the United States. Prospective investors may read and download any public document that we have filed with securities commissions or similar regulatory authorities in each of the provinces of Canada on the System for Electronic Document Analysis and Retrieval, which is commonly known by the acronym SEDAR, and which may be accessed at www.sedar.com. Prospective investors may read any document that we file with or furnish to the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C., 20549. Prospective investors may also obtain copies of the same documents from the SEC’s public reference room by paying a fee. Please call the SEC at 1-800-SEC-0330 or contact it at www.sec.gov for further information on the public reference room. Documents that we file with or furnish to the SEC will also be electronically available from the SEC’s Electronic Document Gathering and Retrieval System, which is commonly known by the acronym EDGAR, and which may be accessed at www.sec.gov, as well as from commercial document retrieval sources.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This short form prospectus, including the documents incorporated by reference herein, contains “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, forecasts and projections about the business of our company and the industry in which we operate and includes beliefs and assumptions made by the management of our company. Such information and statements include, but are not limited to, information and statements about the general development of our business, our strategy, future capital expenditures, and expectations regarding developments in the statutory and operating framework for electricity distribution and transmission in Ontario. Additional forward-looking information and forward-looking statements are identified in the various documents incorporated by reference in this short form prospectus, including the section entitled “Forward-Looking Information” in our annual information form and the section entitled “Forward-Looking Statements and Information” in our MD&A. Words such as “expect”, “anticipate”, “intend”, “attempt”, “may”, “plan”, “will”, “believe”, “seek”, “estimate”, and variations of such words and similar expressions are intended to identify such forward-looking statements. The forward-looking information and forward-looking statements contained in this short form prospectus, including the documents incorporated by reference herein, are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. In particular, this forward-looking information and these forward-looking statements are based on a variety of factors and assumptions including, but not limited to: no unforeseen changes in the legislative and operating framework for Ontario’s electricity market; favourable decisions from the Ontario Energy Board and other regulatory bodies concerning outstanding rate and other applications; no delays in obtaining required approvals; no unforeseen changes in rate orders or rate structures for our distribution and transmission businesses; no unfavourable changes in environmental regulation; the continued use and availability of U.S. GAAP; a stable regulatory environment; and no significant event occurring outside the ordinary course of business. These assumptions are based on information currently available to our company including information obtained by our company from third-party sources. Actual outcomes and results may differ materially from what is expressed, implied or forecasted in this forward-looking information and these forward-looking statements. While we do not know what impact any of these differences may have, our business, results of operations, financial condition and credit stability may be materially adversely affected. Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information and forward-looking statements are discussed in more detail under “Risk Factors” in this short form prospectus and in any prospectus supplement or pricing supplement and in the sections entitled “Forward-Looking Information” and “Risk Factors” in our annual information form and the sections entitled “Risk Management and Risk Factors” and “Forward-Looking Statements and Information” in our MD&A. You should carefully consider these and other factors and not place undue reliance on forward-looking statements and forward-looking information.

We do not intend, and we disclaim any obligation, to update any forward-looking information or forward-looking statements, except as required by law.

ENFORCEABILITY OF CIVIL LIABILITIES

We exist under the laws of the Province of Ontario. All of our directors and officers and the experts named in this short form prospectus are residents of Canada or otherwise reside outside the United States, and substantially all of our assets and the assets of said persons may be located outside the United States. We have filed with the SEC, along with the Registration Statement, an appointment of agent for service of process on Form F-X. Under the Form F-X, we appointed CT Corporation System as our agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving us in a United States court arising out of or related to or concerning an offering of the Notes. Although we have appointed an agent for service of process in the United States, it may be difficult for holders of Notes who reside in the United States to effect service within the United States upon those directors, officers and experts who are not residents of the United States. It may also be difficult for holders of Notes who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon the civil liability of us and the civil liability of the directors, officers and experts under the United States federal securities laws.

 

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OUR COMPANY

We are the leading electricity transmission and distribution company in Ontario. We own and operate substantially all of Ontario’s electricity transmission system, accounting for approximately 96.8% of Ontario’s transmission capacity based on revenues approved by the Ontario Energy Board for the year ended December 31, 2012. Our transmission system is one of the largest in North America based on assets. Our distribution system is the largest in Ontario based on assets as at December 31, 2012 and serves approximately 1.4 million customers. We have three reportable segments: (1) our transmission business; (2) our distribution business; and (3) our other business.

Our transmission business, which represented approximately $11.6 billion of our total assets of $20.8 billion as at December 31, 2012, transmits electricity through an approximately 29,000 circuit-kilometre high-voltage network. We transmit electricity from generators to our own distribution network, to 47 local distribution companies and to 92 transmission connected companies. We also own and operate 26 facilities that interconnect our transmission system with systems in neighbouring provinces and states.

Our distribution business, which represented approximately $8.6 billion of our total assets of $20.8 billion as at December 31, 2012, distributes electricity through our low-voltage distribution system to municipalities and to rural areas. Customers of our distribution business include 23 local distribution companies that are not directly connected to our transmission system, another 33 local distribution companies that are connected to our transmission system, 30 customers with loads exceeding 5MW and approximately 1.4 million rural and urban customers. Hydro One Brampton Networks Inc. is our urban distribution company, serving approximately 142,000 customers in the Greater Toronto Area. We also operate, through our subsidiary Hydro One Remote Communities Inc., 19 small, regulated generation and distribution systems in 21 remote communities across Northern Ontario that are not connected to Ontario’s electricity grid.

Our other business segment is primarily represented by the operations of Hydro One Telecom Inc. This subsidiary markets dark and lit fibre-optic capacity to telecommunications carriers and commercial customers with broadband network requirements. The assets of this segment constituted approximately $0.6 billion of our total assets of $20.8 billion as at December 31, 2012.

The Ontario Energy Board regulates our transmission and distribution businesses and issues rate orders to establish the revenue requirements required to cover the approved cost of these businesses plus a specified rate of return.

The address of the head and registered office and principal place of business of our company is 483 Bay Street, North Tower, 15th Floor, Toronto, Ontario, M5G 2P5.

EARNINGS COVERAGE RATIOS

For the twelve months ended December 31, 2012 and the twelve months ended June 30, 2013, our company’s consolidated income before provision for payment in lieu of corporate income taxes and interest expense (net of capitalized interest) was $1,224 million and $1,264 million, respectively. Interest expense (net of capitalized interest) for these periods was $358 million and $362 million, respectively, and including capitalized interest, was $417 million and $412 million, respectively. Preferred share dividends declared for these periods were $18 million and $18 million, respectively.

The following table sets forth the earnings coverage ratio for our company for the twelve month period ended December 31, 2012, based on audited information, and for the twelve month period ended June 30, 2013, based on unaudited information, in each case without giving effect to any Notes to be issued under this short form prospectus:

 

     December 31,
2012
     June 30,
2013
 

Earnings coverage on long-term debt obligations(1)

     2.83         2.94   

 

(1) The earnings coverage ratio has been calculated as the sum of net income, interest expense (net of capitalized interest) and provision for payments in lieu of corporate income taxes divided by the sum of interest expense (including capitalized interest) plus preferred dividends declared.

 

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DESCRIPTION OF THE NOTES

General

The following is a summary of the material attributes and characteristics of the Notes, and does not purport to be complete and is qualified in its entirety by reference to the Notes and the Trust Indenture (as defined below).

The terms and conditions set forth in this section “Description of the Notes” will apply to each Note unless otherwise specified in the applicable prospectus supplement or pricing supplement. We reserve the right to set forth in a prospectus supplement or pricing supplement specific variable terms of or amendments to the Notes which are not within the options and parameters set forth in this short form prospectus. References in this section “Description of the Notes” refer to all medium term notes of our company which have previously been or are to be issued under the Trust Indenture.

This short form prospectus qualifies under applicable Canadian securities laws the distribution of $3.0 billion aggregate principal amount of Notes in Canadian currency (or the equivalent thereof in other currencies or currency units at the time of issue) which have been authorized for issue under the Trust Indenture. This amount is subject to amendment from time to time as determined by our company. Our company has previously issued $1.485 billion aggregate principal amount of medium term notes under our short form prospectus dated August 23, 2011, which was qualified under applicable Canadian securities laws. Upon the issuance of a final receipt for this short form prospectus, we will not qualify for distribution any additional Notes under the August 23, 2011 prospectus. Only Notes that meet the eligibility requirements for registration on Form F-10, as applicable to our company, shall be registered under the U.S. Securities Act pursuant to the Registration Statement.

Notes issued hereunder will have a term to maturity of not less than one year and will be issuable in Canadian currency (or in other currencies or currency units at the time of issue) in fully registered definitive or global form, in which case the Notes will be exchangeable only under certain conditions for definitive Notes (as described under the subheading “Global Notes” below). Each interest-bearing Note will bear interest at either a fixed rate (a “Fixed Rate Note”) or a floating rate (a “Floating Rate Note”). Notes will be issued from time to time at such rates of interest and at par, at a premium or at a discount, may be subject to redemption or repayment prior to maturity, and may include terms entitling our company to extend the maturity dates of the Notes, which terms shall be determined by our company based on a number of factors, including advice from the Dealers. The Notes will be unsecured and will, at their respective dates of issue, rank pari passu with all other unsecured and unsubordinated Indebtedness and obligations of our company then outstanding, except as to any sinking fund which pertains exclusively to any particular Indebtedness of our company. We may also, from time to time, issue debt securities and incur additional debt otherwise than through the issuance of Notes pursuant to this short form prospectus.

Neither the aggregate principal amount of Notes which will be issued and sold nor the issue price to the public of the Notes has been established as the Notes will be issued at such times, in such amounts and at such prices as our company determines from time to time. Notes issued hereunder will be offered and sold during the twenty-five months from the date of issuance of the receipt for this short form prospectus at prices negotiated with the purchasers, and the prices at which the Notes will be offered and sold may vary as between purchasers and during the distribution period. The Notes will be issued from time to time at the discretion of our company in an aggregate principal amount not to exceed $3.0 billion in Canadian currency, or the equivalent thereof calculated at the applicable rates of exchange prevailing at the time of issue of Notes issued in currencies other than Canadian currency.

 

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The specific variable terms of any offering of Notes, including, in the case of Floating Rate Notes, the information necessary for the calculation of interest thereon, will be set forth in a prospectus supplement or pricing supplement to this short form prospectus. Where Notes are offered and sold in currencies other than Canadian dollars, the Canadian dollar equivalent of the offering price and the rate of exchange at the last feasible date will be included in the applicable prospectus supplement or pricing supplement.

Trust Indenture

The Notes will be issued under a trust indenture dated as of June 4, 2001, as supplemented or modified from time to time (collectively, the “Trust Indenture”) between our company and Computershare Trust Company of Canada, as trustee (the “Trustee”, which term shall include, unless the context otherwise requires, its successors and assigns). To the extent necessary in connection with offers and sales in the United States, a U.S. affiliate of the Trustee and the Transfer Agent (as defined below) may act as co-transfer agent for the Notes, but not as co-trustee. The following is a brief summary of the material attributes and characteristics of the Trust Indenture. This summary does not purport to be complete and reference should be made to the Trust Indenture for more detailed information.

The Trust Indenture is subject to and governed by the Business Corporations Act (Ontario) and, consequently, is exempt from certain provisions of the U.S. Trust Indenture Act of 1939, as amended (the “U.S. Trust Indenture Act”), by virtue of Rule 4d-9 thereunder.

The Trust Indenture permits the issuance from time to time of additional unsecured medium term notes without limitation as to aggregate principal amount, subject to compliance with the covenants contained therein.

The Notes will be direct obligations of our company and will rank pari passu with all other medium term notes from time to time issued and outstanding under the Trust Indenture and with other present and future unsubordinated and unsecured Indebtedness of our company, except as to any sinking fund which pertains exclusively to any particular Indebtedness of our company. The Notes will not be secured by any mortgage, pledge or charge, except in the circumstances referred to under the heading “Negative Pledge”.

Negative Pledge

The Trust Indenture contains provisions to the effect that our company will not, nor will it permit any Designated Subsidiary (as defined below) to, create, assume or suffer to exist any Security Interest (as defined below) on any of our or the Designated Subsidiary’s assets to secure any Obligation (as defined below) unless at the same time it shall secure all the Notes then outstanding on an equal basis. This covenant is, however, subject to the following exceptions:

 

   

any Security Interest that secures the Obligations of a Designated Subsidiary which exists prior to the date on which it becomes a Designated Subsidiary and which (a) was not incurred in contemplation of that person becoming a Designated Subsidiary and (b) was not applicable to our company or any other Designated Subsidiary or the properties or assets of our company or any other Designated Subsidiary;

 

   

any Security Interest granted by our company or a Designated Subsidiary to secure the Notes;

 

   

any Purchase Money Mortgage (as defined below) or Capital Lease Obligation (as defined below) of our company or any Designated Subsidiary;

 

   

any Security Interest on a property or asset acquired by our company or a Designated Subsidiary that secures the Obligations of a person, whether or not that Obligation is assumed by the acquiring person, which Security Interest exists at the time that property or asset is acquired and which (a) was not incurred in contemplation of that property or asset being acquired and (b) was not applicable to our company or any other Designated Subsidiary or the properties or assets of our company or any other Designated Subsidiary;

 

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any Security Interest given in the ordinary course of business by our company or a Designated Subsidiary to any bank or banks or other lenders to secure any Indebtedness payable on demand or maturing within 18 months of the date that Indebtedness is incurred or of the date of any renewal or extension of that Indebtedness;

 

   

any Security Interest granted by any Designated Subsidiary in favour of our company or any Wholly-Owned Designated Subsidiary (as defined below);

 

   

any Security Interest on or against cash or marketable debt securities pledged to secure any non-speculative Financial Instrument Obligation (as defined below) which hedges Indebtedness of our company or of a Designated Subsidiary;

 

   

any Security Interest for taxes, assessments, government charges or claims that are being contested in good faith and in respect of which appropriate provision is made in our consolidated financial statements in accordance with GAAP;

 

   

Security Interests securing appeal bonds or other similar Security Interests arising in connection with contracts, bids, tenders or court proceedings, including, without limitation, surety bonds, security for costs of litigation where required by law and letters of credit, or any other instruments serving a similar purpose;

 

   

a Security Interest in cash or marketable debt securities in a sinking fund account established by our company in support of a series of Notes;

 

   

a lien or deposit under workers’ compensation, social security or similar legislation or good faith deposits in connection with bids, tenders, leases, contracts or expropriation proceedings, or deposits to secure public or statutory obligations or deposits of cash or obligations to secure surety and appeal bonds;

 

   

any lien or privilege imposed by law, such as builders’, carriers’, warehousemen’s, landlords’, mechanics’ and material men’s liens and privileges, and any lien or privilege arising out of judgments or awards with respect to which our company or a Designated Subsidiary at the time is prosecuting an appeal or proceedings for review and with respect to which it has secured a stay of execution pending that appeal or proceedings for review; or any liens for taxes, assessments or governmental charges or levies not at the time due and delinquent or the validity of which is being contested at the time by our company or a Designated Subsidiary in good faith; or undetermined or inchoate lien privileges and charges incidental to current operations which have not at such time been filed pursuant to law against our company or a Designated Subsidiary or which relate to obligations not due or delinquent; or the deposit of cash or securities in connection with any lien or privilege referred to in this clause;

 

   

any minor encumbrance, such as easements, rights-of-way, servitudes or other similar rights in land granted to or reserved by other persons, rights-of-way for sewers, electric lines, telegraph and telephone lines, oil and natural gas pipelines and other similar purposes, or zoning or other restrictions as to our company’s use of real property, which do not in the aggregate materially detract from the value of that property or materially impair its use in the operation of the business of our company or a Designated Subsidiary;

 

   

any right reserved to or vested in, whether by statutory provision or otherwise, any municipality or governmental or other public authority to terminate, purchase assets used in connection with or require annual or other periodic payments as a condition to the continuance of, any lease, license, franchise, grant or permit acquired by our company or a Designated Subsidiary;

 

   

any lien or right of distress reserved in or exercisable under any lease for rent and for compliance with the terms of that lease;

 

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any Security Interest granted by our company or a Designated Subsidiary to a public utility or any municipality or governmental or other public authority when required by that utility, municipality or other authority in connection with the operations of our company or a Designated Subsidiary;

 

   

any reservation, limitation, proviso or condition, if any, expressed in any original grants to our company or a Designated Subsidiary from the Crown; and

 

   

any extension, renewal, alteration, substitution or replacement, in whole or in part, of any Security Interest referred to in the foregoing clauses, provided that the Security Interest is limited to all or part of the same property that secured the Security Interest, the principal amount of the secured Obligations is not increased by that action, the term of the secured Indebtedness is not shortened and the terms and conditions are no more restrictive in any material respect than the Security Interest so extended.

In addition to the Security Interests permitted above, our company or any Designated Subsidiary may create, assume or suffer to exist any Security Interest on any of its assets if, after giving effect to that Security Interest, the aggregate amount of Indebtedness secured by the Security Interests permitted only by this paragraph does not at that time exceed 5% of the Consolidated Net Worth (as defined below) of our company.

Limitation on Funded Obligations

So long as any of the Notes issued under the Trust Indenture remain outstanding, neither our company nor any of its Designated Subsidiaries will, directly or indirectly, guarantee, incur, issue or become liable for or in respect of any Funded Obligations (as defined below) unless after giving pro forma effect to that guarantee, incurrence, issuance or liability, including the application or use of the resulting net proceeds, the aggregate principal amount of Consolidated Funded Obligations (as defined below) does not exceed 75% of the Total Consolidated Capitalization (as defined below). This covenant, however, will not prevent the incurrence of Capital Lease Obligations, Purchase Money Obligations and non-speculative Financial Instrument Obligations.

Ceasing to be a Designated Subsidiary

The Board of Directors of our company may elect that any Designated Subsidiary cease to be a Designated Subsidiary, except that an election may not be made in respect of any Designated Subsidiary:

 

   

if the Designated Subsidiary owns any Funded Obligations of our company or any shares, voting interests or Funded Obligations of any other Designated Subsidiary;

 

   

if the Designated Subsidiary owns or has any ownership interest in any Principal Property (as defined below); or

 

   

if, after giving effect to the election, our company would not be entitled to issue Funded Obligations in the principal amount of at least $1.00.

Mergers, Consolidations and Sales of Assets

Our company will not enter into any transaction in which all or substantially all of our property and assets would become the property of any other person, whether by way of reorganization, consolidation, amalgamation, arrangement, merger, transfer, sale or otherwise, unless:

 

   

our company shall be the surviving person, or the person, if other than our company, formed by the amalgamation, consolidation or into which our company is merged or that acquires by disposition all or substantially all of the property or assets of our company, shall be a company organized and validly existing under the federal laws of Canada or any of its provinces or territories and shall expressly assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, all of our company’s obligations under the Trust Indenture;

 

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immediately before and after giving effect to the transaction, no Event of Default or event that with the passing of time or the giving of notice, or both, would constitute an Event of Default shall have occurred and be continuing; and

 

   

neither our company nor any successor, either at the time of or immediately after the consummation of any such transaction, will be insolvent or generally fail to meet, or admit in writing its inability or unwillingness to meet, its obligations as they generally become due.

Events of Default

The following are Events of Default under the Trust Indenture with respect to Notes of any series:

 

  (1) failure to pay any principal or premium, if any, on any Notes when due, at maturity, upon redemption or otherwise and the continuance of such default for a period of five days;

 

  (2) failure to pay any interest on any Notes when due and the continuance of that default for a period of 45 days;

 

  (3) the sale, transfer or other disposition of all or substantially all of our undertaking or assets other than in accordance with the covenant described above under “Mergers, Consolidations and Sales of Assets”;

 

  (4) default in the performance or breach of any other covenant or agreement of our company under the Trust Indenture, any supplemental indenture or the Notes and the continuance of that default for a period of 60 days after written notice to our company by the Trustee or by holders of at least 25% of all Notes issued under the Trust Indenture;

 

  (5) default by our company or any Material Subsidiary (as defined below), whether as primary obligor, guarantor or surety, on any payment of principal, premium, if any, or interest on any Indebtedness, the outstanding principal amount of which Indebtedness exceeds $100 million in the aggregate, beyond any applicable grace period or failure to perform or observe any other agreement, term or condition contained in any agreement under which that Indebtedness is created, or if any default, failure or other event under that agreement shall occur and be continuing, and the effect of that default, failure or other event is to cause $100 million or more of that Indebtedness to become due or to be required to be repurchased prior to any stated maturity;

 

  (6) the rendering of a judgment or judgments, not subject to appeal, against our company or any Material Subsidiary in an aggregate amount in excess of $100 million by a court or courts of competent jurisdiction, which judgment or judgments remain undischarged and unstayed for a period of 60 days; and

 

  (7) specified events of bankruptcy, insolvency or reorganization affecting our company or any Material Subsidiary.

If an Event of Default applicable only to the issued and outstanding Notes of a series occurs and is continuing, either the Trustee or the holders of not less than 25% in principal amount of Notes of that series then outstanding may declare the principal of, and interest and premium, if any, on all Notes of that series to be due and payable immediately.

If, however, an Event of Default applicable to all Notes issued and outstanding under the Trust Indenture, or an Event of Default described in clause (5), (6), or (7) above occurs and is continuing, either the Trustee or the holders of not less than 25% in principal amount of all issued and outstanding Notes, treated as one class, may declare the principal amount of all the Notes then outstanding to be due and payable immediately.

Subject to the provisions of the Trust Indenture relating to the duties of the Trustee, in case an Event of Default applicable to any Notes shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Trust Indenture at the request or direction of any of the holders of those Notes, unless those holders shall have offered to the Trustee reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the holders of a majority in principal amount of Notes of all series affected by an Event of Default will have the right to direct the time, method and place of conducting any proceedings for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee in respect of the Notes of all series affected by that Event of Default.

 

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Defeasance

The Trust Indenture requires the Trustee to release our company from its obligations under the Trust Indenture relating to a particular series of Notes if specified conditions are satisfied. Among other things, our company must deposit money or securities for the payment of all principal of and interest and any other amounts on that series of Notes as well as for the payment of the expenses of the Trustee. The deposited money or securities must be denominated in the currency in which principal of these Notes is payable and, in the case of deposited securities, must constitute direct obligations of Canada or specified provinces of Canada or an agency or instrumentality of Canada.

Amendments and Waivers

The Trust Indenture provides that our company and the Trustee may enter into supplemental indentures (“Supplemental Indentures”) without the consent of the holders of the Notes of any or all series to:

 

   

add limitations or restrictions to be observed upon the amount or issue of Notes, provided that such limitations or restrictions shall not be materially adverse to the interests of the holders of the Notes;

 

   

add covenants for the protection of the holders of the Notes of any series;

 

   

provide for any additional Events of Default;

 

   

make such provisions not inconsistent with the Trust Indenture as may be necessary or desirable with respect to matters or questions arising thereunder, including the making of any modifications in the form of the Notes which do not affect the substance thereof and which it may be expedient to make, provided that such provisions and modifications will not adversely affect the holders of Notes;

 

   

provide for the issue of Notes of any one or more series and establish the form and terms of any series of Notes;

 

   

evidence the succession, or successive successions, of successors to our company and the covenants and obligations assumed by any such successor, in accordance with the provisions of the Trust Indenture; and

 

   

giving effect to any extraordinary resolution or ordinary resolution of the holders of Notes in accordance with the Trust Indenture.

Other amendments and modifications of the Trust Indenture, Supplemental Indentures and Notes may be made by our company and the Trustee with the consent of the holders of not less than 66 2/3% (and in certain circumstances, a majority) in principal amount of Notes of all series voting on such amendment or modification and, if the rights of holders of Notes of a particular series of Notes would be affected differently than rights of holders of Notes of other series, not less than 66 2/3% (and, in certain circumstances, a majority) in principal amount of Notes of the series so affected by that modification or amendment voting on such amendment or modification, in each case, voting as one class. However, no modification or amendment may, without the consent of the holder of each outstanding Note of the affected series,

 

   

reduce the principal amount at maturity of, extend the fixed maturity of, or alter the redemption provisions of, those Notes;

 

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change the currency in which those Notes or any premium or accrued interest is payable;

 

   

reduce the percentage in principal amount at maturity outstanding of those Notes that must consent to an amendment, supplement or waiver or consent to take any action under the Trust Indenture, Supplemental Indenture or those Notes;

 

   

impair the right to institute suit for the enforcement of any payment on or with respect to those Notes;

 

   

waive a default in payment with respect to those Notes;

 

   

reduce the rate or extend the time for payment of interest on those Notes;

 

   

affect the ranking of those Notes in a manner adverse to the holders; or

 

   

make any changes to the Trust Indenture, Supplemental Indentures or those Notes that would result in our company being required to make any withholding or deduction from payments made under or with respect to those Notes.

The holders of 66 2/3% in principal amount of the Notes of all series with respect to which an Event of Default shall have occurred and be continuing, voting as one class, may waive any Event of Default, except in the case of a default in payment of principal with respect to the Notes or except, further, in respect of a covenant or provision which cannot be modified or amended without the consent of the holder of each outstanding Note affected.

In respect of any series of Notes that are offered for sale in the United States pursuant to the Registration Statement, the Supplemental Indenture entered into in respect of such series will provide that notwithstanding anything else contained in the Trust Indenture, the right of any holder of that series of Notes to receive payment of the principal of and interest on that series of Notes, on or after the respective due dates for such payments, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such holder, except to the extent permitted by Section 316(b) of the U.S. Trust Indenture Act.

Definitions

In addition to the definitions set out above, the Trust Indenture contains definitions substantially to the following effect:

“Capital Lease Obligation” means any monetary obligation of our company or a Designated Subsidiary under any leasing or similar arrangement which, in accordance with GAAP, would be classified as a capital lease and for the purposes of the Trust Indenture, the amount of Capital Lease Obligations will be the capitalized amount thereof, determined in accordance with GAAP;

“Consolidated Funded Obligations” means the aggregate amount of all Funded Obligations of our company and its Designated Subsidiaries determined on a consolidated basis in accordance with GAAP;

“Consolidated Net Worth” means, as at any date, the consolidated shareholders’ equity of our company and its Designated Subsidiaries as at that date determined in accordance with GAAP;

“Contingent Liability” means any agreement, undertaking or arrangement by which any person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Obligation of any other person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other person. The amount of any person’s obligation under any Contingent Liability will, subject to any limitation contained in that Contingent Liability, be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby;

 

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“Designated Subsidiary” means any subsidiary which is designated as such by the directors of our company, provided that any such subsidiary may only be so designated if, after giving effect thereto, our company would be entitled under the Trust Indenture to issue Funded Obligations in the principal amount of at least $1.00 and further provided that a subsidiary cannot be so designated if any of its shares are owned by a subsidiary which is not itself a Designated Subsidiary;

“Financial Instrument Obligations” means, with respect to any person at any time, the obligations of that person under any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, commodity future, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other similar transaction, including any option to enter into any of the foregoing, or any combination of the foregoing to the extent of the net amount due to or accruing due by the person under that obligation, determined by marking that obligation to market at that time in accordance with its terms;

“Funded Obligations” means all Indebtedness created, assumed or guaranteed, which matures by its terms on, or is renewable at the option of the obligor to, a date more than 18 months after the date of the original creation, assumption or guarantee thereof;

“GAAP” means as at any date of determination:

 

  (1) accounting principles which are recognized as being generally accepted in Canada, if our company is then preparing its financial statements in accordance with such principles; or

 

  (2) accounting principles which are recognized as being generally accepted in the United States, if our company is then preparing its financial statements in accordance with such principles;

“Indebtedness” means, without duplication, with respect to any person,

 

  (1) all obligations of that person for borrowed money, including obligations with respect to bankers’ acceptances and contingent reimbursement obligations, excluding Preferred Securities issued by that person;

 

  (2) all obligations issued or assumed by that person in connection with its acquisition of property in respect of the deferred purchase price of that property;

 

  (3) all Capital Lease Obligations and Purchase Money Obligations of that person; and

 

  (4) all Contingent Liabilities of that person in respect of any of the foregoing;

“Material Subsidiary” means, as at any date, a Designated Subsidiary,

 

  (1) the total assets of which represent more than 10% of the total assets of our company determined on a consolidated basis as shown in the most recently publicly released consolidated financial statements of our company; or

 

  (2) the total revenues of which represent more than 10% of the total revenues of our company determined on a consolidated basis as shown in the most recently publicly released consolidated financial statements of our company;

“Obligations” means, without duplication, with respect to any person, all items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of that person as of the date at which Obligations are to be determined, other than Preferred Securities issued by that person; and all Contingent Liabilities of that person in respect of any of the foregoing;

 

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“Preferred Securities” means:

 

  (1) securities which on the date of issue by a person (a) have a term to maturity of more than 30 years, (b) are unsecured and rank subordinate to the unsecured and unsubordinated Indebtedness of that person outstanding on that date, (c) entitle that person to satisfy the obligation to pay the principal or face amount by issuing common shares, (d) entitle that person to defer the payment of interest for more than four years without causing an event of default to occur, and (e) entitle that person to satisfy the obligation to make payments of interest by issuing common shares; and

 

  (2) shares of any class in the capital of a corporation or securities representing ownership interests in any person other than a corporation which, in either case, are not common shares;

“Principal Property” means any of our company’s and our subsidiaries’ fixed assets used for the transmission, transformation and distribution of electricity in Ontario as of June 4, 2001 (the date of the Trust Indenture);

“Purchase Money Mortgage” means any security interest, mortgage, pledge, charge or other encumbrance created, issued or assumed by our company or a Designated Subsidiary to secure a Purchase Money Obligation; provided that the security interest, mortgage, pledge, charge or other encumbrance is limited to the property (including associated rights) acquired, constructed, installed or improved using the funds advanced to our company or a Designated Subsidiary in connection with that Purchase Money Obligation;

“Purchase Money Obligation” means Indebtedness of our company or a Designated Subsidiary incurred or assumed to finance the purchase price, in whole or in part, of any property (except any Indebtedness which constitutes a Funded Obligation and which was incurred or assumed to finance the purchase price, in whole or in part, of any shares, bonds or other securities) or incurred to finance the cost, in whole or in part, of construction or installation of or improvements to any real property or fixtures provided that such Indebtedness is incurred or assumed within 24 months after the purchase of such real property or fixtures or the completion of such construction, installation or improvements, as the case may be, and includes any extension, renewal or refunding of any such Indebtedness, so long as the principal amount thereof outstanding on the date of such extension, renewal or refunding is not increased;

“Security Interest” means any assignment, mortgage, charge (whether fixed or floating), hypothec, pledge, lien, or other encumbrance on or interest in property or assets that secures payment of Indebtedness or Obligation;

“Total Consolidated Capitalization” means, at any time and from time to time, without duplication, the sum of (1) the principal amount of all Consolidated Funded Obligations at the time outstanding, and (2) the total share capital of our company at the time outstanding, based upon the stated capital on the books of our company, and (3) the principal amount of all outstanding Preferred Securities referred to in clause (1) of the definition of “Preferred Securities” plus the total amount of (or less the amount of any net deficits in) the contributed or capital surplus of our company and the retained earnings of our company and all Designated Subsidiaries in accordance with GAAP after adding back the amount shown on the consolidated balance sheet of our company and its Designated Subsidiaries for minority interests applicable to Designated Subsidiaries and eliminating all intercorporate items, plus the amount of any premium on capital of our company not included in its surplus, and less the amount, if any, by which the capital account of our company or the consolidated capital surplus account of our company and all Designated Subsidiaries (determined in the manner described above) has at any time been increased as a result of any write-up in the value of the shares of a subsidiary which is not a Designated Subsidiary to reflect the equity of our company in its retained earnings or otherwise, or as a result of a restatement of the amount at which any other assets of our company or any Designated Subsidiary are recorded on its books. The amount of Total Consolidated Capitalization of our company and all Designated Subsidiaries at any time shall be ascertained in Canadian dollars; and

“Wholly-Owned Designated Subsidiary” means a Designated Subsidiary, all of the outstanding shares in the capital of which are owned, directly or indirectly, by or for our company and/or by or for one or more other Wholly-Owned Designated Subsidiaries.

 

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Global Notes

Notes may be issued in the form of fully registered global notes (“Global Notes”) held by, or on behalf of, CDS Clearing and Depository Services Inc. (“CDS”) or another corporation performing similar services that is acceptable to the Trustee (the “Depository”) as custodian of the Global Notes and, in such event, Notes will be registered in the name of the Depository or its nominee (a “Nominee”). Where CDS acts as Depository for a series of Notes, The Depositary Trust Company (“DTC”), Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), in each case as direct or indirect participants in CDS, will record beneficial ownership of such series of Notes on behalf of their respective accountholders or participants, to the extent we make such series of Notes eligible with DTC, Euroclear or Clearstream, Luxembourg, as applicable (and we specify as such in the prospectus supplement or pricing supplement with respect to the particular series of Notes).

Purchasers of Notes represented by Global Notes will not receive Notes in definitive form (“Definitive Notes”). Instead, ownership of such Notes will be constituted through beneficial interests in the Global Notes, and will be represented through book-entry accounts of institutions (including the Dealers), as direct and indirect participants of the Depository (“participants”) which, to the extent the Depository is CDS, may include DTC, Euroclear and Clearstream, Luxembourg to the extent applicable as noted above, acting on behalf of the beneficial owners of such Notes. Each purchaser of a Note represented by a Global Note will receive a customer confirmation of purchase from the Dealer or other person from or through whom the Note is purchased in accordance with the practices and procedures of such Dealer or other person. The Depository will be responsible for establishing and maintaining book-entry accounts for its participants having interests in Global Notes.

If Global Note(s) are issued and the Depository notifies our company that it is unwilling or unable to continue as depository in connection with the Global Notes, or if at any time the Depository ceases to be a clearing agency or otherwise ceases to be depository and our company and the Trustee are unable to locate a qualified replacement, or if our company elects to terminate the book-entry system, beneficial owners of Notes represented by Global Notes will receive Definitive Notes.

DTC, Euroclear and Clearstream, Luxembourg

Where CDS acts as Depository for a series of Notes, to the extent we make such series of Notes eligible with DTC, Euroclear or Clearstream, Luxembourg (and we specify as such in the prospectus supplement or pricing supplement with respect to such series of Notes), holders may hold such series of Notes through the accounts maintained by DTC, Euroclear or Clearstream, Luxembourg, as applicable, as participants in CDS only if they are participants of those systems, or indirectly through organizations which are participants of those systems.

In such case, DTC, Euroclear and Clearstream, Luxembourg will hold omnibus book-entry positions on behalf of their participants through customers’ securities accounts in their respective depositaries which in turn will hold such positions in customers’ securities accounts in the names of the nominees of the depositaries on the books of CDS. All securities in DTC, Euroclear and Clearstream, Luxembourg are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts.

Transfers of such Notes by persons holding through Euroclear or Clearstream, Luxembourg participants, as applicable, will be effected through CDS, in accordance with CDS rules, on behalf of the relevant European international clearing system by its depositaries; however, such transactions will require delivery of transfer instructions to the relevant European international clearing system by the participant in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transfer meets its requirements, deliver instructions to its depositaries to take action to effect the transfer of the Notes on its behalf by delivering Notes through CDS and receiving payment in accordance with its normal procedures for next-day funds settlement. Payments with respect to the Notes held through Euroclear or Clearstream, Luxembourg will be credited to the cash accounts of Euroclear participants or Clearstream, Luxembourg participants in accordance with the relevant system’s rules and procedures, to the extent received by its depositaries.

 

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All information in this short form prospectus concerning CDS, DTC, Euroclear and Clearstream, Luxembourg, reflects our understanding of the policies of such organizations which may change at any time without notice.

Fixed Rate Notes

Each Fixed Rate Note will bear interest from its original issue date at the rate per annum on the face thereof until the principal amount thereof is paid or made available for payment. Interest on a Fixed Rate Note will be calculated and payable monthly, quarterly, semi-annually or annually in arrears on the dates specified in such Fixed Rate Note, or other such dates as may be agreed to between the purchaser of the Note and our company (each, an “Interest Payment Date”) and at maturity or upon earlier redemption or repayment. Interest Payment Dates will be set forth in the applicable prospectus supplement or pricing supplement for the Fixed Rate Note. Each payment of interest in respect of an Interest Payment Date will include interest accrued to but excluding such Interest Payment Date.

Floating Rate Notes

Each Floating Rate Note will bear interest from its original issue date at rates described in the Floating Rate Note and specified in the applicable prospectus supplement or pricing supplement.

The rate of interest on each Floating Rate Note will be reset monthly, quarterly, or as otherwise specified in the Floating Rate Note and applicable prospectus supplement or pricing supplement. Interest on each Floating Rate Note will be payable monthly, quarterly or as otherwise specified in the Floating Rate Note and applicable prospectus supplement or pricing supplement. Unless otherwise specified in the Floating Rate Note and applicable prospectus supplement or pricing supplement, our company will be the calculation agent with respect to the Floating Rate Notes. Upon request of the holder of any Floating Rate Note, our company will provide the interest rate then in effect.

Payment of Interest and Principal

Interest on each interest bearing Note will be payable on such periodic basis or at maturity and on such date or dates as may be agreed upon by our company and the purchaser of the Note. Payments of interest on each interest bearing Definitive Note will be made by cheque payable on the interest payment date and mailed to the address of, or if so directed by the holder, funds representing the interest payable will be forwarded by electronic funds transfer on the interest payment date to the account of, the holder appearing on the registers maintained by Computershare Trust Company of Canada, as registrar and transfer agent (the “Transfer Agent”, which term shall include such other registrar or transfer agent (or co-registrar or co-transfer agent) as may from time to time be appointed by our company) at the close of business in the City of Toronto on the tenth business day (with “business day” being a day other than Saturday, Sunday, or a day on which financial institutions in Toronto, Ontario are authorized or obligated by law or regulation to close) prior to the interest payment date or such other day specified to the Trustee by our company and reflected in a Supplemental Indenture for a particular series of Notes. Payment of principal will be made at any branch in Canada of the bank designated in a Definitive Note against surrender of the Note.

Payment of interest and principal on each Global Note will be made to the Depository or the Nominee, as the case may be, as the registered holder of the Global Note. Interest payments on Global Notes will be made by wire transfer no later than the date interest is payable. Principal payments on Global Notes will be made by wire transfer on the maturity date delivered to the Depository or the Nominee, as the case may be, at maturity against receipt of the Global Note. As long as the Depository or the Nominee is the registered owner of a Global Note, the Depository or the Nominee, as the case may be, will be considered the sole owner of the Global Note for the purposes of receiving payment on the Note and for all other purposes under the Trust Indenture and the Note.

Our company expects that the Depository or Nominee, upon receipt of any payment of principal or interest in respect of a Global Note, will credit participants’ accounts, on the date principal or interest is payable, with payments in amounts proportionate to their respective beneficial interests in the principal amount of such Global Note as shown on the records of the Depository or the Nominee. Our company also expects that such payments of principal and interest by participants to the owners of beneficial interests in such Global Note held through such participants will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name” and will be the responsibility of such participants. The responsibility and liability of our company and the Trustee in respect of Notes represented by Global Notes is limited to making payment of any principal and interest due on such Global Notes to the Depository or the Nominee.

 

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Except as noted below or unless otherwise specified in the applicable prospectus supplement or pricing supplement, payments of interest and principal will be made in the currency in which the Note is denominated. In respect of Notes denominated in Canadian dollars and held through DTC (in circumstances where CDS acts as Depository), although we will make all payments of principal and interest on such Notes in Canadian dollars, holders of Notes held through DTC will receive such payments in U.S. dollars, unless they elect, through procedures established from time to time by DTC and its participants, to receive Canadian dollar payments, in which case such Canadian dollar amounts will be transferred directly to Canadian dollar accounts designated by such holders to DTC. If no election is made, Canadian dollar payments received by CDS will be exchanged into U.S. dollars and paid directly to DTC in accordance with procedures established from time to time by CDS and DTC. All costs of conversion will be borne by holders of Notes held through DTC who receive payments in U.S. dollars.

If the payment date for any amount of principal or interest on any Note is not, at the place of payment, a business day such payment will be made on the next business day and the holder of such Note shall not be entitled to any further interest or other payment in respect of such delay.

Transfers

The registered holder of a Definitive Note may transfer such Note upon payment of taxes incidental thereto, if any, by executing the form of transfer provided on the reverse side of the Note and surrendering the Note to the Transfer Agent at its principal office in the City of Toronto, upon which one or more new Definitive Notes will be issued in authorized denominations in the same aggregate principal amount as the Note so transferred, registered in the name or names of the transferee or transferees.

Transfers of beneficial ownership in Notes represented by Global Notes will be effected through records maintained by the Depository for such Global Notes or the Nominee (with respect to the interest of participants) and on the records of participants (with respect to the interest of beneficial owners other than participants). Beneficial owners of an interest in a Note represented by a Global Note who are not participants in the Depository’s book-entry system, but who desire to purchase, sell or otherwise transfer ownership of or other interests in Global Notes, may do so only through participants in the Depository’s book-entry system. A purchaser’s interest in a Note represented by a Global Note will only be exchangeable for Definitive Notes in the limited circumstances set forth under the subheading “Global Notes” above and in accordance with the procedures established by the Depository or the Nominee.

The ability of a beneficial owner of an interest in a Note represented by a Global Note to pledge the Note or otherwise take action with respect to such owner’s interest therein other than through a participant may be limited due to the lack of a physical certificate.

No transfer of a Note will be registered during the 10 business days immediately preceding any date fixed for payment of interest on such Note or payment of the principal amount thereof.

PLAN OF DISTRIBUTION

The Notes may be offered for sale severally and on a continuous basis by one or more of BMO Nesbitt Burns Inc., Casgrain & Company Limited, CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. pursuant to an agreement dated September 4, 2013, among such dealers and our company (the “Dealer Agreement”) or such other dealers as may be selected from time to time by our company, in each case acting as agent of our company or as principal. Where the Notes are offered by the Dealer(s) as agent(s), the commission payable by our company shall be agreed from time to time between our company and any such Dealer(s). Where the Notes are purchased by the Dealer(s) as principal, the Notes shall be purchased at such prices and with such commissions as may be agreed from time to time between our company and any such Dealer(s) for resale to the public at prices to be negotiated with each purchaser. Such resale prices may vary during the distribution period and as between purchasers. Each Dealer’s compensation will increase or decrease by the amount by which the aggregate price paid for Notes by purchasers exceeds or is less than the price paid by the Dealer, acting as principal, to our company. The commission payable in connection with sales of Notes shall be no higher than 1.5% and shall be set forth in a prospectus supplement or pricing supplement that shall accompany this short form prospectus. The Dealers that participate in the distribution of Notes may be deemed to be underwriters within the meaning of the U.S. Securities Act. Our company has agreed to reimburse the Dealers for certain expenses and to indemnify each Dealer against certain liabilities including liabilities under the U.S. Securities Act and applicable Canadian securities laws.

 

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The Notes may be offered and sold in each of the provinces of Canada pursuant to this short form prospectus in compliance with applicable registration requirements of Canadian securities law, may be offered and sold in the United States pursuant to the Registration Statement or in transactions exempt from the registration requirements of U.S. federal securities laws, in each case in compliance with the broker-dealer registration requirements of the United States Securities and Exchange Act of 1934, as amended and applicable state securities laws and may be offered and sold outside of Canada and the United States on a private placement basis with our consent but subject to compliance by the Dealers with all applicable legal requirements of those other jurisdictions.

Our company may also offer the Notes directly to potential purchasers pursuant to applicable statutory exemptions at prices and upon terms negotiated between the purchaser and our company.

Our company and, if applicable, the Dealers, reserve the right to reject any offer to purchase the Notes in whole or in part. Our company also reserves the right to withdraw, cancel or modify the offering of the Notes under this short form prospectus without notice. In addition, the obligations of the Dealers to purchase any particular issue of Notes as principal may be terminated at the discretion of the Dealers upon the occurrence of certain stated events as set out in detail in the Dealer Agreement. However, the Dealers are obligated to take up and pay for all Notes of a particular issue if any of the Notes of that issue are purchased under the Dealer Agreement by the Dealers as principal.

In connection with any offering of Notes, the Dealers may, when acting as an agent or purchasing as principal, over-allot or effect transactions which stabilize or maintain the market price of the Notes offered at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.

The Dealers may from time to time purchase and sell the Notes in the secondary market but are not obliged to do so. Unless otherwise indicated in a prospectus supplement or pricing supplement, there is no market through which Notes may be resold and purchasers may not be able to resell Notes purchased under this short form prospectus. The offering price and other selling terms for any sales in the secondary market may, from time to time, be varied by the Dealers.

BMO Nesbitt Burns Inc., CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. are subsidiaries or affiliates of lenders (the “Lenders”) which are lenders to our company under an unsecured revolving credit facility of up to $1,500 million (as amended and restated from time to time, the “Credit Facility”). As of September 4, 2013, there is no outstanding indebtedness under the Credit Facility. Proceeds from the sale of particular series or issues of Notes in which such Dealers are acting as principals or agents may be used to repay indebtedness under the Credit Facility or any future credit facility to which our company may be a party with one or more of the Lenders. Consequently, if and when there is outstanding indebtedness to any of the Lenders under such facilities, our company may be considered a connected issuer of those Dealers who are affiliates of such Lenders for purposes of the securities laws of certain Canadian provinces. The decision to distribute the Notes will be made by our company and the terms and conditions of distribution will be determined through negotiations between our company and the Dealers. The Lenders will not have any involvement in such decision or determination. As of the date hereof, our company is in compliance with the terms of the Credit Facility. Other than payment of their portion of the commissions, if applicable, or as set forth above in respect of the Credit Facility, none of the proceeds of such offerings of Notes will be applied, directly or indirectly, for the benefit of BMO Nesbitt Burns Inc., CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. or their affiliates. See “Use of Proceeds”.

 

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USE OF PROCEEDS

The net proceeds from the sale of Notes will be added to the general funds of our company and, together with funding from other sources, including internally generated funds and other external financings, will be used to finance our company’s working capital requirements, to repay outstanding bank loans (which may include indebtedness under the Credit Facility), debentures, notes or other Indebtedness, to make advances to subsidiaries of our company, to finance our company’s capital expenditure program, to make acquisitions and for other general corporate purposes. Where appropriate, a prospectus supplement or pricing supplement will contain more specific information about the use of proceeds from each sale of Notes. All expenses relating to an offering of Notes, including any compensation paid to the Dealers, will be paid out of our company’s general funds or netted out of the proceeds of the particular offering of Notes. Our company may from time to time issue debt instruments and incur additional Indebtedness otherwise than through the issue of Notes pursuant to this short form prospectus.

PRIOR SALES

In the 12-month period prior to the date hereof, our company issued the following tranches of medium term notes under our short form prospectus dated August 23, 2011:

 

Note

 

Date of Issuance

 

Principal Amount

 

Sale Price (per $100
principal amount)

 

Gross Proceeds

Series 27 (Floating Rate Note) due 2016   December 3, 2012   $50,000,000   $100.00   $50,000,000

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

General

The following summary describes the principal Canadian federal income tax considerations generally applicable to a purchaser who acquires Notes, including entitlement to all payments thereunder, as a beneficial owner pursuant to this short form prospectus and who, at all relevant times, for purposes of the application of the Income Tax Act (Canada) and the Income Tax Regulations (collectively, the “Tax Act”), deals at arm’s length with our company and holds Notes as capital property (a “Holder”). Generally, Notes will be capital property to a purchaser provided the purchaser does not acquire or hold those Notes in the course of carrying on a business or as part of an adventure or concern in the nature of trade. Certain purchasers resident in Canada may be entitled to make or may have already made the irrevocable election permitted by subsection 39(4) of the Tax Act the effect of which may be to deem to be capital property any Notes (and all other “Canadian securities”, as defined in the Tax Act) owned by such purchasers in the taxation year in which the election is made and in all subsequent taxation years. Purchasers whose Notes might not otherwise be considered to be capital property should consult their own tax advisors concerning this election.

This summary is based on the current provisions of the Tax Act and on counsel’s understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and assumes that all Proposed Amendments will be enacted in the form proposed. However, no assurances can be given that the Proposed Amendments will be enacted as proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative policy or assessing practice whether by legislative, administrative or judicial action nor does it take into account tax legislation or considerations of any province, territory or foreign jurisdiction, which may differ from those discussed herein.

 

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Depending upon the terms of any offering of the Notes as set forth in an applicable prospectus supplement or pricing supplement, and upon whether our company continues to be a corporation to which any of paragraphs 149(1)(d) to (d.6) of the Tax Act applies at the time of such offering, the Canadian federal income tax considerations applicable to a Holder of the Notes at the time of such offering may be different from those described below. Such considerations may be described more particularly when such Notes are offered (and then only to the extent material) in the prospectus supplement or pricing supplement related thereto. In the event the Canadian federal income tax considerations are described in such prospectus supplement or pricing supplement, the description below will be superseded by the description in the prospectus supplement or pricing supplement to the extent indicated therein.

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular purchaser. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, prospective purchasers of Notes should consult their own tax advisors having regard to their own particular circumstances.

Currency Conversion

For purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of the Notes issued in a non-Canadian currency must be converted into Canadian dollars based on exchange rates as determined in accordance with the Tax Act. The amount of interest required to be included in the income of, and capital gains or capital losses realized by, a Holder may be affected by fluctuations in the applicable exchange rate.

Holders Resident in Canada

This portion of the summary is generally applicable to a Holder who, at all relevant times, for purposes of the application of the Tax Act, is, or is deemed to be resident in Canada, is not affiliated with our company and has not entered into and will not enter into, with respect to the Notes acquired by such Holder, a “derivative forward agreement” as that term is defined in proposed amendments contained in a Notice of Ways and Means Motion that accompanied the federal budget tabled by the Minister of Finance (Canada) on March 21, 2013 (a “Resident Holder”).

This portion of the summary is not applicable to (i) a purchaser an interest in which is a “tax shelter investment”, (ii) a purchaser that is, for purposes of certain rules (referred to as the mark-to-market rules) applicable to securities held by financial institutions, a “financial institution”, or (iii) a purchaser that reports its “Canadian tax results” in a currency other than Canadian currency, each as defined in the Tax Act. Such purchasers should consult their own tax advisors.

Taxation of Interest and other Amounts

A Resident Holder that is a corporation, partnership, unit trust or any trust of which a corporation or partnership is a beneficiary will be required to include in computing its income for a taxation year any interest on a Note that accrues or is deemed to accrue to such Resident Holder to the end of that taxation year, or becomes receivable or is received by the Resident Holder before the end of such year, to the extent that such interest was not included in computing the Resident Holder’s income for a preceding taxation year.

Any other Resident Holder, including an individual, will be required to include in computing its income for a taxation year any interest on a Note that is received or receivable by such Resident Holder in that taxation year (depending on the method regularly followed by the Resident Holder in computing its income) to the extent that such interest was not included in computing the Resident Holder’s income for a preceding taxation year. Such a Resident Holder may also be required to include in the Resident Holder’s income, for any taxation year that includes an “anniversary day” (as defined in the Tax Act) of the Note, any interest or amount that is considered for the purposes of the Tax Act to be interest on the Note which accrues to the Resident Holder to the end of such day, to the extent that such interest was not otherwise included in computing the Resident Holder’s income for the year or a preceding taxation year. For this purpose, an “anniversary day” means the day that is one year after the day immediately preceding the date of issue of a Note, the day that occurs at every successive one year interval from that day and the day on which a Note is disposed of.

 

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Where a Resident Holder is required to include an amount on account of interest on a Note that accrued in respect of the period prior to its date of acquisition, the Resident Holder will be entitled to a deduction in computing income of an equivalent amount. The adjusted cost base to the Resident Holder of the Note will be reduced by the amount which is so deducted.

If a Note is issued by our company at a discount from its face value, a Resident Holder who acquires the Note may be required to include an additional amount in respect of such discount in computing its income for the taxation year in which the Resident Holder acquired the Note, in taxation years in which such amount accrues or in the taxation year in which such discount is received or receivable by the Resident Holder, depending on the significance of such discount and whether our company is a corporation that is exempt from income tax pursuant to section 149 of the Tax Act at the time the Note is issued. Resident Holders should consult their own tax advisors in these circumstances as the treatment of the discount may vary with the facts and circumstances giving rise to the discount.

Any amount paid by our company to a Resident Holder as a premium, penalty or bonus because of early repayment of all or part of the principal amount of a Note before its maturity will be deemed to be received by the Resident Holder as interest on the Note at that time and will be required to be included in computing the Resident Holder’s income as described above, to the extent such amount can reasonably be considered to relate to, and does not exceed the value at the time of payment of, interest that, but for the repayment, would have been paid or payable by our company on the Note for a taxation year of our company ending after that time.

Disposition of Notes

On a disposition or deemed disposition of a Note, including a redemption, repayment prior to or on maturity or repurchase, a Resident Holder will generally be required to include in computing its income for the taxation year in which the disposition occurs the amount of interest that has accrued, or that has been deemed to have accrued, on the Note to that time except to the extent that such amount has otherwise been included in the Resident Holder’s income for the year or a preceding taxation year.

Generally, on a disposition or deemed disposition of a Note, including a redemption, payment on maturity or purchase for cancellation, a Resident Holder will realize a capital gain (or capital loss) equal to the amount, if any, by which the proceeds of disposition, net of any amount included in the Resident Holder’s income as interest and any reasonable costs of disposition, exceed (or are less than) the adjusted cost base to the Resident Holder of the Note immediately before the disposition or deemed disposition. Generally, a Resident Holder is required to include in computing its income for a taxation year one-half of the amount of any capital gain (a “taxable capital gain”) realized in the year. Subject to and in accordance with the provisions of the Tax Act, a Resident Holder is required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) realized in a taxation year from taxable capital gains realized by the Resident Holder in the year and allowable capital losses in excess of taxable capital gains for the year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years.

Holders Not Resident in Canada

This portion of the summary is generally applicable to a Holder who, at all relevant times, for purposes of the application of the Tax Act (1) is not, and is not deemed to be, resident in Canada, (2) deals at arm’s length with any transferee resident (or deemed to be resident) in Canada to whom the Holder disposes of the Notes, and (3) does not use or hold, and is not deemed to use or hold, the Notes in a business carried on in Canada (a “Non-Resident Holder”). Special rules, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that carries on an insurance business in Canada and elsewhere.

This summary assumes that no interest paid on the Notes will be in respect of a debt or other obligation to pay an amount to a person with whom our company does not deal at arm’s length, within the meaning of the Tax Act.

 

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This portion of the summary is not applicable to a Non-Resident Holder that is a “specified shareholder” (as defined in subsection 18(5) the Tax Act) of our company or that does not deal at arm’s length for purposes of the Tax Act with a “specified shareholder” of our company. Generally, for this purpose, a “specified shareholder” is a shareholder that owns or is deemed to own, either alone or together with persons with which the shareholder does not deal at arm’s length for purposes of the Tax Act, shares of our capital stock that either (i) give such shareholders 25% or more of the votes that could be cast at an annual meeting of the shareholders or (ii) have a fair market value of 25% or more of the fair market value of all of the issued and outstanding shares of our capital stock. Such Non-Resident Holders should consult their own tax advisors.

No Canadian withholding tax will apply to interest, principal or premium paid or credited to a Non-Resident Holder by our company on a Note or to the proceeds received by a Non-Resident Holder on the disposition of a Note including a redemption, repayment prior to or on maturity or repurchase, unless all or any portion of such interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation (the “Participating Debt Interest”). The interest on Fixed Rate Notes, and on Floating Rate Notes in respect of which the payment of interest is determined by reference to published rates of a central banking authority or one or more financial institutions, or to recognized market benchmark interest rates, is not Participating Debt Interest and, as such, no Canadian withholding tax will apply to interest paid or credited or deemed to be paid or credited on such Notes.

Generally, no other Canadian federal taxes on income or gains will be payable by a Non-Resident Holder on interest, principal or premium paid or credited to a Non-Resident Holder by our company on a Note or on the proceeds received by a Non-Resident Holder on the disposition of a Note including a redemption, repayment prior to or on maturity or repurchase.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

General

The following disclosure has been prepared without regard to the particular terms of any Notes that you may purchase in the future and, therefore, is provided solely as a matter of general information. You should not rely upon the following disclosure with regard to an investment in any particular Note because the disclosure does not take into account the terms of any particular Note or the tax consequences of investing in or holding any particular Note. Any Note that you purchase may have terms that would result in a tax treatment that is materially different from the treatment described below. There may be features or terms of your Note that will cause this tax section to be inapplicable to your Note. To the extent we deem necessary, we may include tax disclosure relevant to any Note you may purchase in any prospectus supplement or pricing supplement relating to your Note, and, unless the prospectus supplement or pricing supplement indicates otherwise, you should not rely on the tax disclosure below in deciding whether to invest in any Note. Moreover, in all cases, you should consult with your own tax advisor concerning the consequences of investing in and holding any particular Note you propose to purchase.

This section describes certain of the material United States federal income tax consequences of owning certain Notes that we may offer. It applies to you only if you acquire Notes in an offering and you hold Notes as capital assets (generally, property held for investment) for tax purposes. This section does not apply to persons other than U.S. holders (as defined below). The ownership of Notes that pay interest from sources within the United States may give rise to material United States federal income tax consequences to persons other than U.S. holders. If a particular offering of Notes is expected to pay interest from sources within the United States, the applicable prospectus supplement or pricing supplement will specify that fact and may discuss the material United States federal income tax consequences to persons other than U.S. holders of owning such Notes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including a dealer in securities or currencies, a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, a regulated investment company, a real estate investment trust, a tax-exempt organization (including a private foundation), an insurance company, a person that owns Notes that are a hedge or that are hedged against interest rate or currency risks, a person that holds Notes as part of a straddle, conversion transaction or a synthetic security or other integrated transactions for United States federal income tax purposes, a United States expatriate, a U.S. holder whose functional currency is not the U.S. dollar, a person subject to the alternative minimum tax, a financial institution, an entity or arrangement treated as a partnership for United States federal income tax purposes and its partners, a controlled foreign corporation or a passive foreign investment company.

 

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This discussion does not address any tax consequences arising under United States federal gift and estate or other federal tax laws or under the tax laws of any state, local or non-United States jurisdiction. This discussion is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, as well as on the income tax treaty between the United States of America and Canada. These laws are subject to differing interpretations or change, possibly on a retroactive basis. This discussion is not binding on the United States Internal Revenue Service (the “IRS”) or the courts.

If a partnership (including any entity treated as a partnership for United States federal income tax purposes) holds Notes, the United States federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding Notes should consult its tax advisor with regard to the United States federal income tax treatment of an investment in Notes.

You are urged to consult your own tax advisor regarding the United States federal, state and local and other tax consequences of owning and disposing of Notes offered under this short form prospectus in your particular circumstances.

U.S. Holders

This section describes certain of the material United States federal income tax consequences of the acquisition, ownership and disposition of Notes by a U.S. holder. You are a U.S. holder if you are a beneficial owner of Notes and you are (i) a citizen or resident of the United States, (ii) a corporation, or other entity classified as a corporation for United States federal income tax purposes, that is created or organized in or under the laws of the United States, any state in the United States or the District of Columbia, (iii) an estate whose income is subject to United States federal income tax regardless of its source, or (iv) a trust if (A) a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or (B) it has made a valid election under applicable United States Treasury regulations to be treated as a United States person.

This section deals only with Fixed Rate Notes (i) that are due to mature 30 years or less from the date on which they are issued, and (ii) that are purchased pursuant to the offering to which the applicable prospectus supplement or pricing supplement relates at the offering price on the cover page of the applicable prospectus supplement or pricing supplement. The United States federal income tax consequences of owning Notes with a term of more than 30 years, Floating Rate Notes, Notes that are issued with original issue discount for United States federal income tax purposes, Notes that are not treated as debt for United States federal tax purposes or Notes that are treated as contingent payment debt obligations for United States federal tax purposes will be discussed, if material, in the applicable prospectus supplement or pricing supplement and will not, unless otherwise specified in the applicable prospectus supplement or pricing supplement, be treated in accordance with the discussion in this section.

Payments of Interest

In general, you will be taxed on any interest on your Notes, whether payable in Canadian dollars or any other currency, as ordinary income at the time you receive the interest or when it accrues, depending on your method of accounting for United States tax purposes.

Unless the applicable prospectus supplement or pricing supplement states otherwise, Notes will, for United States federal income tax purposes, be accounted for as being issued by our company or one of its non-United States affiliates, rather than by a United States branch or subsidiary. Assuming this treatment is respected, interest paid by us on such Notes will generally be income from sources outside the United States, subject to the rules regarding the foreign tax credit allowable to a U.S. holder. Under the foreign tax credit rules, interest included in income from sources outside the United States will, depending on your circumstances, be either “passive” or “general” income for purposes of computing the foreign tax credit. If, on the contrary, a particular offering of Notes is expected to pay interest from sources within the United States, the applicable prospectus supplement or pricing supplement will state that fact, if material. Interest from sources within the United States is not foreign source income for purposes of computing the foreign tax credit.

 

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Cash Basis Taxpayers. If you are a taxpayer that uses the cash receipts and disbursements method of accounting for tax purposes and you receive an interest payment that is denominated in, or determined by reference to, a currency other than the U.S. dollar, you must recognize income equal to the U.S. dollar value of the interest payment, based on the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars.

Accrual Basis Taxpayers. If you are a taxpayer that uses an accrual method of accounting for tax purposes, you may determine the amount of income that you recognize with respect to an interest payment denominated in, or determined by reference to, a currency other than the U.S. dollar by using one of two methods. Under the first method, you will determine the amount of income accrued based on the average exchange rate in effect during the interest accrual period or, with respect to an accrual period that spans two taxable years, that part of the period within the taxable year.

If you elect the second method, you would determine the amount of income accrued on the basis of the exchange rate in effect on the last day of the accrual period, or, in the case of an accrual period that spans two taxable years, the exchange rate in effect on the last day of the part of the period within the taxable year. Additionally, under this second method, if you receive a payment of interest within five business days of the last day of your accrual period or taxable year, you may instead translate the interest accrued into U.S. dollars at the exchange rate in effect on the day that you actually receive the interest payment. If you elect the second method, it will apply to all debt instruments that you hold at the beginning of the first taxable year to which the election applies and to all debt instruments that you subsequently acquire. You may not revoke this election without the consent of the IRS.

When you actually receive an interest payment, including a payment attributable to accrued but unpaid interest upon the sale or retirement of your Note, denominated in, or determined by reference to, a currency other than the U.S. dollar for which you accrued an amount of income, you will recognize ordinary income or loss measured by the difference, if any, between the exchange rate that you used to accrue interest income and the exchange rate in effect on the date of receipt, regardless of whether you actually convert the payment into U.S. dollars.

Purchase, Sale and Retirement of Notes

Your tax basis in your Note will generally be the U.S. dollar cost of your Note. If you purchase your Note with foreign currency, the U.S. dollar cost of your Note will generally be the U.S. dollar value of the purchase price on the date of purchase. However, if you are a cash basis taxpayer or an accrual basis taxpayer that so elects and your Note is traded on an established securities market, as defined in the applicable Treasury regulations, the U.S. dollar cost of your Note will be the U.S. dollar value of the purchase price on the settlement date of your purchase.

You will generally recognize capital gain or loss on the sale or retirement of your Note equal to the difference between the amount you realize on the sale or retirement (other than amounts attributable to accrued interest not previously included in income, which will be subject to tax as interest income as discussed above, and exchange gain or loss with respect to the principal amount of the Note, as discussed below) and your tax basis in your Note. If your Note is sold or retired for an amount in a non-United States currency, the amount you realize will be the U.S. dollar value of such amount on the date the Note is disposed of or retired, except that in the case of a Note that is traded on an established securities market, as defined in the applicable Treasury regulations, a cash basis taxpayer, or an accrual basis taxpayer that so elects, will determine the amount realized based on the U.S. dollar value of the foreign currency on the settlement date of the sale. Capital gain of a noncorporate U.S. holder is generally taxed at preferential rates where the property is held for more than one year. The deductibility of capital losses is subject to significant limitations.

You must treat any portion of the gain or loss that you recognize on the sale or retirement of a Note as ordinary income or loss to the extent attributable to changes in exchange rates. However, you take exchange gain or loss into account only to the extent of the total gain or loss you realize on the transaction.

 

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Exchange of Amounts in other than U.S. Dollars

If you receive non-U.S. currency as interest on your Note or on the sale or retirement of your Note, your tax basis in such currency will equal its U.S. dollar value when the interest is received or at the time of the sale or retirement. If you purchase foreign currency, you generally will have a tax basis equal to the U.S. dollar value of such currency on the date of your purchase. If you sell or dispose of such currency, including if you use it to purchase Notes or exchange them for U.S. dollars, any gain or loss recognized generally will be ordinary income or loss.

Medicare Tax

For taxable years beginning after December 31, 2012, a U.S. holder that is an individual or estate, or a trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the U.S. holder’s “net investment income” in the case of individuals, and the “undistributed net investment income” in the case of estates and trusts for the relevant taxable year and (2) the excess of the U.S. holder’s modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000, depending on the individual’s circumstances). A holder’s net investment income will generally include its interest income and its net gains from the disposition of Notes, unless such interest income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). If you are a U.S. holder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in Notes.

Information With Respect to Foreign Financial Assets

Under recently enacted legislation, individuals that own “specified foreign financial assets” with an aggregate value in excess of $50,000 in taxable years beginning after March 18, 2010 will generally be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts held for investment that have non-United States issuers or counterparties, and (iii) interests in foreign entities. The Notes offered under this short form prospectus may be subject to these rules. U.S. holders that are individuals are urged to consult their tax advisors regarding the application of this legislation to their ownership of the Notes.

Information Reporting and Backup Withholding

In general, if you are a noncorporate U.S. holder, we and other payors may be required to report to the IRS all payments of principal, any premium and interest on a Note. In addition, we and other payors are required to report to the IRS any payment of proceeds of the sale of your Note before maturity within the United States. Additionally, backup withholding may apply to any payments, if you fail to provide an accurate taxpayer identification number, or if you are notified by the IRS that you have failed to report all interest and dividends required to be shown on your United States federal income tax returns. You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your income tax liability by timely filing a refund claim with the IRS.

RISK FACTORS

In addition to the other information contained and incorporated by reference in this short form prospectus, a purchaser should consult its own financial and legal advisors and should carefully consider the following risk factors before investing in the Notes. Notes will not be an appropriate investment for a purchaser if the purchaser does not understand the terms of the Notes or financial matters in general. A purchaser should not purchase Notes unless the purchaser understands, and can bear, all of the investment risks involving the Notes. For a discussion of the risks to which our business and industry are subject, please see the section entitled “Risk Factors” in our company’s annual information form and the section entitled “Risk Management and Risk Factors” in our annual MD&A. In addition to those risks, an investment in the Notes is subject to the following additional risks:

 

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We Must Receive Dividends and Other Payments from Our Subsidiaries in Order to Make Payments to Holders of Notes

We are a holding company that has no significant assets or operations other than the debt and equity of our subsidiaries. Our most significant subsidiary is Hydro One Networks Inc., a regulated wholly-owned subsidiary which owns and operates our transmission and distribution assets. We are dependent on dividends, interest, loans and other payments from this and other subsidiaries to meet our debt service and other obligations.

Our subsidiaries are separate legal entities and have no obligation to pay any amounts due under the Notes and, except for their respective obligations under existing intercompany debt obligations owing to us, have no obligation to make funds available to us, whether by dividends, interest, loans or other payments. In addition, these subsidiaries have not guaranteed the Notes. In the event of bankruptcy, liquidation or reorganization of any of our subsidiaries, the creditors of these subsidiaries will generally be entitled to the payment of their claims before any assets are made available for distribution to us, except to the extent that we are recognized as a creditor of those subsidiaries.

Our subsidiaries currently are not restricted in terms of their ability to pay dividends or make other payments to us, other than by solvency provisions under generally applicable Ontario corporate law. However, they could become so restricted in the future by, among other things, other laws as well as agreements to which they may become parties in the future.

There May Be No Trading Market for the Notes and if One Develops, the Notes May Be Subject to Trading Price Fluctuations

The Notes are new issues of securities for which, unless otherwise indicated in a prospectus supplement or pricing supplement, there is no existing trading market. We cannot predict whether any active trading market will develop for the Notes, even if the Notes are listed on a stock exchange.

Even if an active trading market develops for the Notes, the Notes could trade at prices that may be higher or lower than their initial offering prices, depending on many factors, including prevailing interest rates, our results of operations and financial position, the ratings assigned to the Notes and our other debt securities, and the markets for similar debt securities.

If you sell any Notes before their maturity, you may have to do so at a substantial discount from the issue price, and as a result you may suffer substantial losses.

Investors May Be Subject to the Risk of Exchange Rate Fluctuations

An investment in Notes that are denominated or payable in a currency other than the functional currency of the investor entails significant risks that are not associated with a similar investment in a security denominated in the functional currency of the investor. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the two currencies, the possibility of the imposition or modification of foreign exchange controls in respect of one or both of the currencies, and potential illiquidity in the secondary market. These risks generally depend on circumstances over which we have no control including political events, government policy and macroeconomic conditions. These risks will vary depending upon the currency or currencies involved and, where appropriate, will be more fully described in a prospectus supplement or pricing supplement.

In certain circumstances, investors may receive payments in currencies other than the currency in which the Notes are denominated. This may subject investors to exchange rate risk in respect of the conversion of principal and interest payments on the Notes from the currency in which the Notes are denominated to the currency of the payment which they receive, and they may also bear any costs of conversion incurred in connection therewith. For example, United States investors who hold Notes through DTC where CDS acts as Depository and who do not elect to receive principal and interest payments in Canadian dollars will be subject to exchange rate risk in respect of the conversion of Canadian dollar principal and interest payments to U.S. dollars, and will also bear any costs of conversion incurred in connection therewith.

 

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The Notes will be governed by and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. A judgment by a Canadian court relating to any Note may be awarded only in Canadian currency and such judgment may be based on a rate of exchange in existence on a day other than the day of payment.

This short form prospectus does not describe all the risks of an investment in the Notes denominated or payable in a currency other than an investor’s functional currency, and prospective investors should consult their own financial and legal advisor as to the risks entailed with respect thereto. Notes denominated in currencies other than an investor’s functional currency are not appropriate investments for investors who are unfamiliar with foreign currency transactions.

Changes in Interest Rates Will Affect the Market Price or Value of the Notes

Generally, the market price or value of the Notes will decline as prevailing interest rates for comparable debt instruments rise, and increase as prevailing interest rates for comparable debt instruments decline. Fluctuations in interest rates may also impact borrowing costs of our company which may adversely affect its creditworthiness. It is impossible to predict whether interest rates will rise or fall.

Changes in Creditworthiness or Credit Ratings May Affect the Market Price or Value of the Notes

The perceived creditworthiness of our company and changes in credit ratings of the Notes may affect the market price or value and the liquidity of the Notes. In addition, negative changes in our company’s credit rating may affect the credit ratings of the Notes.

Floating Rate Notes Are, By Their Nature, Uncertain

Investments in Floating Rate Notes entail risks not associated with investments in Fixed Rate Notes. The resetting of the applicable rate on a Floating Rate Note may result in a lower interest rate as compared to a Fixed Rate Note issued at the same time. The applicable rate on a Floating Rate Note will fluctuate in accordance with fluctuations in the instrument or obligation or other measure on which the applicable rate is based, which in turn may fluctuate and be affected by a number of interrelated factors, including economic, financial and political events over which our company has no control.

The Notes May Be Subject to Early Redemption

Depending on the terms of the Notes, we may have the right to redeem them, or the Notes may be automatically redeemable under some circumstances. If the Notes are redeemed, depending on the market conditions at the time of redemption, you may not be able to reinvest the redemption proceeds in a security with a comparable return.

LEGAL MATTERS

Certain legal matters in connection with any offering hereunder will be passed upon by Osler, Hoskin & Harcourt LLP for our company in respect of both Canadian and United States legal matters and by Blake, Cassels & Graydon LLP for the Dealers in respect of Canadian legal matters and Skadden, Arps, Slate, Meagher & Flom LLP in respect of United States legal matters. The partners and associates of Osler, Hoskin & Harcourt LLP and Blake, Cassels & Graydon LLP beneficially own, directly or indirectly, less than one percent of the securities of our company or any associate or affiliate of our company.

AUDITORS, REGISTRAR AND TRANSFER AGENT

The auditors of our company are KPMG LLP, Bay Adelaide Centre, 333 Bay Street, Suite 4600, Toronto, Ontario M5H 2S5. KPMG LLP is independent in Ontario in accordance with its rules of professional conduct.

Registers for the registration and transfer of the Notes issued in registered form are kept at the principal offices of the Transfer Agent in the City of Toronto. A U.S. affiliate of the Trustee and the Transfer Agent may also act as co-transfer agent for the Notes, but only to the extent necessary in connection with offers and sales of the Notes in the United States.

 

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PART II – INFORMATION NOT REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

Basis for Form F-10 Eligibility

The Registrant is filing this Registration Statement in reliance upon General Instruction I.C.(5) to Form F-10. The Registrant has a reasonable belief that it would have been eligible to register investment grade, non-convertible securities on Form F-9 as of December 30, 2012 on the basis of satisfying the credit rating requirements of General Instruction I.A. to Form F-9 and on the basis that the public float requirements of General Instruction I.B.(4) to Form F-9 would not have applied to non-convertible securities. The Registrant will file a final prospectus for any offering to be made under this Registration Statement on or prior to December 31, 2015.

Indemnification of Directors and Officers

The Registrant is a corporation formed under the Business Corporations Act (Ontario) (the “OBCA”). OBCA corporations may indemnify a current or former director or officer of the corporation or another individual who acts or acted at the corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity (an “Eligible Party”). Such indemnity may include all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the Eligible Party is involved as a result of acting or having acted as a director or officer of the corporation, or acting or having acted at the corporation’s request as a director or officer, or individual acting in a similar capacity, of such other entity. An OBCA corporation may not indemnify an Eligible Party unless the Eligible Party has:

(a) acted honestly and in good faith with a view to the best interests of the corporation or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the corporation’s request; and

(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the Eligible Party had reasonable grounds for believing that the individual’s conduct was lawful.

Eligible Parties will be entitled to indemnification from an OBCA corporation if (i) they have not been judged by a court or other competent authority to have committed any fault or omitted to do anything they ought to have done and (ii) they fulfill conditions (a) and (b) set out above this paragraph. An OBCA corporation may advance money to an Eligible Party for the costs, charges and expenses of a proceeding referred to above; however, such Eligible Party must repay the money if they do not fulfill condition (a) set out above this paragraph. OBCA corporations may purchase and maintain insurance for the benefit of those individuals entitled to indemnification under the OBCA. In the case of a derivative action, indemnification and any cost, charge or expense advancement may only be made with court approval.

The by-laws of the Registrant provide that, subject to the limitations contained in the OBCA, the Registrant shall indemnify any director or officer, or former director or officer, of the Registrant, or any individual who, at the request of the Registrant, acts or has acted as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including, without


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limitation, any amount paid to settle an action or satisfy a judgment, reasonably incurred by such individual in respect of any civil, criminal, administrative, investigative or other proceeding in which such individual is involved as a result of acting or having acted as a director or officer of the Registrant, or acting or having acted at the Registrant’s request as a director or officer, or individual acting in a similar capacity, of such other entity. Such director, officer or individual must have acted honestly and in good faith, with a view to the best interests of the Registrant (or, if applicable, in the best interests of the other entity for which the individual acted as a director, officer or in a similar capacity at the Registrant’s request), and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that such individual’s conduct was lawful. The by-laws also provide that the Registrant shall indemnify any such individuals referred to above in such other circumstances as the OBCA or law permits or requires.

The by-laws further provide that the above described indemnification provisions shall not affect any other right to indemnification to which any individual may be entitled.

The Registrant maintains directors’ and officers’ liability insurance which insures the directors and officers of the Registrant and its subsidiaries against certain losses resulting from any wrongful act committed in their official capacities for which they become obligated to pay, subject to policy restrictions and to the extent permitted by applicable law.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

 

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EXHIBITS

The following exhibits have been filed as part of this Registration Statement.

 

Exhibit
Number

  

Description

1.1*    Dealer Agreement, dated September 4, 2013, among Hydro One Inc. and the dealers party thereto
4.1†    Annual Information Form of the Registrant dated March 28, 2013 for the year ended December 31, 2012
4.2†    Audited annual financial statements of the Registrant as at and for the years ended December 31, 2012 and December 31, 2011, together with the auditors’ report thereon and Management’s Discussion and Analysis of the Registrant for the year ended December 31, 2012
4.3†    Unaudited interim financial statements of the Registrant as at and for the six months ended June 30, 2013 and 2012, together with Management’s Discussion and Analysis for the six months ended June 30, 2013 and 2012
5.1*    Consent of KPMG LLP
6.1†    Powers of Attorney (included in Part III of this Registration Statement)
7.1†    Trust Indenture, dated June 4, 2001, between the Registrant and Computershare Trust Company of Canada
7.2†    Twenty-Second Supplemental Trust Indenture, dated July 29, 2011, between the Registrant and Computershare Trust Company of Canada (effecting certain amendments to the Trust Indenture)

 

Previously filed
* Filed herewith

 

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PART III – UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

Item 1. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form F-10 or to transactions in said securities.

Item 2. Consent to Service of Process

The Registrant has previously filed with the Commission a written irrevocable consent and power of attorney on Form F-X in connection with this Registration Statement. Any change to the name or address of the agent for service of the Registrant or the trustee shall be communicated promptly to the Commission by amendment to Form F-X referencing the file number of this Registration Statement.


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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-10 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereonto duly authorized, in the City of Toronto, Province of Ontario, Canada, on September 4, 2013.

 

HYDRO ONE INC.

By: 

 

/s/ Sandy Struthers

  Name:   Sandy Struthers
  Title:   Chief Administration Officer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by or on behalf of the following persons in the capacities indicated, on September 4, 2013.

 

*

Carmine Marcello

  

President and Chief Executive Officer and Director

(Principal Executive Officer)

*

James Arnett

  

Director

*

Kathryn Bouey

  

Director

*

George Cooke

  

Director

*

Don MacKinnon

  

Director


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*

Michael Mueller

  

Director

*

Yezdi Pavri

  

Director

*

Robert Pace

  

Director

*

Gale Rubenstein

  

Director

*

Douglas E. Speers

  

Director

 

*By:  

/s/ Sandy Struthers

  Name:   Sandy Struthers
  Title:   attorney-in-fact


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AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of Section 6(a) of the Securities Act of 1933, as amended, the undersigned has signed this Registration Statement, solely in the capacity of the duly authorized representative of Hydro One Inc. in the United States, in the City of New York, State of New York, on September 4, 2013.

 

CT Corporation System

(Authorized Representative)

By:    /s/ JoAn Tolosa
 

Name:

Title:

 

Joan Tolosa

Assistant Secretary


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EXHIBIT INDEX

 

Exhibit
Number

  

Description

1.1*    Dealer Agreement, dated September 4, 2013, among Hydro One Inc. and the dealers party thereto
4.1†    Annual Information Form of the Registrant dated March 28, 2013 for the year ended December 31, 2012
4.2†    Audited annual financial statements of the Registrant as at and for the years ended December 31, 2012 and December 31, 2011, together with the auditors’ report thereon and Management’s Discussion and Analysis of the Registrant for the year ended December 31, 2012
4.3†    Unaudited interim financial statements of the Registrant as at and for the six months ended June 30, 2013 and 2012, together with Management’s Discussion and Analysis for the six months ended June 30, 2013 and 2012
5.1*    Consent of KPMG LLP
6.1†    Powers of Attorney (included in Part III of this Registration Statement)
7.1†    Trust Indenture, dated June 4, 2001, between the Registrant and Computershare Trust Company of Canada
7.2†    Twenty-Second Supplemental Trust Indenture, dated July 29, 2011, between the Registrant and Computershare Trust Company of Canada (effecting certain amendments to the Trust Indenture)

 

Previously filed
* Filed herewith
EX-1.1 2 d587664dex11.htm EX-1.1 EX-1.1

Exhibit 1.1

DEALER AGREEMENT

Hydro One Inc.

483 Bay Street

15th Floor, North Tower

Toronto, Ontario

M5G 2P5

Ladies and Gentlemen:

We understand that Hydro One Inc. (the “Corporation”) proposes to issue and sell in all the provinces of Canada (the “Jurisdictions”), from time to time, unsecured medium term notes with maturities of not less than one year, as described in the English and French language versions of the Corporation’s Canadian final short form base shelf prospectus dated September 4, 2013 (the “Notes”) as amended by any Canadian Prospectus Amendment(s) (as defined below) and as supplemented by any Canadian Prospectus Supplement(s) (as defined below) and any Canadian Pricing Supplement (as defined below), in each case to be prepared and filed in the Jurisdictions.

We further understand that the Corporation proposes to offer and sell the Notes in the United States, from time to time, to the extent provided herein. The Notes may either be offered or sold in the United States pursuant to (i) an effective registration statement on Form F-10 under the Multijurisdictional Disclosure System (“MJDS”) (including any post-effective amendments thereto as well as all exhibits thereto and documents incorporated by reference therein, the “Registration Statement”) filed by the Corporation with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the U.S. Securities Act of 1933, as amended (the “1933 Act”) or (ii) Rule 144A under the 1933 Act (“Rule 144A”), if available.

The Notes may also be offered and sold in jurisdictions other than the Jurisdictions and the United States with the prior consent of the Corporation, subject to compliance by the Dealers with all applicable laws of such other jurisdictions.


 

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In this agreement (the “Agreement”) the term “Distribution” means “distribution” or “distribution to the public” as those terms are defined in applicable securities legislation of the Jurisdictions; the term “Canadian Base Prospectus” means the aforementioned Canadian final short form base shelf prospectus including any documents or information incorporated therein by reference from time to time, including without limitation, any “marketing materials” as defined under applicable Canadian provincial securities laws, incorporated or deemed to be incorporated by reference in the Canadian Prospectus (as defined below) for an offering of a Tranche (as defined below) of Notes; the term “Canadian Prospectus” means in respect of an offering of a Tranche (as defined below) of Notes, the Canadian Base Prospectus, as then amended by any Canadian Prospectus Amendment(s) (as defined below) and then supplemented by any Canadian Prospectus Supplement(s) (as defined below) and any Canadian Pricing Supplement (as defined below); the term “Canadian Prospectus Amendment” means any amendment of the Canadian Base Prospectus prepared and filed with the Canadian Securities Administrators and includes an amendment by way of a material change report as contemplated by National Instrument 44-102 “Shelf Distributions” of the Canadian Securities Administrators or any successor instrument, rule or policy (“National Instrument 44-102”); the term “Canadian Prospectus Supplement” means any prospectus supplement, other than a Canadian Pricing Supplement, to the Canadian Base Prospectus prepared and filed with the Canadian Securities Administrators and, for greater certainty, also includes a draft or preliminary form of such prospectus supplement; the term “Canadian Pricing Supplement” means any pricing supplement to the Canadian Base Prospectus prepared in connection with the issuance, Distribution, offering or sale of the Notes setting out the aggregate principal amount, interest rate(s), maturity date(s) and other terms of a particular offering of a series of the Notes (a “Tranche”) and, for greater certainty, also includes a draft or preliminary form of such pricing supplement (in each case in both the English and French languages unless the context otherwise requires); the term “U.S. Base Prospectus” means a version of the Canadian Base Prospectus prepared for use in the United States in connection with the Registration Statement containing such additions, deletions or other changes to the Canadian Base Prospectus as may be permitted or required by the instructions to Form F-10 (the Canadian Base Prospectus and U.S. Base Prospectus are herein together defined as the “Base Prospectuses”); the term “U.S. Prospectus” means, in respect of an offering of a Tranche of Notes, a version of the Canadian Prospectus prepared for use in the United States in respect of such Tranche and in connection with the Registration Statement containing such additions, deletions or other changes to such Canadian Prospectus as may be permitted or required by the instructions to Form F-10 (the Canadian Prospectus and U.S. Prospectus are herein together defined as the “Prospectuses”); the term “U.S. Prospectus Amendment” means a version of the Canadian Prospectus Amendment containing such additions, deletions or other changes to the Canadian Prospectus Amendment as may be permitted or required by the instructions to Form F-10 (the Canadian Prospectus Amendment and U.S. Prospectus Amendment are herein together defined as the “Prospectus Amendments”); the term “U.S. Prospectus Supplement” means a version of the Canadian Prospectus Supplement containing such additions, deletions or other changes to the Canadian Prospectus Supplement as may be permitted or required by the instructions to Form F-10 (the Canadian Prospectus Supplement and U.S. Prospectus Supplement are herein together defined as the “Prospectus Supplements”); the term “U.S. Pricing Supplement” means a version of the Canadian Pricing Supplement containing such additions, deletions or other changes to the Canadian Pricing Supplement as may be permitted or required by the instructions to Form F-10 (the Canadian Pricing Supplement and U.S. Pricing Supplement are herein together defined as the “Pricing Supplements”); the term “Time of Sale” means, with respect to any Tranche of the Notes, the time when sales of any Notes forming part of that Tranche are first made to any investors in the United States; and the term “Time of Sale Information” means, with respect to any Tranche of the Notes, the U.S. Prospectus in the form delivered to investors in the United States at or prior to the Time of Sale, together with any Issuer Free Writing Prospectus (as defined in Section 7.3(j) below) prepared by or authorized for use by the Corporation and any other written or oral communication by the Dealers (or their U.S. Affiliates (as defined below)) to prospective investors in the United States of the same information that is ultimately contained in the final version of the U.S. Prospectus Supplement or U.S. Pricing Supplement, as applicable, in respect of such Tranche of Notes.

The Notes will be issued pursuant to a trust indenture dated as of June 4, 2001 made between Hydro One Inc. and Computershare Trust Company of Canada as trustee, registrar and transfer agent (such trust indenture, including any applicable supplemental trust indentures thereto, the “Trust Indenture”). To the extent necessary in connection with offers and sales of the Notes in the United States, a U.S. affiliate of Computershare Trust Company of Canada may also be a party to the Trust Indenture, acting in the capacity of co-transfer agent, but not as a co-trustee.


 

- 3 -

Subject to the terms and conditions contained in this Agreement, the Corporation hereby appoints, severally, BMO Nesbitt Burns Inc., Casgrain & Company Limited, CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., Laurentian Bank Securities Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc. and TD Securities Inc. (collectively, the “Dealers” or individually a “Dealer”), as its non-exclusive agents in the Jurisdictions to solicit, from time to time, offers to purchase Notes, and to offer and sell the Notes in the Jurisdictions either directly or through other investment dealers approved in writing by the Corporation (such other investment dealers, in any of the Jurisdictions, the United States or elsewhere, referred to herein as the “Selling Firms”) and the Dealers hereby severally accept such appointment. The Corporation also hereby appoints, subject to the terms and conditions contained in this Agreement, severally, the Dealers as its non-exclusive agents in the United States to solicit, from time to time, offers to purchase Notes, and to offer and sell the Notes in the United States, either directly (to the extent permitted) in accordance with Rule 15a-6 under the U.S. Securities Exchange Act of 1934, as amended (the “1934 Act”), through their respective U.S. registered broker-dealer affiliates (the “U.S. Affiliates”) or through Selling Firms approved in writing by the Corporation, and the Dealers hereby severally accept such appointment. The Corporation also hereby appoints, subject to the terms and conditions contained in this Agreement, severally, the Dealers as its non-exclusive agents to solicit, from time to time, offers to purchase Notes, and to offer and sell the Notes outside the Jurisdictions and the United States (to the extent the Corporation has consented to offers and sales being made in such jurisdictions) either directly (to the extent permitted), through their respective affiliates outside the Jurisdictions and the United States (the “Foreign Affiliates”) or through Selling Firms approved in writing by the Corporation, and the Dealers hereby severally accept such appointment. These agency sales will be subject to acceptance by the Corporation of all offers to purchase Notes and to the requirements of any applicable securities or other laws. A Dealer, either alone or together with one or more of the other Dealers, may, from time to time, purchase, as principal for resale to the public, Notes from the Corporation at such prices and at such commissions, if any (up to a maximum aggregate commission of 1.5% of the principal amount of the Notes sold), as may from time to time be agreed upon between the Corporation and the Dealer or Dealers. The Corporation may also offer the Notes, from time to time, directly to the public at such prices and upon such terms as may be agreed to by the Corporation and the purchaser of the Notes, provided that the Corporation may not so offer Notes: (i) on a date the Corporation requests Dealers to solicit offers to purchase Notes; or (ii) during a period commencing on the date on which a Dealer, either alone or together with one or more of the other Dealers, has agreed to purchase Notes as principal for resale and ending, unless otherwise agreed with such Dealer or Dealers, on the earlier of ten (10) business days in Toronto, Ontario (“Business Days”) thereafter or the date the Dealers have completed distribution of such purchased Notes as so determined by the Dealers, acting reasonably. No commission shall be payable to the Dealers for sales made directly by the Corporation. The Corporation may appoint additional or alternate dealers hereunder by delivering to the then existing Dealer or Dealers a copy of this Agreement signed by each such additional dealer, and a copy of a Canadian Prospectus Amendment signed by the additional dealers (together with the related U.S. Prospectus Amendment), whereupon such additional dealer shall become one of the Dealers hereunder.

For each Note sold under this Agreement by one or more of the Dealers acting as agent or agents of the Corporation, the Corporation will pay to such Dealer or to such Dealers collectively a commission as determined in accordance with Exhibit A or such other commissions as the Corporation and the Dealer or Dealers may determine from time to time. The aforesaid commission in respect of any particular Note will be payable in the same currency as the principal of the Note.


 

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For a Tranche of Notes for which a New York Stock Exchange listing is contemplated, the Corporation shall appoint one or more lead Dealers (the “Lead Dealer(s)”) from among the Dealers to act on their behalf and to assist with such listing. The Corporation may, in its sole discretion, apply to list for trading on the New York Stock Exchange any Tranche of Notes that is to be offered and sold in the United States pursuant to the Registration Statement, following consultation with the Lead Dealer(s) for the specific Tranche of Notes to be so listed, and each of the Lead Dealer(s) participating in the offering of the specific Tranche of Notes to be so listed (together with any of the other Dealers participating in the offering of the specific Tranche of Notes, as selected by the Corporation) will use its commercially reasonable efforts to cause its U.S. Affiliate to provide such assistance that the Corporation may reasonably request in connection with obtaining such listing.

TERMS AND CONDITIONS

 

1. Attributes of Notes

The Notes to be offered and sold in each Tranche shall have the attributes and characteristics in all material respects as described in the Base Prospectuses as amended by any Prospectus Amendment(s) and supplemented by any Prospectus Supplement(s) and any Pricing Supplement(s) from time to time. The Notes will be in the form agreed to from time to time by the Corporation and the Dealer(s) participating in the offering of the particular Tranche of Notes, or where no Dealer is involved in the sale of a Note in a form determined by the Corporation. Subject to the foregoing, all terms and conditions of each Note issued by the Corporation from time to time will be determined by the Corporation in its sole discretion. Such terms and conditions shall include, without limiting the generality of the foregoing, the maturities of the Notes (having a term to maturity of not less than one year), the fixed or floating interest rate and interest payment dates for the Notes, the issue price of the Notes (at par, at a premium or at a discount), the redemption or repayment provisions of the Notes, the entitlement of the holder to exchange or convert the Notes into other debt instruments of the Corporation or to extend or to retract the maturity date of the Notes and the denominations of the Notes in Canadian currency or in other currencies at the time of issue.

 

2. Filing of Documents for Continuous Offering of Notes

The Corporation will as soon as possible fulfil and will continue to fulfil during the term of this Agreement, to the satisfaction of Blake, Cassels & Graydon LLP in respect of Canadian legal matters and Skadden, Arps, Slate, Meagher & Flom LLP in respect of United States legal matters, or such other counsel acceptable to the Dealers and the Corporation (collectively, the “Dealers’ Counsel”), acting reasonably, all legal requirements: (i) to be fulfilled by the Corporation (including, from time to time, such filings, proceedings and legal requirements as are set forth in National Instrument 44-102) to enable the Notes to be continuously offered for sale and sold to the public in the Jurisdictions in compliance with National Instrument 44-102 and other applicable securities laws of each of the Jurisdictions by or through investment dealers and brokers who comply with the applicable securities laws of the Jurisdictions; and (ii) to be fulfilled by the Corporation to enable the Notes to be continuously offered for sale and sold to the public in the United States pursuant to the Registration Statement through the Dealers (to the extent permitted by Rule 15a-6 under the 1934 Act), the U.S. Affiliates and other U.S. registered broker-dealers.


 

- 5 -

3. Distribution of Notes

The Dealers shall, from time to time, solicit offers to purchase the Notes from, and sell the Notes to, members of the public in the Jurisdictions and elsewhere outside the United States (to the extent the Corporation has consented to offers and sales being made in such jurisdictions), directly or through the Selling Firms or the Foreign Affiliates, as applicable, only as permitted by and in compliance with the applicable securities laws, including without limitation, as applicable, the procedures set forth in National Policy 11-201 “Electronic Delivery of Documents” and National Policy 47-201 “Trading Securities Using the Internet and Other Electronic Means”, upon the terms and conditions set forth in the Canadian Base Prospectus as amended by any Canadian Prospectus Amendment(s) and supplemented by any Canadian Prospectus Supplement(s) and any Canadian Pricing Supplement(s) and in this Agreement. The Dealers will not solicit offers to purchase or sell the Notes so as to require registration thereof or filing of a prospectus, registration statement or other notice or document with respect thereto under the laws of any jurisdiction other than the Jurisdictions and to the extent specified in this Agreement, the United States; and will require each Selling Firm and each Foreign Affiliate, as applicable, to agree with the Dealers participating in the offering of a specific Tranche of Notes not to so solicit or sell, which agreements will be held in trust by such Dealers for the benefit of the Dealers and the Corporation. For purposes of this paragraph 3, the Dealers shall be entitled to assume that the Notes are qualified for Distribution in any Jurisdiction in which or on behalf of which a receipt or similar document for the Canadian Base Prospectus shall have been issued or deemed issued by the applicable securities regulatory authority. The Dealers shall, as soon as practicable following a request for the same made by the Corporation to the Dealers, provide the Corporation with a comprehensive breakdown of the Notes distributed by the Dealers collectively, both through agency sales and principal sales (separately enumerated), in each of the Jurisdictions where such breakdown is required for the purpose of calculating fees payable by the Corporation to securities regulatory authorities.

In order to ensure compliance with the requirements of the 1933 Act with respect to offers and sales of any particular Tranche of Notes outside the United States (the “Non-U.S. Offering Portion”), the Dealers covenant and agree that all offers and sales of any Tranche of the Notes may only be made in the Jurisdictions and elsewhere outside the United States (to the extent the Corporation has consented to offers and sales being made in such jurisdictions) if either:

 

  (a) the Non-U.S. Offering Portion of the Notes of that Tranche has been registered pursuant to the Registration Statement (a “Registered Non-U.S. Offering”), is covered by the registration fees paid by the Corporation to the SEC in respect of the Registration Statement, and is being offered and sold in Canada and elsewhere outside the United States (to the extent the Corporation has consented to offers and sales being made in such jurisdictions) as registered securities for the purposes of the 1933 Act; or


 

- 6 -

  (b) the Non-U.S. Offering Portion of the Notes is offered and sold outside the United States (an “Unregistered Non-U.S. Offering”) in accordance with Category 1 of Rule 903 of Regulation S under the 1933 Act (“Regulation S”), meaning that:

 

  (A) there are no “directed selling efforts” within the meaning of Regulation S;

 

  (B) all offers and sales are made in an “offshore transaction” within the meaning of Regulation S; and

 

  (C) either the condition in (I) or (II) below is satisfied:

(I) the Non-U.S. Offering Portion is conducted only in Canada, so as to qualify as an “overseas directed offering” within the meaning of Regulation S, made into only one country other than the United States; or

(II) the Corporation does not, at the time of any such offers or sales, have a “substantial U.S. market interest” within the meaning of Regulation S with respect to its debt securities.

Upon completion of the offering of any Tranche of Notes outside the United States, the Dealers shall report promptly to the Corporation in respect of any Non-U.S. Offering Portion, the principal amount of each Tranche of Notes that was offered and sold through the Registered Non-U.S. Offering and the principal amount of each Tranche of Notes that was offered and sold through the Unregistered Non-U.S. Offering.

The Corporation and the Dealer(s) participating in the offering of a particular Tranche of Notes may determine that all or a portion of any Tranche of Notes may be offered or sold in the United States, in which case all of such offers and sales in the United States will be made either: (A) pursuant to the Registration Statement, in which case the Notes will be registered securities for the purpose of the 1933 Act (a “Registered U.S. Offering”); or (B) following consultation with United States counsel to the Corporation and United States counsel to the Dealers for the offering of the Tranche, pursuant to Rule 144A, if available, in which case the Notes will be restricted securities within the meaning of Rule 144 under the 1933 Act (an “Unregistered U.S. Offering”). Upon completion of the offering of any Tranche of Notes in the United States, the Dealers shall confirm promptly to the Corporation the principal amount of each Tranche of Notes that was offered and sold in the United States through the Registered U.S. Offering or the principal amount of each Tranche of Notes that was offered and sold through the Unregistered U.S. Offering, as applicable.

If a Tranche of Notes or any portion thereof is to be offered or sold in an Unregistered U.S. Offering, the provisions of Exhibit C will apply.

The Corporation represents and covenants to the Dealers that, (i) as of the date of this Agreement, it is a “foreign issuer” within the meaning of Regulation S and reasonably believes that there is no “substantial U.S. market interest” in its debt securities within the meaning of Regulation S, and (ii) it will promptly (and in any event within three Business Days prior to the offering of any particular Tranche of Notes) inform the Dealers and Dealers’ Counsel in writing (a “Regulation S Notice”) if it ceases to be a “foreign issuer” within the meaning of Regulation or a “substantial U.S. market interest” develops in its debt securities such that any Unregistered Non-U.S. Offering must therefore be conducted only in Canada, so as to qualify as an “overseas directed offering” within the meaning of Regulation S. The Corporation’s delivery to the Dealers of the documents referred to in clauses 6(a) and 6(b) hereof in an offering of any particular Tranche of Notes that is not a Registered Non-U.S. Offering without a Regulation S Notice shall constitute the Corporation’s representation and warranty to the Dealers that the Corporation continues to be a “foreign issuer” within the meaning of Regulation S and reasonably believes that there is no “substantial U.S. market interest” in its debt securities within the meaning of Regulation S.


 

- 7 -

4. Related Issuers

Upon request by the Corporation, the Dealers shall provide to the Corporation a list of their respective related issuers. If, during the term of this Agreement, there is any change in the related issuers so identified, the Dealer being affected by such change will promptly notify the Corporation and each other Dealer in writing of such change and the Corporation will determine whether such change establishes a related or connected issuer of the Corporation. If, based on the foregoing, the Corporation at any time reasonably determines that a related or connected issuer relationship has been established with one or more of the Dealers, the Corporation shall notify the Dealers and convene a meeting with the Dealers to consider the respective obligations of the Corporation and the Dealers pursuant to any applicable laws of the Jurisdictions.

The Dealers shall ensure that each Selling Firm, prior to its appointment as such, has delivered to the Dealers a representation to the effect that the Corporation is not a related issuer of such Selling Firm and that each of such Selling Firms, any related issuer of such Selling Firm and the directors, officers or partners of such Selling Firm and of any related issuer of such Selling Firm is not a person to which the Corporation or any related issuer of the Corporation owes any indebtedness or with which the Corporation or any related issuer of the Corporation has any other relationship, unless the Dealers and the Corporation have agreed in writing that the Corporation is not a related issuer or connected issuer of such Selling Firm. The Dealers shall hold such representations (which shall be continuing representations until the Corporation shall have been notified to the contrary in writing) in trust for the benefit of the Corporation and the Dealers. If the Corporation at any time reasonably determines that a related or connected issuer relationship has been established with one or more of the Selling Firms, it shall notify the Dealers and convene a meeting with the Dealers and such Selling Firm or Selling Firms to consider the respective obligations of the Corporation, the Dealers and such Selling Firm or Selling Firms pursuant to any applicable laws of the Jurisdictions.

For the purposes of this paragraph 4, “related issuer” and “connected issuer” have the meanings ascribed thereto in National Instrument 33-105 “Underwriting Conflicts”.

 

5. No Trade Period

 

5.1 The Corporation shall not, during the time period in which the Corporation believes, in its reasonable judgment, that any change or fact (which change or fact has not been announced or is the subject of the filing of a confidential material change report) has occurred or is sufficiently imminent and probable that in each case a reasonably prudent reporting issuer would not trade in its own securities (the “No Trade Period”), permit or continue the Distribution of the Notes until such No Trade Period ends through a change in circumstances or a public announcement of such change or fact being made.


 

- 8 -

5.2 Any change or fact, as used in paragraphs 5.1 and 5.3, shall mean the following:

 

  (a) any change (actual, anticipated, contemplated or threatened) in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or ownership of the Corporation and its subsidiaries taken together, or

 

  (b) any change in any matter covered by a statement contained or incorporated by reference in the Base Prospectuses, as then amended or supplemented, as the same is immediately prior to such change, or

 

  (c) any fact that has arisen which would have been required to have been stated in the Base Prospectuses, as then amended or supplemented, had the fact arisen on, or prior to, the date of the Base Prospectuses, as then amended or supplemented,

which change or fact in any case is, or may be, of such a nature as to: (i) result in the Canadian Base Prospectus, as then amended or supplemented, as the same is immediately prior to such change or fact, containing a “misrepresentation” (as defined in applicable Canadian securities laws) or would result in the Canadian Base Prospectus, as then amended or supplemented, as the same is immediately prior to such change or fact, not complying with the laws of any Jurisdiction in any material respect; or (ii) result in the Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, not misleading; or result in the U.S. Base Prospectus containing an untrue statement of a material fact or omitting to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

5.3 The Corporation shall promptly comply with all applicable filing and other requirements under applicable securities laws in the Jurisdictions and the United States arising as a result of such fact or change but need not submit any document required to be filed to the Dealers or the Dealers’ Counsel for review or approval. The Corporation shall provide the Dealers with copies of such filings or other documents required under such securities laws and shall not continue Distribution of the Notes if a confidential filing has been made, provided however if such fact or change is the subject of a confidential material change report, the Corporation shall terminate Distribution of the Notes and shall promptly notify any Dealer which has agreed to purchase any such Note as principal or to offer for sale any such Note as agent during the Distribution of such Notes (without a copy of such notice to either any Dealer which has not agreed to purchase any such Note as principal or to offer for sale any such Note as agent, or the Dealers’ Counsel) of such termination of Distribution and of the termination of such Dealer’s purchase, without providing any Dealer with the particulars of the basis of such termination. In addition, if, during the period of the Distribution of the Notes, there is any change in any applicable securities laws which results in a requirement to file a Canadian Prospectus Amendment or a Canadian Prospectus Supplement to the Canadian Base Prospectus, as then amended or supplemented, or a requirement to amend or supplement the U.S. Base Prospectus, as then amended or supplemented, or U.S. Private Placement Memorandum (as defined in Exhibit C hereto), as then amended or supplemented, the Corporation shall, to the satisfaction of the Dealers’ Counsel, acting reasonably, make any such filing and will amend or supplement the U.S. Base Prospectus or U.S. Private Placement Memorandum, in each case, as then amended or supplemented, as required as soon as possible.


 

- 9 -

6. Deliveries to Dealers

The Corporation shall cause to be delivered to the Dealers:

 

  (a) on the date of this Agreement, copies of the Canadian Base Prospectus (in both the English and French languages to the extent applicable) signed as required by the laws of the Jurisdictions and any other applicable laws, and copies of the Registration Statement (which for clarity includes the U.S. Base Prospectus), in each case as acceptable in form and substance to the Dealers’ Counsel, acting reasonably, including copies of any documents or information incorporated by reference therein not previously delivered hereunder and not available on SEDAR at www.sedar.com or, in the case of the Registration Statement and the exhibits thereto, not available on EDGAR at www.sec.gov, and such additional financial and statistical information (if any) as the Dealers may reasonably require;

 

  (b) as soon as they are available, copies of any Canadian Prospectus Amendment, any Canadian Prospectus Supplement and any Canadian Pricing Supplement (in both the English and French languages to the extent applicable) as contemplated by National Instrument 44-102, signed as required by the laws of the Jurisdictions, copies of any U.S. Prospectus Amendment, U.S. Prospectus Supplement and any U.S. Pricing Supplement filed or required to be filed pursuant to General Instruction II.L of Form F-10 and any other applicable laws and copies of any preliminary and final version of any U.S. Private Placement Memorandum acceptable in form and substance to the Dealers’ Counsel, acting reasonably, including copies of any documents or information incorporated by reference therein not previously delivered hereunder and not available on SEDAR at www.sedar.com or on EDGAR at www.sec.gov;

 

  (c) at the time of the delivery (or as soon as practicable thereafter) to the Dealers pursuant to this paragraph 6 of the French language version of the Canadian Base Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement or any Canadian Pricing Supplement:

 

  (i) an opinion of the Corporation’s local counsel in Québec, dated the date of such document, and acceptable in form and substance to the Dealers’ Counsel, acting reasonably, substantially to the effect that, except for any capitalization tables, summary financial information, management’s discussion and analysis, financial statements, notes to financial statements and auditors’ reports and similar financial information contained in such document (collectively, the “Financial Information”), each of the documents in the French language and any document or information in the French language incorporated by reference therein is in all material respects a complete and proper translation of the corresponding document in the English language; and


 

- 10 -

  (ii) an opinion of the Corporation’s auditors, dated the date of such document, and acceptable in form and substance to the Dealers’ Counsel, acting reasonably, substantially to the effect that the French language version of the Financial Information contained in such document is in all material respects a complete and proper translation of the English language version of such Financial Information;

 

  (d) at the time of the delivery to the Dealers of the Base Prospectuses, a comfort letter from the Corporation’s auditors, dated the date of the Base Prospectuses, and acceptable in form and substance to the Dealers’ Counsel, acting reasonably, with respect to certain financial and accounting information relating to the Corporation contained or incorporated by reference therein, which comfort letter shall be based on a review by the auditors having a cutoff date not more than two (2) Business Days prior to the date of the comfort letter and shall be in addition to any comfort letters which must be filed with securities regulatory authorities pursuant to applicable securities laws, if any;

 

  (e) upon the reasonable request of the Dealers, at the time of the delivery to the Dealers of any Prospectus Amendment and any Prospectus Supplement, a comfort letter from the Corporation’s auditors, dated the date of the Prospectus Amendment or the Prospectus Supplement, as the case may be, and acceptable in form and substance to the Dealers’ Counsel, acting reasonably, with respect to certain financial and accounting information relating to the Corporation contained or incorporated by reference therein, which comfort letter shall be based on a review by the auditors having a cutoff date not more than two (2) Business Days prior to the date of the comfort letter and shall be in addition to any comfort letters which must be filed with securities regulatory authorities pursuant to applicable securities laws, if any;

 

  (f) after December 31, 2013, once annually, upon the reasonable request of the Dealers, following the time of filing of the Corporation’s annual information form and annual financial statements and related management’s discussion and analysis with the Canadian securities regulatory authorities, a comfort letter from the Corporation’s auditors, dated on a date reasonably requested by the Dealers provided that the date of such comfort letter shall not be earlier than ten (10) Business Days from the date of the request, and acceptable in form and substance to the Dealers’ Counsel, acting reasonably, with respect to certain financial and accounting information relating to the Corporation contained and/or incorporated by reference in the Base Prospectuses, as then amended or supplemented, which comfort letter shall be based on a review by the auditors having a cutoff date not more than two (2) Business Days prior to the date of the comfort letter and shall be in addition to any comfort letters which must be filed with securities regulatory authorities pursuant to applicable securities laws, if any; and

 

  (g) as soon as they are available and to the extent applicable, such numbers of copies of the Base Prospectuses, any Prospectus Amendment, any Prospectus Supplement(s), any Pricing Supplement(s) and any U.S. Private Placement Memorandum, including copies of any documents or information incorporated by reference therein, as the Dealers may reasonably require, without charge, in such cities as the Dealers may reasonably request.


 

- 11 -

Without limiting the generality of the foregoing and in order to assist the Dealers in their monitoring, on an ongoing basis, of the affairs of the Corporation, the Corporation shall, during the period of Distribution of the Notes, forthwith provide to the Dealers’ Counsel copies of all documents filed with, or furnished to (in the case of the SEC), any securities commission or stock exchange in Canada or the United States, other than (i) documents filed or furnished (in the case of the SEC) confidentially; (ii) documents that are available on SEDAR at www.sedar.com and (iii) documents that are available on EDGAR at www.sec.gov. Prior to the commencement of an offering of a specific Tranche of Notes, the Corporation shall provide to the Dealers’ Counsel access to all documents filed with, or furnished to (in the case of the SEC) any securities commission or stock exchange in Canada or the United States confidentially to the extent that (i) their contents have not been publicly disclosed subsequent to such confidential filing and (ii) they have not been previously provided to the Dealers’ Counsel.

 

7. Corporation’s Representations and Warranties on Delivery

 

7.1 The Corporation’s delivery to the Dealers of the documents referred to in clauses 6(a) and 6(b) hereof shall constitute:

 

  (a) the Corporation’s representation and warranty to the Dealers that the Canadian Base Prospectus and each Canadian Prospectus Amendment at the time of its filing, and each Canadian Prospectus Supplement and Canadian Pricing Supplement at the date thereof, fully complies with the requirements of the securities laws of the Jurisdictions;

 

  (b) the Corporation’s representation and warranty to the Dealers that the Canadian Base Prospectus, as then amended or supplemented (except (i) information or statements furnished in writing by or on behalf of any Dealer or U.S. Affiliate expressly for use therein; (ii) information or statements which are not contained in or incorporated by reference into the Canadian Base Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement or any Canadian Pricing Supplement; and (iii) information or statements which are modified by (to the extent so modified) or superseded by information or statements contained in or deemed to be incorporated by reference in the Canadian Base Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement or any Canadian Pricing Supplement, as the case may be): (x) contains full, true and plain disclosure of all material facts relating to the Notes as required by applicable securities laws in the Jurisdictions and (y) does not contain any misrepresentation.

 

  (c) the Corporation’s representation and warranty to the Dealers, that, except as has been publicly disclosed, there has been no material adverse change (actual, anticipated, contemplated or threatened) in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or ownership of the Corporation and its subsidiaries, taken together, since the end of the period covered by the Corporation’s last publicly available audited financial statements;


 

- 12 -

  (d) the Corporation’s representation and warranty to the Dealers that all actions required to be taken by or on behalf of the Corporation, including the passing of all requisite resolutions of directors and filings and consents with and from governmental authorities, shall have occurred so as to validly authorize and create the Notes having the attributes contemplated in each applicable Prospectus Supplement or Pricing Supplement;

 

  (e) the Corporation’s representation and warranty to the Dealers that the Corporation is a “reporting issuer” (or equivalent) not in default in each of the Jurisdictions in which such concept exists under applicable securities laws; and

 

  (f) the Corporation’s consent to the use by the Dealers (and to the extent the Corporation has approved, each Selling Firm) of such documents in connection with the Distribution of the Notes in compliance with the provisions of this Agreement in the Jurisdictions and in the United States, to the extent applicable.

 

7.2 The Corporation’s delivery to the Dealers of a preliminary or final U.S. Private Placement Memorandum or any amendment thereto shall constitute the Corporation’s representation and warranty to the Dealers that such document (except information or statements furnished in writing by or on behalf of any Dealer or U.S. Affiliate expressly for use therein) is true and correct in all material respects and contains no misrepresentation, and does not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and that the Corporation’s representations and warranties provided for in Exhibit C hereof continue to be true and correct.

 

7.3 The Corporation’s delivery to the Dealers of the Registration Statement, the U.S. Base Prospectus and any amendment thereto, any U.S. Prospectus Supplement or any U.S. Pricing Supplement in respect of an offering of a Tranche of Notes shall constitute the Corporation’s representation, warranty and covenant to the Dealers that:

 

  (a) the Corporation meets the eligibility requirements for use of Form F-10 under the 1933 Act for the registration of its investment grade debt securities;

 

  (b) at the Time of Sale, the Notes will constitute “investment grade debt” within the meaning of General Instruction I.A. of Form F-9 as such form was in effect immediately prior to December 30, 2012, and will only be offered for cash;

 

  (c) the Corporation has filed with the SEC a registration statement on Form F-10 including the U.S. Base Prospectus corresponding to the Canadian Base Prospectus for which the Ontario Securities Commission (the “OSC”) has issued a final receipt and an appointment for service of process on Form F-X relating to such registration statement; the Corporation has caused the Trustee (as defined below) to prepare and file with the SEC an appointment for service of process on Form F-X relating to such registration statement;


 

- 13 -

  (d) as of the respective date of each, the U.S. Base Prospectus and any amendment thereto, any U.S. Prospectus Supplement and any U.S. Pricing Supplement, as amended or supplemented, if applicable, did and will conform to the Canadian Base Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement and any Canadian Pricing Supplement as amended or supplemented, as applicable, in each case except for such deletions therefrom and additions thereto as are permitted or required by Form F-10 and the applicable rules and regulations of the SEC; and the Form F-X of the Corporation conforms in all material respects with the requirements of the 1933 Act and the rules and regulations of the SEC under the 1933 Act;

 

  (e) there are no reports or other information that, in accordance with the requirements of the OSC, must be made publicly available in connection with the filing of the Registration Statement or the offering of the Notes that have not been made publicly available as required; there are no documents required to be filed with the OSC in connection with the U.S. Base Prospectus and any amendment or supplement thereto that have not been filed as required; there are no contracts, documents or other materials required to be described or referred to in the Registration Statement or the U.S. Base Prospectus, as amended or supplemented, or to be filed or incorporated by reference as exhibits to the Registration Statement that are not described, referred to or filed or incorporated by reference as required;

 

  (f) the Corporation shall file any U.S. Prospectus Supplement or U.S. Pricing Supplement in relation to the Tranche of Notes with the SEC pursuant to General Instruction II.L. of Form F-10;

 

  (g) if at any time following the original Time of Sale and prior to the Settlement Date (as defined in Exhibit B to this Agreement) for the Tranche of Notes (an “Issuance Closing Date”) the Corporation and the Dealers have determined that the Time of Sale Information included an untrue statement of material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Corporation and the Dealers shall provide an opportunity to purchasers of the Notes in the United States to terminate their original purchase contracts and enter into new purchase contracts, and the first time at which any such new purchase contract is entered shall become the new “Time of Sale” for the purposes of this Agreement;

 

  (h) the Registration Statement when it became effective did and on the Issuance Closing Date will, the Time of Sale Information as of the Time of Sale will, and the U.S. Prospectus as of its date and as of the Issuance Closing Date will comply and, as amended or supplemented, if applicable, will comply as of the time of such amendment or supplement, in all material respects with the requirements of Form F-10 and other applicable requirements of the 1933 Act and the U.S. Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), and as to the Registration Statement and any amendment thereto, do not and will not, as of the applicable effective date of the Registration Statement and any such amendment, or on the date of this Agreement, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and, as to the U.S. Base Prospectus and any amendment or supplement thereto, do not and will not, as of their dates and applicable filing dates as to the U.S. Base Prospectus and such amendment or supplement, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Corporation by or on behalf of any Dealer or U.S. Affiliate expressly for use in the U.S. Prospectus as amended or supplemented;


 

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  (i) the Time of Sale Information, at the Time of Sale did not, and at the Issuance Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Corporation by or on behalf of any Dealer or U.S. Affiliate expressly for use in such Time of Sale Information;

 

  (j) other than the U.S. Base Prospectus, as amended or supplemented, the Corporation (including its representatives) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule 405 under the 1933 Act) that constitutes an offer to sell or solicitation of an offer to buy the Notes (each such communication by the Corporation or its agents and representatives, other than a communication referred to in clause (i) below, an “Issuer Free Writing Prospectus” as defined in Rule 433(h)(1) under the 1933 Act) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the 1933 Act or Rule 134 under the 1933 Act or (ii) any other written communications approved in writing in advance by the Dealers; each such Issuer Free Writing Prospectus complied and will comply in all material respects with the 1933 Act, has been or will be filed in accordance with the 1933 Act (to the extent required thereby) and, when taken together with the U.S. Base Prospectus, as amended and supplemented, filed prior to first use of such Issuer Free Writing Prospectus, did not, and at the Issuance Closing Date or time of settlement of such sale will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in writing to the Corporation by or on behalf of any Dealer or U.S. Affiliate expressly for use in any Issuer Free Writing Prospectus; and the Corporation is not and was not an “ineligible issuer” or an “excluded issuer” and the offering is not an “excluded offering”, in connection with the offering of the Notes pursuant to Rules 164, 405 and 433 under the 1933 Act;


 

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  (k) the Corporation is not, and upon the issuance and sale of the Notes contemplated herein and the application of the proceeds as described in the Prospectuses, will not be, required to register as an “investment company,” as such term is defined in the United States Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

  (l) the Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement or suspending the use of the U.S. Base Prospectus or any amendment or supplement thereto, or any free writing prospectus (as defined in Rule 433 under the 1933 Act) is in effect, and no proceedings for such purposes are pending before, or to the knowledge of the Corporation, threatened by the SEC;

 

  (m) the consolidated annual and interim quarterly financial statements of the Corporation included or incorporated by reference in the Registration Statement (including in any amendment or supplement to the U.S. Base Prospectus forming part of the Registration Statement filed pursuant to General Instruction II.L. to Form F-10), the U.S. Prospectus and the Time of Sale Information, together with the notes thereto, have been prepared in conformity with U.S. Generally Accepted Accounting Principles and present fairly in all material respects the consolidated financial position of the Corporation at the dates indicated and the consolidated results of operations and consolidated changes in financial position of the Corporation for the periods specified; the consolidated annual financial statements have been audited in compliance with Canadian generally accepted auditing standards by auditors meeting the independence requirements of Rule 2-01 of Regulation S-X of the SEC;

 

  (n) the Trust Indenture complies, to the extent applicable, with the requirements of the Trust Indenture Act and has been qualified under the Trust Indenture Act;

 

  (o) neither the Corporation nor any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by the Corporation or its subsidiaries of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”); and the Corporation and its subsidiaries have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures reasonably designed to ensure continued compliance therewith;

 

  (p) the operations of the Corporation and its subsidiaries are conducted and, to the knowledge of the Corporation, have been conducted in compliance with the applicable anti-money laundering statutes of all jurisdictions to which the Corporation or its subsidiaries are subject and the rules and regulations thereunder (collectively, the “Anti-Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Corporation or any of its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Corporation, threatened; and


 

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  (q) none of the Corporation or any of its subsidiaries is currently the subject of any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), nor is located, organized or resident in a country or territory that is the subject of any such sanctions; and the Corporation will not directly or indirectly use the proceeds of any offering of Notes hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing activities of any person, or in any country or territory, that at the time of such funding, is the subject of any U.S. sanctions administered by OFAC, or in a manner that would cause any person to violate any such sanctions.

 

8. Deliveries on Closing

 

  (a) The Corporation will deliver, or cause to be delivered, to the Dealers and the Dealers’ Counsel, on or before the earlier of: (i) September 30, 2013; and (ii) the closing date for the first Tranche of Notes to be offered and sold pursuant to either the Canadian Base Prospectus or the Registration Statement (such date of delivery, the “Program Closing Date”):

 

  (i) an officer’s certificate dated the Program Closing Date with respect to the articles and by-laws of the Corporation, the resolutions of the Corporation’s board of directors relevant to the creation, issuance and sale of the Notes, the incumbency and signature of signing officers, the appointment of Computershare Trust Company of Canada as the trustee under the Trust Indenture (together with any successor trustee under the Trust Indenture, the “Trustee”), the filing of the Canadian Base Prospectus and the Registration Statement and such other matters as the Dealers may reasonably request;

 

  (ii) an opinion from Canadian counsel to the Corporation, Osler, Hoskin & Harcourt LLP, dated the Program Closing Date, with respect to Canadian law, in a form acceptable to the Dealers’ Counsel acting reasonably including, without limiting the generality of the foregoing, opinions that:

 

  (A) the Corporation is a corporation existing under the Business Corporations Act (Ontario) (the “OBCA”). There are no restrictions on the corporate power and capacity of the Corporation to own and lease property and assets and to carry on business and to execute, deliver and perform its obligations under this Agreement and the Trust Indenture;

 

  (B) all necessary corporate action has been taken by the Corporation to authorize the execution and delivery by it of this Agreement and the Trust Indenture and the performance of its obligations hereunder and thereunder, and each of this Agreement and the Trust Indenture has been duly executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting the rights of creditors generally, and subject to the qualifications that equitable remedies may be granted in the discretion of a court of competent jurisdiction and except that counsel need express no opinion with respect to the rights to indemnity, contribution and waiver and provisions relating to third party beneficiaries;


 

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  (C) the execution and delivery of this Agreement and the fulfilment of the terms thereof by the Corporation, do not and will not result in a breach of any of the terms, conditions or provisions of the articles or by-laws of the Corporation, the laws of the Province of Ontario or the federal laws applicable therein;

 

  (D) all necessary corporate action has been taken by the Corporation to authorize the execution and delivery of the English and French language versions of the Canadian Base Prospectus, the Registration Statement and each document incorporated by reference therein as of the date of such opinion and the filing thereof with the Canadian Securities Administrators and the SEC, as applicable;

 

  (E) all necessary documents have been filed, all requisite proceedings have been taken and all other legal requirements have been fulfilled under the laws of each of the Jurisdictions to qualify the issuance and sale of the Notes to the public in each of the Jurisdictions through persons who are registered under applicable legislation and who have complied with the relevant provisions of such applicable legislation; provided, that the Corporation continues to be eligible to use a shelf prospectus under, and continues to comply with the provisions of, National Instrument 44-102 and for greater certainty, provided that the Corporation files all required Canadian Prospectus Supplements and Canadian Pricing Supplements in accordance with National Instrument 44-102 and provided, however, that such counsel need not express an opinion as to whether the Canadian Base Prospectus constitutes full, true and plain disclosure of all material facts relating to the Notes;

 

  (F) when duly issued, executed and delivered by the Corporation and duly authenticated by the Trustee in accordance with the provisions of the Trust Indenture, the Notes will be legal, valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and subject to the qualification that specific performance and equitable remedies may only be granted in the discretion of a court of competent jurisdiction, and the holders of the Notes will be entitled to the benefits of, and will be subject to the restrictions contained in, the Trust Indenture;


 

- 18 -

  (G) if the Notes were issued as of the Program Closing Date, the statements concerning Canadian federal tax laws under the heading “Eligibility for Investment” and “Certain Canadian Federal Income Tax Considerations” in the English language version of the Canadian Base Prospectus are accurate subject to the assumptions, qualifications, limitations and restrictions set out therein;

 

  (H) the statements in the Registration Statement under Part II of the registration statement on Form F-10 under the heading “Indemnification”, insofar as such statements constitute statements of the laws of the Province of Ontario or the federal laws of Canada applicable therein or purport to summarize provisions of agreements or instruments, fairly summarize the matters described therein and are accurate in all material respects;

 

  (I) the Trustee, at its principal office in the City of Toronto, has been duly appointed as the trustee under the Trust Indenture; and

 

  (J) the provisions of the OBCA relating to trust indentures and to the issue, certification and delivery of debt obligations have been complied with in respect of the Trust Indenture and the Notes to be issued thereunder.

In connection with such opinion, counsel to the Corporation may rely on the opinions of local counsel acceptable to the Dealer’s Counsel, acting reasonably, as to the qualification for distribution of the Notes and as to other matters governed by the laws of Jurisdictions other than the provinces in which counsel to the Corporation are qualified to practice and such counsel may rely, as to matters of fact on certificates of officers of the Corporation, auditors of the Corporation, the Trustee and others;

 

  (iii) an opinion from United States counsel to the Corporation, Osler, Hoskin & Harcourt LLP, dated the Program Closing Date, subject to such exceptions and qualifications as would be customary in a form acceptable to the Dealers’ Counsel, acting reasonably, to the effect that:

 

  (A) no authorization, approval or other action by, and no notice to or filing with, any governmental or regulatory authority or agency is required under Applicable Law in connection with the Registered U.S. Offering other than those which have been obtained or made;

 

  (B) each of the Registration Statement, the U.S. Base Prospectus, as then amended or supplemented (other than the financial statements and other financial data contained therein or omitted therefrom, as to which such counsel shall not be required to express an opinion) and the Form F-X, at the time it was filed with the SEC, appears on its face to be appropriately responsive in all material respects to the requirements of the 1933 Act and the Trust Indenture Act and the applicable rules and regulations of the SEC thereunder;


 

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  (C) the Registration Statement became effective under the 1933 Act as of the date and time specified in such opinion and no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the SEC;

 

  (D) the Trust Indenture has been duly qualified under the Trust Indenture Act (to extent applicable under MJDS);

 

  (E) the execution and delivery by the Corporation of this Agreement, the Trust Indenture and the Notes does not, and the performance by the Corporation of its obligations thereunder will not result in a violation of Applicable Law;

 

  (F) although the discussion in the U.S. Prospectus under the caption “Certain United States Federal Income Tax Considerations” does not purport to discuss all possible United States federal income tax consequences to holders that purchase Notes pursuant to the U.S. Prospectus, subject to the qualifications set forth therein, such discussion constitutes, in all material respects, a fair and accurate summary of the United States federal income tax consequences of the acquisition, ownership and disposition of Notes by such holders; and

 

  (G) the Corporation is not, and after the issuance of the Notes and the application of proceeds therefrom as described in the Prospectuses will not be, required to register as an “investment company” under the Investment Company Act.

For purposes of the opinion provided under (a)(iii) above, “Applicable Law” means the federal law of the United States of America, and the law of the State of New York (including the rules or regulations promulgated thereunder or pursuant thereto, but not including any statutes, ordinances, administrative decisions, rules or regulations of any political subdivision of the State of New York), that a New York lawyer exercising customary professional diligence would reasonably be expected to recognize as being applicable to the Corporation, the Dealer Agreement, the Trust Indenture or the Notes or the transactions governed by the Dealer Agreement, the Trust Indenture or the Notes but not including any industry-specific regulation applicable to the Corporation and its subsidiaries;

 

  (iv) an opinion from each of the Dealers’ Counsel in a form acceptable to the Dealers acting reasonably dated the Program Closing Date. In giving the foregoing opinions, Canadian counsel to the Dealers may rely on the opinion of counsel to the Corporation as to matters relating to the Corporation and with respect to matters of law in Jurisdictions other than the provinces in which counsel is qualified to practice will be entitled to rely upon the opinions of local counsel acceptable to them and Canadian and U.S. counsel to the Dealers may, as to matters of fact, be entitled to rely upon certificates of officers or auditors of the Corporation and/or of the Dealers and/or of the Trustee;


 

- 20 -

  (v) a favourable opinion from Québec counsel to the Corporation, dated the Program Closing Date, to the effect that all laws of the Province of Québec relating to the use of the French language and, in particular, the Charter of the French language (R.S.Q., c. C-11), will have been complied with in connection with the offer and sale of the Notes to purchasers in the Province of Québec, if such purchasers receive copies of the French language version of the Canadian Base Prospectus and any required Canadian Prospectus Supplements and Canadian Pricing Supplements filed pursuant to National Instrument 44-102 in the French language only, or in the French language and the English language, and forms of order confirmation relating to the sale of Notes in the French language only or in bilingual form;

 

  (vi) letters dated on or about the Program Closing Date of each of DBRS Limited (“DBRS”), Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P” and together with DBRS and Moody’s, the “Rating Agencies”) or other evidence acceptable to the Dealers’ or the Dealers’ Counsel (it being acknowledged that oral or written confirmation from counsel to the Corporation that it has reviewed such letters is evidence acceptable to the Dealers’ and the Dealers’ Counsel), as to the program rating of the Notes of at least “A (high)” in the case of DBRS, “A1” in the case of Moody’s and “A+” in the case of S&P; and

 

  (vii) an officer’s certificate of the General Counsel of the Corporation, or equivalent, dated the Program Closing Date, to the effect that the statements in the Corporation’s (A) Annual Information Form dated March 28, 2013, under the heading “Regulation”, and (B) Management’s Discussion and Analysis for the year ended December 31, 2012, under the heading “Regulation”, each as may be modified, supplemented or superseded to the extent that a statement contained therein is modified, supplemented or superseded by any document incorporated by reference in the Prospectuses, insofar as such disclosure describes or summarizes matters of law fairly summarizes such matters of law.

 

  (b) For each issuance of and sale of a Tranche of Notes qualified for Distribution under the Canadian Base Prospectus (and, as applicable, the U.S. Base Prospectus), the Corporation will deliver, or cause to be delivered, to the Dealers and the Dealers’ Counsel, on the Issuance Closing Date:

 

  (i) an officer’s certificate dated the Issuance Closing Date with respect to the articles and by-laws of the Corporation, the resolutions of the Corporation’s board of directors relevant to the creation, issuance and sale of the Notes, the incumbency and signature of signing officers, the appointment of the Trustee as the trustee under the Trust Indenture and such other matters as the Dealers may reasonably request;


 

- 21 -

  (ii) an opinion from counsel to the Corporation, Osler, Hoskin & Harcourt LLP, dated the Issuance Closing Date, with respect to Ontario law and the federal laws of Canada applicable therein, in a form acceptable to Dealers’ Counsel acting reasonably including, without limiting the generality of the foregoing, opinions that:

 

  (A) all necessary corporate action has been taken by the Corporation to authorize the execution and delivery by it of the Trust Indenture and the performance of its obligations thereunder, and the Trust Indenture has been duly executed and delivered by the Corporation and constitutes a legal, valid and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting the rights of creditors generally, and subject to the qualifications that equitable remedies may only be granted in the discretion of a court of competent jurisdiction and except that counsel need express no opinion with respect to the rights to indemnity, contribution and waiver and provisions relating to third party beneficiaries;

 

  (B) when duly issued, executed and delivered by the Corporation and duly authenticated by the Trustee in accordance with the provisions of the Trust Indenture, the Notes will be legal, valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their terms except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting creditors’ rights generally and subject to the qualification that specific performance and equitable remedies may only be granted in the discretion of a court of competent jurisdiction, and the holders of the Notes will be entitled to the benefits of, and will be subject to the restrictions contained in, the Trust Indenture;

 

  (C) the form of certificate representing the Notes complies in form and substance with the provisions of the Trust Indenture and has been duly authorized by the Corporation;

 

  (D) the description of the Notes contained in the Canadian Base Prospectus, as amended or supplemented, represents a fair summary of the attributes and characteristics of the Notes;

 

  (E) the statements concerning Canadian federal tax laws under the heading “Eligibility for Investment” in the English language version of the Canadian Base Prospectus, as amended or supplemented by any Canadian Prospectus Amendment, Canadian Prospectus Supplement and Canadian Pricing Supplement, as applicable, are accurate subject to the assumptions, qualifications, limitations and restrictions set out therein;


 

- 22 -

  (F) the Trustee, at its principal office in the City of Toronto, has been duly appointed as the paying agent in respect of the Notes under the Trust Indenture; and

 

  (G) the provisions of the OBCA relating to trust indentures and to the issue, certification and delivery of debt obligations have been complied with in respect of the Trust Indenture and the Notes to be issued thereunder; and

In the event that a Canadian Prospectus Amendment or a Canadian Prospectus Supplement has been filed since the later of the Program Closing Date and the most recent issuance of Notes, the opinion shall also include the following:

 

  (H) all necessary corporate action has been taken by the Corporation to authorize the execution and delivery of the English and French language versions of the Canadian Prospectus Amendment or Canadian Prospectus Supplement, as applicable, and the filing thereof with the Canadian Securities Administrators; and

 

  (I) all necessary documents have been filed, all requisite proceedings have been taken and all other legal requirements have been fulfilled under the laws of the Province of Ontario to qualify the issuance and sale of the Notes to the public in the Province of Ontario through persons who are registered under applicable legislation and who have complied with the relevant provisions of such applicable legislation; provided, that, the Corporation continues to be eligible to use a shelf prospectus under, and continues to comply with the provisions of, National Instrument 44-102 and for greater certainty, provided that the Corporation files all required Canadian Prospectus Supplements and Canadian Pricing Supplements in accordance with National Instrument 44-102 and provided, however, that such counsel need not express an opinion as to whether the Canadian Base Prospectus, as then amended or supplemented, constitutes full, true and plain disclosure of all material facts relating to the Notes; and

In the event any offers or sales of Notes are made in a Registered U.S. Offering, the opinion shall also include the following:

 

  (J) the statements concerning Canadian federal tax laws under the heading “Certain Canadian Federal Income Tax Considerations” in the English language version of the Canadian Base Prospectus, as amended or supplemented by any Canadian Prospectus Amendment, Canadian Prospectus Supplement and Canadian Pricing Supplement, as applicable, are accurate subject to the assumptions, qualifications, limitations and restrictions set out therein;


 

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  (iii) a certificate dated each Issuance Closing Date signed by any two of the following senior officers of the Corporation: President and Chief Executive Officer, the Chief Financial Officer, the Treasurer or the General Counsel or any two other senior officers acceptable to the Dealers, acting reasonably, certifying for and on behalf of the Corporation, and without personal liability, to the best of the knowledge, information and belief of the persons signing such certificate after due inquiry that:

 

  (A) all covenants have been satisfied and all terms and conditions of this Agreement and the Trust Indenture on its part to be complied with and satisfied at or prior to the Issuance Closing Date have been complied with or satisfied;

 

  (B) the No-Trade Period is not in effect with respect to the Corporation;

 

  (C) the representations and warranties of the Corporation contained herein are true and correct as of the Issuance Closing Date with the same force and effect as if made at and as of the Issuance Closing Date; and

 

  (D) no order, ruling or determination having the effect of ceasing trading or suspending the distribution and sale of the Notes or any other securities of the Corporation has been issued and no proceedings for such purpose have been instituted, are pending or, to the knowledge of the signers, contemplated or threatened;

 

  (iv) letters dated not later than the Issuance Closing Date and not earlier than the Trade Date (as defined in Exhibit B to this Agreement), of each of the Rating Agencies or other evidence acceptable to the Dealers’ or the Dealers’ Counsel (it being acknowledged that oral or written confirmation from counsel to the Corporation that it has reviewed such letters is evidence acceptable to the Dealers’ and the Dealers’ Counsel), as to the then current rating of the Notes, provided that such letters or other evidence shall be provided only in respect of those Rating Agencies that provide a rating for the specific Tranche of Notes being issued on such Issuance Closing Date; and

 

  (v) such further documentation as may be contemplated in this Agreement, the Trust Indenture and any supplemental trust indentures or as counsel may reasonably require.

 

  (c) For each Tranche in which any offers or sales of Notes are made to any person within the United States in an Unregistered U.S. Offering, the Corporation will deliver, or cause to be delivered, to the Dealers and the Dealers’ Counsel, on the Issuance Closing Date, an opinion of the Corporation’s U.S. counsel that no registration of the Notes will be required under the 1933 Act.


 

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  (d) For each Tranche in which any offers or sales of Notes are made in a Registered U.S. Offering, the Corporation will deliver, or cause to be delivered, to the Dealers and the Dealers’ Counsel, on the Issuance Closing Date, each of the following:

 

  (i) an opinion of Osler, Hoskin & Harcourt LLP, United States counsel for the Corporation, subject to such exceptions and qualifications as would be customary, in a form acceptable to the Dealers’ Counsel, acting reasonably, addressing the matters contemplated by Section 8(a)(iii) and further to the effect that:

 

  (A) any U.S. Prospectus Supplement or U.S. Pricing Supplement was filed with the SEC pursuant to General Instruction II.L. to Form F-10 and no stop order suspending the effectiveness of any Registration Statement or any part thereof has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the SEC;

 

  (B) although the discussion in the U.S. Base Prospectus as amended or supplemented by any U.S. Prospectus Amendment, U.S. Prospectus Supplement and U.S. Pricing Supplement, as applicable, under the caption “Certain United States Federal Income Tax Considerations”, does not purport to discuss all possible United States federal income tax consequences to holders that purchase Notes pursuant to the U.S. Base Prospectus as amended or supplemented by any U.S. Prospectus Amendment, U.S. Prospectus Supplement and U.S. Pricing Supplement, as applicable, subject to the qualifications set forth therein, such discussion constitutes, in all material respects, a fair and accurate summary of the United States federal income tax consequences of the acquisition, ownership and disposition of Notes by such holders;

 

  (C) if applicable, the Tranche of Notes to be issued by the Corporation has been listed, subject to official notice of issuance, on the New York Stock Exchange; and

 

  (D) if applicable, the Corporation’s registration statement on Form 8-A relating to the Tranche of Notes became effective under the 1934 Act as of the date and time specified in such opinion and, to the knowledge of such counsel, no stop order suspending the effectiveness of such registration statement has been issued and, to the knowledge of such counsel, no proceeding for that purpose is pending or threatened by the SEC;


 

- 25 -

  (ii) if requested by the Dealer(s) participating in the offering of such Tranche by the date that is one Business Day prior to the date of launch of the Tranche of Notes, provided that United States counsel to the Dealers and United States counsel to the Corporation, respectively, have been given at least two (2) Business Days prior to launch the opportunity to carry out a due diligence investigation of the Corporation, a negative assurance letter from each of Osler, Hoskin & Harcourt LLP, United States and Canadian counsel for the Corporation and Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel for the Dealers, stating that no facts came to such counsel’s attention which caused them to believe that: (A) the Registration Statement (other than the financial statements and other financial data contained therein or omitted therefrom, as to which such counsel will not be required to comment), at the time it became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (B) the Time of Sale Information (other than the financial statements and other financial data contained therein or omitted therefrom, as to which such counsel will not be required to comment), at the Time of Sale contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (C) the U.S. Prospectus as amended or supplemented (other than the financial statements and other financial data contained therein or omitted therefrom, as to which such counsel will not be required to comment), as of the date of such amendment or supplement and as of the Issuance Closing Date, contained an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

 

  (iii) an officer’s certificate of the General Counsel or an Assistant General Counsel of the Corporation, or equivalent, dated the Issuance Closing Date, to the effect that the statements in the Corporation’s (A) then current Annual Information Form, under the heading “Regulation” or equivalent, and (B) Management’s Discussion and Analysis for the year most recently ended, under the heading “Regulation” or equivalent, each as may be modified, supplemented or superseded to the extent that a statement contained therein is modified, supplemented or superseded by any document incorporated by reference in the Prospectuses, insofar as such disclosure describes or summarizes matters of law fairly summarizes such matters of law.

 

  (e) On the Program Closing Date, the Dealer(s) shall deliver letter(s) dated the Program Closing Date to the Corporation confirming the information that has been furnished in writing to the Corporation by or on behalf of any Dealer or U.S. Affiliate expressly for use in the Base Prospectuses. For each Tranche in which any offers or sales of Notes are made in a Registered U.S. Offering, the Dealer(s) shall deliver letter(s) dated the Issuance Closing Date to the Corporation confirming the information that has been furnished in writing to the Corporation by or on behalf of any Dealer or U.S. Affiliate expressly for use in the Prospectuses and any applicable Time of Sale Information.


 

- 26 -

9. Indemnity

The Corporation shall protect, indemnify and hold harmless each of the Dealers and their respective directors, officers, employees, agents, U.S. Affiliates and Foreign Affiliates and each person who controls the Dealers within the meaning of the 1933 Act and 1934 Act, such person, a “Control Person” (each hereinafter referred to as an “Indemnified Party”), from and against all losses (other than losses of profits in connection with the Distribution of the Notes), claims, damages, liabilities and costs caused by or arising directly or indirectly by reason of:

 

  (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, the U.S. Prospectus, any U.S. Prospectus Supplement, any U.S. Pricing Supplement, any Issuer Free Writing Prospectus, any road show as defined in Rule 433(h) under the 1933 Act, any U.S. Private Placement Memorandum, any amended or supplemented U.S. Private Placement Memorandum, the Time of Sale Information, or in any other document or material filed or delivered pursuant hereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (with respect to the Registration Statement), or not misleading in the light of the circumstances under which they were made (with respect to the other items referred to in this Section 9(a); except insofar as such claims, damages, liabilities and costs are caused by any such untrue statement or omission or alleged untrue statement or omission based on information furnished in writing to the Corporation by or on behalf of any Dealer, U.S. Affiliate or Foreign Affiliate expressly for use therein;

 

  (b) any misrepresentation or alleged misrepresentation contained in the Canadian Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement and any Canadian Pricing Supplement, or in any other document or material filed or delivered pursuant hereto except insofar as such claims, damages, liabilities and costs are caused by any such misrepresentation based on information furnished in writing to the Corporation by or on behalf of any Dealer, U.S. Affiliate or Foreign Affiliate expressly for use therein;

 

  (c) any order made or any inquiry, investigation or proceeding commenced or threatened by any securities regulatory authority or other authority preventing or restricting the trading in, or sale or Distribution of, the Notes in the United States, and based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, the U.S. Prospectus, any U.S. Prospectus Supplement, any U.S. Pricing Supplement, any Issuer Free Writing Prospectus, any road show as defined in Rule 433(h) under the 1933 Act, any U.S. Private Placement Memorandum, any amended or supplemented U.S. Private Placement Memorandum, the Time of Sale Information, or in any other document or material filed or delivered pursuant hereto, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (with respect to the Registration Statement), or not misleading in the light of the circumstances under which they were made (with respect to the other items referred to in this Section 9(c)); except insofar as such claims, damages, liabilities and costs are caused by any such untrue statement or omission or alleged untrue statement or omission based on information furnished in writing to the Corporation by or on behalf of any Dealer, U.S. Affiliate or Foreign Affiliate expressly for use therein;


 

- 27 -

  (d) any order made or any inquiry, investigation or proceeding commenced or threatened by any securities regulatory authority or other authority preventing or restricting the trading in, or sale or Distribution of, the Notes, and based upon any misrepresentation or alleged misrepresentation contained in the Canadian Prospectus, any Canadian Prospectus Amendment, any Canadian Prospectus Supplement and any Canadian Pricing Supplement, or in any other document or material filed or delivered pursuant hereto; except insofar as such claims, damages, liabilities and costs are caused by any such misrepresentation based on information furnished in writing to the Corporation by or on behalf of any Dealer, U.S. Affiliate or Foreign Affiliate expressly for use therein;

 

  (e) the Corporation’s non-compliance or alleged non-compliance with any requirements of the applicable laws of Canada or the United States or any of the Jurisdictions or the regulations thereunder in connection with the issuance, Distribution, offering and sale of the Notes; and

 

  (f) the breach by the Corporation of any of the covenants, representations or warranties contained in this Agreement.

If any claim contemplated by this paragraph 9 shall be asserted against any of the Indemnified Parties, or if any potential claim contemplated by this paragraph 9 shall come to the knowledge of any of the Indemnified Parties, the Indemnified Party concerned shall notify the Corporation as soon as possible of, and in any event within 10 days (provided that any failure by an Indemnified Party to so notify the Corporation shall not release the Corporation from its duty to so indemnify and such failure shall affect the Corporation’s liability only to the extent the Corporation is materially prejudiced by such failure) of becoming aware of, the nature of such claim and the Corporation shall, subject as hereinafter provided, be entitled (but not required) to assume the defence on behalf of the Indemnified Party of any suit brought to enforce such claim. Any such defence shall be through legal counsel acceptable to the Indemnified Party, acting reasonably, and no admission of liability shall be made by the Corporation or the Indemnified Party without, in each case, the prior written consent of each of them, such consent not to be unreasonably withheld. An Indemnified Party shall have the right to employ separate counsel in any such suit and participate in the defence thereof but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless: (i) the Corporation fails to assume the defence of such suit on behalf of the Indemnified Party within five days of receiving notice of such suit; (ii) the employment of such counsel has been authorized by the Corporation; or (iii) the named parties to any such suit include both the Indemnified Party and the Corporation and the Indemnified Party shall have been advised by its counsel that representation of both parties by the same counsel would be inappropriate because there may be one or more legal defences available to the Indemnified Party which are different from or in addition to those available to the Corporation (in each of which cases the Corporation shall not have the right to assume the defence of such suit on behalf of the Indemnified Party but shall be liable to pay the reasonable fees and expenses of counsel for the Indemnified Party as they are reasonably incurred; provided that in no event shall the Corporation be responsible for the fees and expenses of more than one separate Canadian counsel and one separate U.S. counsel (in each case to the extent applicable and necessary) in respect of all Indemnified Parties). It is the intention of the Corporation to constitute the Dealers trustees for the Dealers’ directors, officers, employees, agents, Control Persons, U.S. Affiliates and Foreign Affiliates of the covenants of the Corporation under this paragraph 9 with respect to the Dealers’ directors, officers, employees, agents, Control Persons and U.S. Affiliates and Foreign Affiliates and the Dealers agree to accept such trust and to hold and enforce such covenants on behalf of such persons.


 

- 28 -

The rights of indemnity contained in this paragraph 9 shall not enure to the benefit of an Indemnified Party with respect to a particular claim to the extent that such claim results from the following: (i) if the Corporation has complied with the provisions of paragraph 5 hereof and the person asserting any claim contemplated by this paragraph 9 was not provided with a copy of any Prospectus Amendment which discloses the change which is the basis of such claim and which is required, under applicable securities laws, to be delivered to such person by such Indemnified Party and if such claim would not have availed if the party asserting such claim had been provided with such Prospectus Amendment, or (ii) if the Indemnified Party has engaged in any fraud, fraudulent misrepresentation or gross negligence or has failed to comply with the terms of this Agreement or any laws, regulations or policies in connection with the Distribution of the Notes if such fraud, fraudulent misrepresentation, gross negligence or failure to comply was a direct cause of the claim in respect of which indemnity is sought. Notwithstanding the foregoing any loss of any rights of indemnification in favour of an Indemnified Party shall not affect any rights of indemnification in favour of any other Indemnified Party.

With respect to this paragraph 9 and paragraph 10, the Corporation acknowledges and agrees that the Dealers are contracting on their own behalf and as agents for their directors, officers, employees and agents and for the benefit of the U.S. Affiliates and Foreign Affiliates of the Dealers and Control Persons.

 

10. Contribution

 

  (a) In order to provide for a just and equitable contribution in circumstances in which the indemnity provided in paragraph 9 would otherwise be available in accordance with its terms but is, for any reason, held to be unavailable to or unenforceable by the Dealers or enforceable otherwise than in accordance with its terms, the Corporation and the Dealers shall contribute to the aggregate of all losses (other than loss of profits in connection with the Distribution of the Notes), claims, damages, liabilities and costs of a nature contemplated in paragraph 9 and suffered or incurred by the Indemnified Party in such proportions so that each Dealer shall severally contribute that portion as is represented by the percentage that the aggregate fee received by the Dealer hereunder bears to the total proceeds from the distribution of the Notes received by the Corporation (net of the fees paid to the Dealers but before deducting expenses) and the Corporation is responsible for the balance. Each Dealer shall not in any event be liable to contribute, in the aggregate, any amounts in excess of such aggregate fee or any portion thereof actually received by such Dealer.


 

- 29 -

  (b) The rights to contribution provided in this paragraph 10 shall be in addition to and not in derogation of any other right to contribution which the Dealers may have by statute or otherwise at law.

 

11. Further Representations, Warranties and Covenants

The Corporation represents and warrants to the Dealers (which shall be continuing representations and warranties until the Dealers shall have been notified to the contrary in writing) that:

 

  (a) there are no actions, suits or proceedings whether on behalf of or against the Corporation pending or to its knowledge threatened against or affecting the Corporation at law or in equity before or by any federal, provincial, municipal or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and which may in any way materially affect the consolidated financial position of the Corporation so as to require public disclosure in accordance with applicable securities law and that have not been so publicly disclosed;

 

  (b) neither the execution and delivery of this Agreement nor the consummation of the transactions herein provided for or contemplated by the Canadian Base Prospectus, the U.S. Base Prospectus or the U.S. Private Placement Memorandum, if any, as amended or supplemented, will result in a breach of any of the terms, conditions or provisions of or will constitute a default under the articles or by-laws of the Corporation or under any material indenture, agreement or other instrument to which the Corporation is now a party or by which the Corporation shall be bound;

 

  (c) the Corporation is eligible to use the shelf procedures established by National Instrument 44-102; and

 

  (d) the Corporation has timely made all filings required by the SEC under the 1934 Act.

Further, the Corporation covenants and agrees that it will make generally available to the Corporation’s security holders and to the Dealers as soon as practicable, but in any event not later than eighteen months after the effective date (as defined in Rule 158(c) under the 1933 Act) of the Registration Statement, an earnings statement of the Corporation and its subsidiaries (which need not be audited) covering a period of at least twelve months beginning with the first fiscal quarter of the Corporation occurring after the date of this Agreement which shall satisfy the provisions of Section 11(a) of the 1933 Act and the rules and regulations of the SEC thereunder; provided that the Corporation may make such earnings statements generally available by filing or furnishing quarterly and annual reports with the SEC as may be required by the 1934 Act.

Each of the Dealers severally represents to the Corporation that, in respect of any Registered U.S. Offering for a Tranche of Notes:

 

  (a) it and its U.S. Affiliate have not and will not use, authorize the use of, or refer to any Free Writing Prospectus (as defined in Rule 405 under the 1933 Act) other than: (i) a free writing prospectus that contains no “issuer information” (as defined in Rule 433(h)(2) under the 1933 Act) that was not included (including through incorporation by reference) in the U.S. Prospectus, or (ii) any free writing prospectus approved by the Corporation in advance in writing;


 

- 30 -

  (b) it or its U.S. Affiliate will, pursuant to reasonable procedures developed in good faith, retain copies of each free writing prospectus used or referred to by it or its U.S. Affiliate, in accordance with Rule 433 under the 1933 Act; and

 

  (c) it and its U.S. Affiliate is not subject to any pending proceeding under Section 8A of the 1933 Act with respect to any Registered U.S. Offering (and will promptly notify the Corporation if any such proceeding against it is initiated prior to the completion of such offering).

Further, each of the Dealers severally represents, warrants and covenants to the Corporation that it will comply with all applicable laws in respect of the offer and sale of the Notes in the Jurisdictions, the United States and in all jurisdictions other than the Jurisdictions and the United States (to the extent applicable).

 

12. Tax Disclosure

The Corporation represents and warrants to the Dealers that the statements concerning Canadian federal tax laws under the heading “Eligibility for Investment” and “Certain Canadian Federal Income Tax Considerations” in the English language version of the Canadian Base Prospectus, as such statements may be amended or supplemented in any Canadian Prospectus Amendment, Canadian Prospectus Supplement or Canadian Pricing Supplement are, or will be as of the date of such Canadian Prospectus Amendment, Canadian Prospectus Supplement or Canadian Pricing Supplement, accurate subject to the assumptions, qualifications, limitations and restrictions set out therein. The Corporation represents and warrants to the Dealers that the statements concerning United States federal tax laws under the heading “Certain United States Federal Income Tax Considerations” in the U.S. Base Prospectus, as such statements may be amended or supplemented in any U.S. Prospectus Amendment, U.S. Prospectus Supplement or U.S. Pricing Supplement are, or will be as of the date of such U.S. Prospectus Amendment, U.S. Prospectus Supplement or U.S. Pricing Supplement, accurate subject to the assumptions, qualifications, limitations and restrictions set out therein.

 

13. Operating Procedures and Due Diligence

 

  (a) The Corporation and the Dealers shall follow the operating procedures set forth in Exhibit B hereto in respect of settlement matters and the timing of payment of commissions in connection with the sale of the Notes by or through the Dealers or their U.S. Affiliates.

 

  (b) The Corporation shall allow the Dealers, directly and with the assistance of the Dealers’ Counsel, where appropriate, to carry out the due diligence which the Dealers may reasonably require in order to fulfil the Dealers’ obligations as registrants and to enable the Dealers to responsibly execute the certificate in the Canadian Base Prospectus and in any Canadian Prospectus Amendment or any Canadian Prospectus Supplement required to be executed by the Dealers. Due diligence sessions with management may be carried out via telephone conference call. In order to provide the Corporation with an opportunity to compile information which may be required to respond to the Dealers’ due diligence enquiries, the Dealers will use their reasonable best efforts to ensure that a list of questions which the Dealers propose to ask officers of the Corporation is provided to the officers prior to any due diligence session, provided that the Dealers will not be limited to making enquiries during such session or otherwise to the list of questions so provided.


 

- 31 -

  (c) If any Dealer is not satisfied with the content of any document required to be filed by the Corporation in connection with the Distribution of the Notes in the Jurisdictions or in the United States (including, without limiting the generality of the foregoing, a Prospectus Amendment, material change report or the annual information form of the Corporation), or if any Dealer gives notice to the Corporation that, in such Dealer’s judgment, a Prospectus Amendment or material change report is required under applicable securities laws to be filed by the Corporation and the Corporation is not prepared to file such Prospectus Amendment or material change report, or if the Corporation or any Dealer determines in its sole discretion that it does not wish to continue the agency arrangement specified herein (in the case of the Corporation in respect of one or more Dealers), the Corporation or such Dealer shall be entitled to terminate its rights and obligations under this Agreement; provided that all of the representations, warranties and indemnities of the Corporation and the provisions of paragraphs 4, 9, 10 and 13 hereof and all provisions relating to the payment of such Dealer’s commissions and expenses payable hereunder shall forever survive for the benefit of such Dealer. Upon such termination the Corporation and the Dealers shall promptly file:

 

  (i) a Prospectus Amendment satisfactory to the Dealers’ Counsel, acting reasonably, indicating that such Dealer or Dealers has ceased to be a Dealer or Dealers under the Canadian Base Prospectus and the U.S. Base Prospectus, as amended or supplemented, and containing a Canadian Prospectus Amendment certificate page signed by the remaining Dealers, and

 

  (ii) any other document required under applicable securities laws.

 

  (d) In the event a Dealer agrees to purchase any Note as principal, such Dealer (or such Dealer’s U.S. Affiliate, as applicable, with respect to Notes to be sold in the United States) may terminate any such principal purchase, immediately upon notice to the Corporation, at any time prior to the Issuance Closing Date relating thereto if, after such Dealer has agreed to purchase such Note:

 

  (i) any inquiry, investigation or other proceeding is commenced or any order is issued under or pursuant to any statute of Canada or the United States or of any province of Canada or state in the United States, other than an inquiry, investigation or other proceeding based solely on the activities of such Dealer, or there is any change of law or in the interpretation or administration thereof which in each case operates to prevent or restrict the trading in the Notes or any other securities of the Corporation or the distribution of the Notes or any of them;


 

- 32 -

  (ii) there shall occur any material change (actual, contemplated or threatened) in the business, affairs, operations, assets, liabilities (contingent or otherwise), capital or control of the Corporation and its subsidiaries taken as a whole, which in the reasonable opinion of such Dealer or U.S. Affiliate (after discussion with the Corporation) could be expected to have a significant adverse effect on the market price or value of the Notes or any other securities of the Corporation;

 

  (iii) there should develop, occur or come into effect or existence any event, action, state, condition or occurrence of national or international consequence, any law, regulation or inquiry or any other event, action or occurrence of any nature whatsoever which, in the reasonable opinion of such Dealer or U.S. Affiliate (after discussion with the Corporation) seriously adversely affects, or may seriously adversely affect, the Canadian, or in the event of a purchase by a U.S. Affiliate the U.S., financial markets, or the business, operations or affairs of the Corporation and its subsidiaries, taken as a whole; or

 

  (iv)    (A) S&P or DBRS or Moody’s, in each case to the extent that it then rates any long-term debt securities of the Corporation, shall have publicly announced that it has placed under surveillance or review, with possible negative implications, its rating of any debt securities of the Corporation;

 

  (B) the most recent rating assigned by S&P or DBRS or Moody’s to any long-term debt securities of the Corporation (other than commercial paper) shall have been downgraded by one or more rating levels (e.g. from A+ to A or lower by S&P or from A (high) to A or lower by DBRS or from A1 to A2 or lower by Moody’s), or downgraded to a comparable degree in the event that the ratings or ratings categories at the time of the agreement to purchase as principal are different than those previously listed, provided that no previous public announcement was made by such rating service that such rating service had placed, as at the time such Dealer agreed to purchase such Note, under surveillance or review, with possible negative implications, its rating of such debt securities; or

 

  (C) the most recent rating assigned by S&P or DBRS or Moody’s to any long-term debt securities of the Corporation (other than commercial paper) shall have been downgraded by two or more rating levels (e.g. from A+ to A- or lower by S&P or from A (high) to A (low) or lower by DBRS or from A1 to A3 or lower by Moody’s), or downgraded to a comparable degree in the event that the ratings or ratings categories at the time of the agreement to purchase as principal are different than those previously listed.


 

- 33 -

For greater certainty, in this section changes in an agency’s outlook for the rating of the Corporation’s debt securities shall not be considered a change in degree. Notwithstanding the foregoing, a Dealer or U.S. Affiliate shall be obligated to take up and pay for all Notes purchased by such Dealer or U.S. Affiliate if any of the Notes so purchased are taken up and paid for by such Dealer or such Dealer’s U.S. Affiliate.

 

14. Term

The term of this Agreement shall expire on the date that is twenty-five months from the date the receipt for the Canadian Base Prospectus is issued by the OSC pursuant to the Securities Act (Ontario) and as principal regulator pursuant to National Policy 11-202 “Process for Prospectus Reviews in Multiple Jurisdictions”.

 

15. Obligations of Dealers

The Corporation agrees that the obligations of the Dealers hereunder are several and not joint or joint and several.

 

16. Notice

Any notice or other communication to be given hereunder shall, in the case of notice to the Corporation, be addressed to:

483 Bay Street

15th Floor, North Tower

Toronto, Ontario

M5G 2P5

Attention: General Counsel

Facsimile: (416) 345-6056

with a copy to (but which shall not constitute notice):

Osler, Hoskin & Harcourt LLP

Box 50, 1 First Canadian Place

100 King Street West, Suite 6100

Toronto, Ontario

M5X 1B8

Attention: Steve Smith and Michael Innes

Facsimile: (416) 862-6666


 

- 34 -

And to the Dealers:

BMO Nesbitt Burns Inc.

3rd Floor Podium, 1 First Canadian Place

100 King Street West

Toronto, Ontario

M5X 1H3

Attention: Grant Williams

Facsimile: (416) 359-1636

Casgrain & Company Limited

1200 McGill College Avenue, 21st Floor

Montreal, Québec

H3B 4G7

Attention: Stephen McHarg

Facsimile: (514) 871-1943

CIBC World Markets Inc.

Brookfield Place

5th Floor

161 Bay Street

Toronto, Ontario

M5J 2S8

Attention: Scott Burrows

Facsimile: (416) 594-7760

Desjardins Securities Inc.

25 York Street

Suite 1000

Toronto, Ontario

M5J 2V5

Attention: Ryan Godfrey

Facsimile: (416) 867-1490

HSBC Securities (Canada) Inc.

8th Floor

70 York Street

Toronto, Ontario

M5J 1S9

Attention: David Loh

Facsimile: (416) 868-1036


 

- 35 -

Laurentian Bank Securities Inc.

130 Adelaide Street West

3rd Floor

Toronto, Ontario

M5H 3P5

Attention: Tom Berky

Facsimile: (416) 865-5694

National Bank Financial Inc.

130 King Street West

4th Floor Podium

Toronto, Ontario

M5X 1J9

Attention: James (Jason) Stewart

Facsimile: (416) 869-8648

RBC Dominion Securities Inc.

200 Bay Street

Royal Bank Plaza, North Tower

2nd Floor

Toronto, Ontario

M5J 2W7

Attention: Robert Brown

Facsimile: (416) 842-7777

Scotia Capital Inc.

68th Floor

40 King Street West

P.O. Box 4085

Station A

Toronto, Ontario

M5W 2X6

Attention: Murray Neal

Facsimile: (416) 863-7527

TD Securities Inc.

Ernst & Young Tower

222 Bay Street

7th Floor

Toronto, Ontario

M5K 1A2

Attention: Patrick Scace

Facsimile: (416) 308-3715


 

- 36 -

with a copy to (but which shall not constitute notice):

Blake, Cassels & Graydon LLP

199 Bay Street

Suite 4000, Commerce Court West

Toronto ON

M5L 1A9

Attention: Brendan Reay

Facsimile: (416) 863-2653

Skadden, Arps, Slate, Meagher & Flom LLP

222 Bay Street

Suite 1750

Toronto, Ontario

M5K 1JS

Attention: Riccardo Leofanti

Facsimile: (416) 777-4747

Any notice or other communication shall be in writing and, unless delivered personally to a responsible officer of the addressee, shall be given by facsimile (with receipt confirmed) and shall be deemed to be given at the time faxed or delivered, if faxed or delivered to the recipient on a day that is a Business Day and before 5:00 p.m. (Toronto time) on such Business Day, and otherwise shall be deemed to be given at 9:00 a.m. (Toronto time) on the next following Business Day. Any party may change its address for notice by notice to the other parties given in the manner herein provided.

 

17. Expenses

The parties hereto agree that the Corporation shall bear (a) all filing fees payable, (b) the Dealers’ reasonable out-of-pocket expenses, and (c) the cost of all reasonable legal fees of the Dealers payable to the Dealers’ Counsel and any other local legal counsel retained by the Dealers outside Canada or the United States, in each case in connection with or relating to: (i) the preparation of this Agreement and the preparation and filing of the Canadian Base Prospectus, the U.S. Base Prospectus, the Registration Statement, any Prospectus Amendment and any Prospectus Supplement (other than in respect of a Tranche of Notes); (ii) the preparation and filing of any Prospectus Supplement (in respect of a Tranche of Notes), any Pricing Supplement, any U.S. Private Placement Memorandum (as defined below) and any other document required for the issuance, Distribution, offering and sale of any Tranche of Notes in Canada, the United States or any other jurisdiction as contemplated herein; and (iii) the issuance, Distribution, offering and sale of any Tranche of Notes in Canada, the United States or any other jurisdiction as contemplated herein, provided that the Dealers are acting as agents in connection with the offering and sale of any such Tranche of Notes. In the event that the Dealers are purchasing the Notes as principal on an underwritten basis in respect of a particular Tranche of Notes, the Dealers shall bear all of their own costs and expenses in respect of such Tranche, including the costs and expenses of the Dealers’ Counsel and any other local legal counsel retained by the Dealers outside Canada or the United States.


 

- 37 -

18. Survival

All of the representations, warranties and indemnities of the Corporation, the provisions of paragraphs 4, 9, 10 and 13 hereof and all provisions relating to the payment of Dealers’ commissions and expenses shall forever survive the termination or expiration of this Agreement.

 

19. Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the courts of such province shall have non-exclusive jurisdiction over any dispute hereunder.

 

20. Arrangements Respecting U.S. Affiliates and Foreign Affiliates

The Corporation:

 

  (a) consents to the delivery of a copy of this Agreement to the U.S. Affiliates and Foreign Affiliates of the Dealers;

 

  (b) understands and acknowledges that the U.S. Affiliates and Foreign Affiliates of the Dealers are relying on the representations, warranties, covenants and indemnities of the Corporation contained herein and contemplated hereby (the “Provisions”);

 

  (c) acknowledges to the Dealers that the U.S. Affiliates and Foreign Affiliates of the Dealers will have the benefit of the Provisions;

 

  (d) confirms its agreement that the Dealers are acting as agents in respect of the Provisions for the U.S. Affiliates and Foreign Affiliates of the Dealers and each of their respective directors, officers, employees and agents;

 

  (e) agrees that in the event of a breach of any of the Provisions, any of the U.S. Affiliates and Foreign Affiliates of the Dealers shall be entitled, if so permitted by the Dealers, to carry out on its own behalf all suits as may be permitted by applicable law to pursue to final legal disposition its claim in respect of the breach provided that, without limiting any other defences which it may have, the Corporation shall be entitled to such defences, in respect of any such suit, arising out of any action or failure to act of a U.S. Affiliate or Foreign Affiliate of the Dealer as the Corporation would have if such action had been commenced, and such action or failure to act had been on the part of, a Dealer; and

 

  (f) agrees that the rights and remedies of the U.S. Affiliates and Foreign Affiliates of the Dealers and the Dealers set forth in this Section are not exclusive of any other rights or remedies which they would otherwise have.

 

21. Dealer Liability for U.S. Affiliates, Foreign Affiliates; Selling Firms

Each of the Dealers:


 

- 38 -

  (a) agrees that it will deliver a copy of this Agreement to its U.S. Affiliates who participate in an offering of Notes, its Foreign Affiliates who participate in an offering of Notes and any Selling Firm appointed by it and approved by the Corporation under this Agreement for an offering of Notes;

 

  (b) agrees that it will obtain the agreement in favour of the Corporation of such U.S. Affiliates and such Foreign Affiliates, and any such Selling Firm appointed by it and approved by the Corporation under this Agreement, to abide by the terms and conditions of this Agreement (with such modifications as may be agreed to by the Selling Firm and the Corporation) as if they were a party hereto as a Dealer;

 

  (c) agrees that it will be liable to the Corporation for any breach of this Agreement by its U.S. Affiliates or its Foreign Affiliates; and

 

  (d) agrees that the rights and remedies of the Corporation under this Agreement in respect of its U.S. Affiliates and its Foreign Affiliates are not exclusive of any other rights or remedies which the Corporation may otherwise have for a breach of this Agreement by such persons.

 

22. No Advisory or Fiduciary Relationship

The Corporation acknowledges and agrees that (a) any purchase and sale of Notes pursuant to this Agreement, including the determination of the offering price of the Notes and any related discounts and commissions, is an arm’s-length commercial transaction between the Corporation, on the one hand, and the Dealers, on the other hand, (b) no Dealer has assumed or will assume an advisory or fiduciary responsibility in favor of the Corporation with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Dealer has advised or is currently advising the Corporation on other matters) and no Dealer has any obligation to the Corporation with respect to the offering contemplated hereby except the obligations expressly set forth in this Agreement, (c) the Dealers and their respective affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Corporation, and (d) the Dealers have not provided any legal, accounting, regulatory or tax advice with respect to the offering contemplated hereby and the Corporation has consulted its own legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.

 

23. Counterparts

This Agreement may be executed in several counterparts and delivered by facsimile or via portable document format, each of which when so executed and delivered shall be deemed to be an original and such counterparts together shall constitute one and the same instrument.

 

24. Time of the Essence

In all respects, time shall be of the essence hereof.

 

25. Enurement; Third Party Beneficiaries

The terms and provisions of this Agreement shall be binding upon and shall enure to the benefit of the Corporation, the Dealers and their respective successors and permitted assigns; provided that, except as provided herein, this Agreement shall not be assignable by any Dealer without the prior written consent of the Corporation or by the Corporation without the prior written consent of the Dealers. The Corporation further agrees for the benefit of, and acknowledges that the provisions of paragraphs 9 and 10 hereof shall also enure to the benefit of, each of the Indemnified Parties, each of whom shall be entitled to rely upon such provisions fully as though he or she was a party hereto and have standing, in his or her sole discretion and his or her own name, to require the Corporation to perform its obligations and responsibilities thereunder, and to assert and protect his or her rights hereunder, as and against the Corporation directly.


 

- 39 -

26. Amendments or Waivers

No waiver, modification or amendment of any term of this Agreement shall be effective unless in writing.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK


If the foregoing is in accordance with your understanding of the terms of the continuous offering program we are to enter into and if such terms are agreed to by you, please confirm your acceptance by signing this letter in the place indicated below, in which event this letter shall constitute a binding agreement between the Corporation and the Dealers.

Yours very truly,

 

BMO NESBITT BURNS INC.     CASGRAIN & COMPANY LIMITED
By:   /s/ Andrew Hainsworth     By:   /s/ Stephen McHarg
  Name: Andrew Hainsworth       Name: Stephen McHarg
  Title:   Managing Director       Title:   Vice-President & Associate Director

 

CIBC WORLD MARKETS INC.     DESJARDINS SECURITIES INC.
By:   /s/ David H. Williams     By:   /s/ Ryan Godfrey
  Name: David H. Williams       Name: Ryan Godfrey
  Title:   Managing Director       Title:   Director

 

HSBC SECURITIES (CANADA) INC.     LAURENTIAN BANK SECURITIES INC.
By:   /s/ Robert A. Buttke     By:   /s/ Thomas Berky
  Name: Robert A. Buttke       Name: Thomas Berky
  Title:   Managing Director       Title:   Vice President & Director

 

NATIONAL BANK FINANCIAL INC.     RBC DOMINION SECURITIES INC.
By:   /s/ James K. (Jason) Stewart     By:   /s/ Robert M. Brown
  Name: James K. (Jason) Stewart       Name: Robert M. Brown
  Title:   Managing Director       Title:   Managing Director


SCOTIA CAPITAL INC.     TD SECURITIES INC.
By:   /s/ Murray Neal     By:   /s/ Patrick Scace
  Name: Murray Neal       Name: Patrick Scace
  Title:   Managing Director       Title:   Managing Director


The foregoing accurately reflects the terms of the continuous offering program we are to enter into and such terms are hereby agreed to by the Corporation as evidenced by the signature of its duly authorized officer on its behalf.

DATED at Toronto, this 4th day of September, 2013.

 

HYDRO ONE INC.
By:   /s/ Sandy Struthers
  Name: Sandy Struthers
 

Title:   Chief Administration Officer and

            Chief Financial Officer


EXHIBIT A

Commission Rates

The following sets out the commission rates which will apply in connection with the sale of Notes by the Dealer or Dealers, as agents or as principal, unless the Corporation and the Dealer or Dealers, as applicable, otherwise agree:

 

Term of Note

   Agency Rate    Underwriting Rate

1 year up to but excluding 2 years

   0.15%    0.200%

2 years up to but excluding 3 years

   0.20%    0.250%

3 years up to but excluding 4 years

   0.25%    0.375%

4 years up to but excluding 5 years

   0.30%    0.500%

5 years up to but excluding 6 years

   0.35%    0.625%

6 years up to but excluding 7 years

   0.35%    0.650%

7 years up to but excluding 8 years

   0.37%    0.650%

8 years up to but excluding 10 years

   0.40%    0.700%

10 years up to but excluding 11 years

   0.40%    0.750%

11 years up to but excluding 16 years

   0.45%    0.750%

16 years and up

   0.50%    0.900%


EXHIBIT B

Operating Procedures

The following outlines the procedures by which the Corporation intends from time to time to sell the Notes through the Dealers acting as agents of the Corporation or as principals for resale pursuant to the Agreement. All operating procedures will be carried out in accordance with National Instrument 44-102. Capitalized terms used herein have the same meanings ascribed thereto in the Agreement, unless otherwise defined herein.

 

A. General

 

1. On any morning at the commencement of business, the Corporation may establish, in consultation with the Dealers or any of them for the current Business Day, an appropriate rate and pricing structure for the Notes to be sold by the Dealers within a defined time frame pursuant to the Agreement and the Corporation’s requirement for funds (including the term or terms required and other variable terms and conditions (collectively, the “Other Terms and Conditions”) of the Notes as permitted by the Canadian Base Prospectus and U.S. Base Prospectus, as amended or supplemented, to be raised by the sale of the Notes. At the Corporation’s sole discretion, the rate and pricing structure and requirement for funds so established will be based upon market conditions and the Corporation’s current and prospective fund requirements. The Corporation and the Dealers participating in an offering of a particular Tranche of Notes shall determine whether all or a portion of any Tranche of Notes may be offered or sold in the United States and, if so, whether all such Notes offered and sold in the United States shall be offered and sold in a Registered U.S. Offering or in an Unregistered U.S. Offering.

 

2. The rate and pricing structure, the Other Terms and Conditions and requirement for funds so established will prevail for each Dealer for and during the Business Day and will not be adjusted unless the Corporation, in its sole and absolute discretion, determines that an adjustment is desirable and notifies each Dealer of the adjustment. The Corporation may consult with the Dealers or any of them concerning the desirability of an adjustment in the rate and pricing structure, the Other Terms and Conditions or in the requirement for funds. Also, a Dealer will advise the Corporation at any time during any Business Day if the Dealer believes an immediate adjustment in the Corporation’s rate and pricing structure, the Other Terms and Conditions or requirement for funds is desirable.

 

3. Whenever a Dealer obtains a firm offer to purchase a Note at the prevailing rate and pricing structure, on the prevailing Other Terms and Conditions and within the confines of the Corporation’s prevailing requirement for funds, the Dealer will telephone or otherwise contact the Corporation to determine whether the Corporation in fact still requires funds and, if it does, the Corporation will confirm by telephone or otherwise that the Dealer may accept such offer as agent on behalf of the Corporation (with commissions as determined in accordance with Exhibit A or as mutually agreed upon by the Dealer and the Corporation) or may acquire the Note as principal on terms (including price and commissions, if any) then mutually agreed upon by the Dealer and the Corporation for resale by the Dealer.


 

- B2 -

4. Whenever a Dealer obtains a firm offer to purchase a Note at other than the prevailing rate and pricing structure and/or not within the confines of the Other Terms and Conditions, and/or not within the confines of the Corporation’s prevailing requirement for funds, the Dealer will inform the Corporation of that offer and will discuss with the Corporation the advisability of accepting that offer prior to accepting that offer.

 

5. Unless otherwise agreed to by the Dealer and the Corporation, all orders accepted by the Corporation on a particular date (the “Trade Date”) will be settled on the third Business Day following the Trade Date or such other Business Day as the parties may mutually agree upon (the “Settlement Date”).

 

6. Any Note (a “Book-Entry Only Note”) is to be issued in accordance with Part B of these Operating Procedures entitled “Book-Entry Only Notes”, unless the issuance of Notes in definitive form (“Certificated Notes”) is, subject to the provisions of the Trust Indenture, agreed to in advance by the Corporation and the Dealers and so indicated in the applicable Prospectus Supplement or Pricing Supplement. Settlement procedures with respect to Book-Entry Only Notes will be as set forth in such Part B.

 

7. The Corporation will make all necessary filing of Prospectus Supplement(s) and Pricing Supplement(s) and other documents required to be filed with the applicable securities regulatory authorities pursuant to National Instrument 44-102 and Canadian securities laws, and, if applicable, with the SEC and state securities regulators in the case of a Registered U.S. Offering or an Unregistered U.S. Offering, in connection with the offer and sale of the Notes and will remit all fees payable to such securities regulatory authorities.

 

B. Book-Entry Only Notes

 

1. Unless otherwise agreed to between the Corporation and the Dealer, each Book-Entry Only Note will be registered in the name of CDS & Co., as nominee for CDS Clearing and Depository Services Inc. (“CDS”) as depository, or registered in such other nominee name as may be specified by CDS, on the debt securities register maintained under the Trust Indenture. The beneficial owner of an interest in a Book-Entry Only Note (each, a “Book-Entry Interest”) will designate one or more participants in CDS to act as agent or agents for such owner in connection with the book-entry system maintained by CDS, and CDS will record in book-entry form, in accordance with instructions provided by such participants, a credit balance with respect to such Book-Entry Interest in the account of such participants. The Book-Entry Interest will be recorded through the records of such participants or through the separate records of such participants and one or more indirect participants in CDS. Where CDS acts as primary depositary for a Book-Entry Only Note as outlined above, to the extent the Corporation requests, the Dealers shall take such commercially reasonable action as is necessary to assist the Corporation to ensure that, by the Settlement Date, Book-Entry Interests in the Book-Entry Only Note can be held by The Depositary Trust Company (“DTC”), Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”) or Clearstream Banking, société anonyme (“Clearstream, Luxembourg”), in each case as participants in CDS, and will deliver to CDS, DTC, Euroclear and Clearstream, Luxembourg such information as they may reasonably require in connection therewith.


 

- B3 -

2. The receipt of immediately available funds by the Corporation in payment for Book-Entry Interests and the authentication and issuance of the Book-Entry Only Note representing such Book-Entry Interests will constitute “Settlement”.

 

3. Settlement procedures with regard to each Book-Entry Only Note sold by a Dealer will be as set forth below:

 

  (a) The Dealer will verbally advise the Corporation of so much of the following information as is available immediately following the acceptance of any offer by the Dealer acting as agent on behalf of the Corporation or acting as principal, and all of the following information (the “Settlement Information”) will be confirmed in writing pursuant to the timetable for Settlement set forth below:

 

  (i) principal amount and currency of the Book-Entry Interest;

 

  (ii) in the case of a Note with a fixed interest rate (“Fixed Rate Note”), the interest rate and interest payment dates, or in the case of a Note with a variable interest rate, the initial interest rate, the interest reset period, the interest reset dates, the interest payment period, the interest payment dates, the interest rate base, index maturity and spread or spread multiplier, if any, and, if applicable, the minimum interest rate and maximum interest rate;

 

  (iii) Settlement Date;

 

  (iv) maturity date;

 

  (v) price;

 

  (vi) net proceeds;

 

  (vii) spread versus comparable benchmark;

 

  (viii) Trade Date;

 

  (ix) FINS Number(s) (the CDS Participant Number(s) of the participant(s) through which the customer will hold the Book-Entry Interest);

 

  (x) Dealer’s commission; and

 

  (xi) jurisdiction(s) of sale.


 

- B4 -

  (b) After receiving the final pricing information from the Dealer, the Corporation will complete and deliver (via electronic mail being acceptable) to the Dealer or its counsel all applicable Prospectus Supplements or Pricing Supplements: in the case of BMO Nesbitt Burns Inc. at fax: (416) 359-1636 or e-mail: grant.williams@bmo.com, Attention: Grant Williams; in the case of Casgrain & Company Limited, at fax: (514) 871-1943 or e-mail: smcharg@casgrain.ca, Attention: Stephen McHarg; in the case of CIBC World Markets Inc. at fax: (416) 594-7760 or e-mail: scott.burrows@cibc.ca, Attention: Scott Burrows; in the case of Desjardins Securities Inc. at fax: (416) 867-1490 or e-mail: ryan.godfrey@vmd.desjardins.com, Attention: Ryan Godfrey; in the case of HSBC Securities (Canada) Inc. at fax: (416) 868-1036 or e-mail: david.w.loh@hsbc.ca, Attention: David Loh; in the case of Laurentian Bank Securities Inc. at fax: (416) 865-5694 or e-mail: berkyt@lb-securities.ca, Attention: Tom Berky; in the case of National Bank Financial Inc. at fax: (416) 869-8648 or e-mail: jason.stewart@nbc.ca, Attention: James (Jason) Stewart; in the case of RBC Dominion Securities Inc. at fax: (416) 842-7777 or e-mail: rob.brown@rbccm.com, Attention: Robert Brown; in the case of Scotia Capital Inc. at fax: (416) 863-7527 or e-mail: murray_neal@scotiacapital.com, Attention: Murray Neal; and in the case of TD Securities Inc. at fax: (416) 308-3715 or e-mail: patrick.scace@tdsecurities.com, Attention: Patrick Scace, relating to the Book-Entry Only Note to be sold in accordance with such Settlement Information. The Dealer will deliver the Canadian Base Prospectus and the U.S. Base Prospectus, as amended or supplemented (which for clarity includes any applicable Prospectus Supplement or Pricing Supplement) to the purchaser of each Book-Entry Interest by the end of the second Business Day following the Trade Date, provided that the Corporation has delivered the applicable Prospectus Supplement or Pricing Supplement to the Dealer or its counsel.

 

  (c) The Corporation will assign a CUSIP number to the Book-Entry Only Note representing such Book-Entry Interest and will forward copies of the Canadian Prospectus Supplement(s) or Canadian Pricing Supplement(s) to CDS via facsimile or other form of electronic transmission and request activation of the CUSIP number.

 

  (d) After receiving all of the Settlement Information from the Dealers participating in the sale of the Book-Entry Only Note, the Corporation will communicate via facsimile or other form of electronic transmission, to CDS and to the Trustee, all of the Settlement Information.

 

  (e) The Corporation will prepare and execute a Book-Entry Only Note in the form that has been agreed upon by the Corporation and the Trustee.

 

  (f) The Trustee will confirm and authenticate the Book-Entry Only Note and deliver to the Dealer for delivery to CDS on the Settlement Date.

 

  (g) The Dealer will deliver each Book-Entry Only Note to CDS and CDS will credit such Book-Entry Interest to the appropriate participant account(s) maintained by CDS. The Dealer will provide the Corporation with written confirmation that such delivery has been made.

 

  (h) Each Dealer will deliver, by electronic funds transfer, the amount in respect of such Book-Entry Interest to the designated account of the Corporation for funds available for immediate use, net of the appropriate commissions, and provide the Corporation with a reference or tracing number. In the event such amount has not been received in the designated account of the Corporation by 10:00 a.m. (Toronto time) on the Settlement Date, the Corporation will be compensated by the Dealer for its cost of funds incurred as a result of the delay as such amount is determined by the Corporation acting reasonably, for the period from and including the Settlement Date to and including the date the amount is received in the account.


 

- B5 -

  (i) The Dealer will confirm the purchase of each Book-Entry Interest to the purchaser thereof by mailing a written confirmation to such purchaser.

For offers accepted by the Corporation (or as provided above, by a Dealer on behalf of the Corporation), Settlement Procedures 3(a) through 3(i) above will occur no later than the respective times (Toronto time) listed below:

 

Settlement

Procedure

   Time
3(a)    9:00 a.m. on the Business Day following the Trade Date
3(b) – 3(c)    9:00 a.m. on the second Business Day following the Trade Date
3(d)    1:00 p.m. on the second Business Day following the Trade Date
3(e) – 3(f) – 3(g) –

3(h) – 3(i)

   9:00 a.m. on the Settlement Date

 

4. If Settlement of a Book-Entry Only Note is rescheduled or cancelled, the Corporation will deliver to CDS and the Trustee a cancellation message to such effect by no later than 10:00 a.m. (Toronto time) on the Business Day immediately preceding the scheduled Settlement Date. If a Book-Entry Only Note is cancelled, the Trustee will mark such Book-Entry Only Note “void and cancelled”, and make appropriate entries in its records. The CUSIP number assigned to such Book-Entry Only Note will, in accordance with CUSIP Service Bureau procedures, be cancelled and not reassigned.

 

5. Interest payments will be made by cheque or wire transfer, at the Corporation’s option, dated the date interest is payable (or by any other payment method as agreed upon between CDS and the Corporation) and delivered to CDS by the Corporation on or before the date interest is payable.

 

6. On the day on which the principal amount of a Book-Entry Only Note is to be paid, the Corporation will make payment thereon to CDS. Book-Entry Only Notes will be delivered for repayment before 9:00 a.m. (Toronto time). Should a Book-Entry Only Note be received after 9:00 a.m. (Toronto time), the Corporation will use its best efforts to make payment on the same day. Should it not be possible to do so, payment will be made the next Business Day, exclusive of additional accrued interest. Should the maturity date not be a Business Day, such payment will be made on the next Business Day and the holder will not be entitled to any further interest.

 

C. Certificated Notes

 

1. The receipt of immediately available funds by the Corporation in payment for Certificated Notes and the authentication and issuance of the Certificated Notes shall constitute “Settlement”.


 

- B6 -

2. Settlement procedures with regard to each Certificated Note sold by a Dealer shall be as follows:

 

  (a) The Dealer will orally advise the Corporation of the following information (except the information referred to in (vi) if not available) immediately following the acceptance of any offer by the Dealers acting as agent on behalf of the Corporation or acting as principal and all of the following information shall be confirmed in writing by 1:00 p.m. on the Business Day following the Trade Date:

 

  (i) principal amount and currency or currencies of the Certificated Note;

 

  (ii) exact name in which the Certificated Note is to be registered (the “Registered Owner”);

 

  (iii) exact address of the Registered Owner and address for payment of principal and interest;

 

  (iv) splits;

 

  (v) delivery location;

 

  (vi) taxpayer identification number of the Registered Owner; and

 

  (vii) the information specified in paragraphs B.3(a)(ii), (iii), (iv), (v), (vi), (vii), (viii), (x) and (xi) above (which information along with the information specified in paragraph C.2(a)(i) to (iv) above shall be deemed to be collectively the “Certificated Settlement Information” for all purposes in regard to the Certificated Notes).

 

  (b) After receiving the Certificated Settlement Information from the Dealers, the Corporation will complete and deliver to the Dealer or its counsel all applicable Prospectus Supplements or Pricing Supplements relating to the Certificated Notes to be sold in accordance with such Certificated Settlement Information.

The Prospectus Supplement(s) or Pricing Supplement(s) will be delivered (via electronic mail being acceptable) or faxed to the following contact at each of the Dealers if such a Dealer is a Dealer for the purpose of such issue or will deliver (via electronic mail being acceptable) to the Dealer’s counsel: in the case of BMO Nesbitt Burns Inc. at fax: (416) 359-1636 or e-mail: grant.williams@bmo.com, Attention: Grant Williams; in the case of Casgrain & Company Limited, at fax: (514) 871-1943 or e-mail: smcharg@casgrain.ca, Attention: Stephen McHarg; in the case of CIBC World Markets Inc. at fax: (416) 594-7760 or e-mail: scott.burrows@cibc.ca, Attention: Scott Burrows; in the case of Desjardins Securities Inc. at fax: (416) 867-1490 or e-mail: ryan.godfrey@vmd.desjardins.com, Attention: Ryan Godfrey; in the case of HSBC Securities (Canada) Inc. at fax: (416) 868-1036 or e-mail: david.w.loh@hsbc.ca, Attention: David Loh; in the case of Laurentian Bank Securities Inc. at fax: (416) 865-5694 or e-mail: berkyt@lb-securities.ca, Attention: Tom Berky; in the case of National Bank Financial Inc. at fax: (416) 869-8648 or e-mail: jason.stewart@nbc.ca, Attention: James (Jason) Stewart; in the case of RBC Dominion Securities Inc. at fax: (416) 842-7777 or e-mail: rob.brown@rbccm.com, Attention: Robert Brown; in the case of Scotia Capital Inc. at fax: (416) 863-7527 or e-mail: murray_neal@scotiacapital.com, Attention: Murray Neal; and in the case of TD Securities Inc. at fax: (416) 308-3715 or e-mail: patrick.scace@tdsecurities.com, Attention: Patrick Scace. The Dealer will deliver the Canadian Base Prospectus and the U.S. Base Prospectus, as amended or supplemented (which for clarity includes any applicable Prospectus Supplement or Pricing Supplement) to each purchaser of the Notes by the end of the second Business Day following the Trade Date, provided that the Corporation has delivered the applicable Prospectus Supplement or Pricing Supplement to the Dealer or its counsel.


 

- B7 -

  (c) After receiving all of the Certificated Settlement Information from the relevant Dealer, the Corporation will communicate the Certificated Settlement Information to the Trustee and to the issuing agent if other than the Trustee, by 1:00 p.m. on the second Business Day following the Trade Date.

 

  (d) The Trustee or issuing agent, as applicable, will complete and distribute a pre-printed 4-ply Certificated Note packet (or a Certificated Note and three photocopies thereof) as follows:

 

  (i) the original Certificated Note (which in the case of the registered Certificated Notes will be registered in the name of the Registered Owner) to the Dealer;

 

  (ii) copy 1 to the Trustee;

 

  (iii) copy 2 to the Dealer; and

 

  (iv) copy 3 to the Corporation.

 

  (e) No later than 10:00 a.m. on the Settlement Date or such time on such other date as may be agreed to by the Corporation and the Dealer or Dealers in question to be the Settlement Date for the purpose of a specific issuance of a Certificated Note, the Trustee or issuing agent, as applicable, will make the Certificated Note available at its principal office in Toronto, Ontario or such other place or places (if any) which the Corporation may, with the approval of the Trustee, designate subject to the provisions of the Trust Indenture. Each Dealer will deliver, by electronic funds transfer, the amount in respect of such Certificated Note to the designated account of the Corporation for funds available for immediate use, net of the appropriate commissions and provide the Corporation with a reference or tracing number. The Dealers will arrange to settle the transaction prior to 12:00 p.m. on the Settlement Date. If the Dealer does not settle the transaction prior to 12:00 p.m. on the Settlement Date the transaction shall not settle until the next Business Day in Toronto, Ontario and the Corporation shall be compensated by the Dealer for its cost of funds incurred as a result of the delay in Settlement based on the interest rate or yield determined and calculated in the manner provided in the Notes, for the period from but not including the Settlement Date to and including the date the transaction settles.


 

- B8 -

3. For each Certificated Note the Dealer will provide the exact address of the Registered Owner and address for payment of interest. Interest payments shall be made by cheque dated the date interest is payable and mailed to the Registered Owner at least five Business Days prior to the applicable interest payment date.

 

4. On the day on which the principal amount of a Certificated Note is to be paid, the paying agent in the Note will make payment thereon, at any branch of the paying agent designated in the Note, to the payee named in the Certificated Note or the appropriate holder thereof (in the case of a Certificated Note which is payable to the order of a named payee) against presentation and surrender of the Certificated Note unless otherwise specified in such Certificated Note or otherwise agreed to by the Corporation, the Trustee, the paying agent and the payee.

These operating procedures shall stay in effect until such time as the Corporation and the Dealers agree that revisions to the procedures are desirable.


EXHIBIT C

Additional Procedures for Unregistered U.S. Offerings

 

1. The Corporation represents, warrants, covenants and agrees to and with the Dealers that, with respect to the Tranche of Notes to be offered and sold in the United States in an Unregistered U.S. Offering:

 

  (a) The Corporation is a “foreign issuer” within the meaning of Regulation S and reasonably believes that there is no “substantial U.S. market interest” in its debt securities within the meaning of Regulation S;

 

  (b) Except with respect to offers and sales to Qualified Institutional Buyers (as defined in Rule 144A) in reliance upon the exemption from registration under Rule 144A, if available, neither the Corporation nor any of its affiliates, nor any person acting on its or their behalf (other than the Dealers, the U.S. Affiliates, or any members of the banking and selling group formed by them, as to whom the Corporation makes no representation), has made or will make: (i) any offer to sell, or any solicitation of an offer to buy, any Notes to or for the benefit of a person in the United States; or (ii) any sale of Notes unless, at the time the buy order was or will have been originated: (A) the purchaser is outside the United States and such sale is made in accordance with Regulation S; or (B) the Corporation, its affiliates, and any person acting on their behalf reasonably believe that the purchaser is outside the United States.

 

  (c) None of the Corporation, its affiliates or any person acting on its or their behalf (other than the Dealers, any members of the selling group formed by them and their respective affiliates, in respect of whom the Corporation makes no representation or warranty) has engaged or will engage in any “directed selling efforts” (within the meaning of Regulation S) in the United States or has engaged or will engage in any form of “general solicitation” or “general advertising” (as each term is used in Regulation D under the 1933 Act (“Regulation D”)) with respect to the offer or sale of the Notes in the United States.

 

  (d) So long as any Notes which have been sold in the United States in reliance upon Rule 144A are outstanding, are “restricted securities” within the meaning of Rule 144(a)(3) under the 1933 Act and are eligible for resale pursuant to Rule 144A pursuant to all conditions and requirements other than those relating to the availability of information regarding the Corporation, it shall either:

 

  (i) furnish to the SEC all information required to be furnished in accordance with Rule 12g3-2(b) under the 1934 Act;

 

  (ii) file reports and other information with the SEC under Section 13 or 15(d) of the 1934 Act; or


 

- C2 -

  (iii) in the event it is exempt from reporting pursuant to Rule 12g3-2(b) under the 1934 Act or is not subject to Section 13 or 15(d) of the 1934 Act, furnish to any holder of the Notes and any prospective purchaser of the Notes designated by such holder, upon request of such holder or prospective purchaser, the information required to be delivered pursuant to Rule 144A(d)(4) under the 1933 Act (so long as such requirement is necessary in order to permit holders of the Notes to effect resales under Rule 144A).

 

  (e) The Corporation is not now, and as a result of the sale of the Notes contemplated hereby will not be, an “investment company” as defined in the Investment Company Act.

 

  (f) The purchased Notes are not, and as of the Issuance Closing Date will not be, and no securities of the same class as the purchased Notes are or will be of the same class as, securities listed on the New York Stock Exchange or any other national securities exchanged registered under section 6 of the 1934 Act, or quoted in a U.S. automated inter-dealer quotation system.

 

2. Each of the Dealers represents and warrants to and with the Corporation that:

 

  (a) It acknowledges that the Notes have not been and will not be registered under the 1933 Act or any U.S. state securities laws and may be offered and sold only in transactions exempt from or not subject to the registration requirements of the 1933 Act and state securities laws. It has not offered and sold, and will not offer and sell, any Notes except: (i) in an offshore transaction in accordance with Rule 903 of Regulation S; or (ii) in the United States to Qualified Institutional Buyers in transactions that are exempt from the registration requirements under the 1933 Act pursuant to Rule 144A, if available. It is acknowledged that Rule 144A is not be available in connection with any offers or sales of Notes made by the Corporation directly to a purchaser in the United States in circumstances where the Dealers are acting on an agency basis and do not first purchase the Notes as principal for resale. It is also acknowledged that Rule 144A is not available with respect to offers and sales of any Notes that, when issued, are of the same class as securities listed on the New York Stock Exchange or any other national securities exchanged registered under section 6 of the 1934 Act, or quoted in a U.S. automated inter-dealer quotation system.

 

  (b) Accordingly, neither the Dealer nor any of its affiliates nor any persons acting on their behalf, has made or will make: (i) except as provided in this Exhibit C, any offer to sell or any solicitation of an offer to buy, any Notes to any person in the United States, or (ii) except as provided in this Exhibit C, any sale of Notes to any purchaser unless, at the time the buy order was or will have been originated, the purchaser was outside the United States, or such Dealer, affiliate or person acting on its or their behalf reasonably believed that such purchaser was outside the United States, or (iii) any “directed selling efforts” (as defined in Regulation S) in the United States with respect to the Notes.


 

- C3 -

  (c) It has not entered and will not enter into any contractual arrangement with respect to the distribution of the Notes, except with its affiliates, any selling group members or with the prior written consent of the Corporation.

 

3. The Dealers shall require each U.S. Affiliate and selling group member to agree, for the benefit of the Corporation, to comply with, and shall use their best efforts to ensure that each U.S. Affiliate and selling group member complies with, the provisions of this Exhibit C as if such provisions applied to such U.S. Affiliate and selling group member.

 

4. Each of the Dealers agrees with the Corporation that:

 

  (a) All Notes sold in the United States will be issued in fully registered form or in book-entry only form and issued in the form of fully registered global notes held by CDS.

 

  (b) All offers and sales of the Notes in the United States will be effected through the U.S. Affiliates or other broker-dealers duly registered under the 1934 Act and applicable state securities laws, provided that the Dealers may make offers of the Notes in the United States in accordance with Rule 15a-6 under the 1934 Act and all applicable state securities laws.

 

  (c) Any U.S. Affiliate selling Notes in the United States will be a Qualified Institutional Buyer.

 

  (d) It has not solicited and will not solicit, either directly or through its U.S. Affiliate, any offers for, or offer to sell, the Notes in the United States by means of any form of “general solicitation” or “general advertising” (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the 1933 Act.

 

  (e) It will solicit, and will cause its U.S. Affiliate to solicit, offers for the Notes in the United States only from, and will offer the Notes only to, persons it reasonably believes to be Qualified Institutional Buyers within the meaning of Rule 144A, in accordance with Rule 144A, if available. It also agrees that it will solicit offers for the Notes only from, and will offer the Notes only to, persons that in purchasing such Notes will be deemed to have represented and agreed as provided in the U.S. Private Placement Memorandum (as defined below).

 

  (f) It will inform, and cause its U.S. Affiliate to inform, all purchasers of the Notes in the United States that the Notes have not been and will not be registered under the 1933 Act and are being sold to them without registration under the 1933 Act in reliance on Rule 144A.


 

- C4 -

  (g) The U.S. Private Placement Memorandum for the offering of the Notes in the United States shall contain disclosure in substantially the form set forth below (in addition to such other disclosure as may be agreed to by the Corporation and the Dealers):

“The Notes offered hereby have not been and will not be registered under the 1933 Act or applicable state securities laws and may not be offered or sold within the United States except that Notes may be offered or sold to Qualified Institutional Buyers pursuant to Rule 144A and applicable state securities laws. In addition, until 40 days after the commencement of the offering of Notes pursuant hereto, an offer or sale of Notes within the United States by any dealer whether or not participating in the offering may violate the registration requirements of the 1933 Act if such offer and sale is made otherwise than pursuant to Rule 144A under the 1933 Act and applicable state securities laws.

Each U.S. purchaser hereof will, by its purchase of such Notes, be deemed to have represented and agreed for the benefit of the Corporation, the Dealers and their U.S. Affiliates as follows:

 

  (i) it is authorized to consummate the purchase of the Notes;

 

  (ii) it is aware that the Notes have not been and will not be registered under the 1933 Act and the sale contemplated hereby is being made in reliance on Rule 144A;

 

  (iii) it is a Qualified Institutional Buyer and it is acquiring the Notes for its own account or for the account of a Qualified Institutional Buyer with respect to which it exercises sole investment discretion, and not with a view to any resale, distribution or other disposition of the Notes in violation of United States federal or state securities laws;

 

  (iv) it acknowledges that is has not purchased Notes as a result of any general solicitation or general advertising, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or the Internet, or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

  (v) it understands that if it decides to offer, sell or otherwise transfer such Notes, such Notes may be offered, sold or otherwise transferred only (a) to the Corporation, (b) outside the United States in accordance with Rule 904 of Regulation S under the 1933 Act, or (c) within the United States in accordance with: (x) Rule 144A to a person the seller reasonably believes is a Qualified Institutional Buyer that is purchasing for its own account or for the account of a Qualified Institutional Buyer to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A or (y) the exemption from registration under the 1933 Act provided by Rule 144, if available, and in each case in compliance with any applicable state securities laws in the United States or securities laws of any other jurisdiction;


 

- C5 -

  (vi) unless otherwise agreed to by the Corporation, and until such time as the same is no longer required under applicable requirements of the 1933 Act or applicable state securities laws, it understands that all Notes sold in the United States will bear a legend to the following effect:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (C) WITHIN THE UNITED STATES, IN ACCORDANCE WITH (1) RULE 144A UNDER THE SECURITIES ACT OR (2) RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, AND IN EACH CASE IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS PROVIDED THAT THE CORPORATION IS A “FOREIGN ISSUER” WITHIN THE MEANING OF REGULATION S AT THE TIME OF SALE. A NEW CERTIFICATE, BEARING NO LEGEND, DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY” MAY BE OBTAINED FROM COMPUTERSHARE TRUST COMPANY OF CANADA (OR ANY SUCCESSOR REGISTRAR FOR THE SECURITIES REPRESENTED HEREBY) (THE “REGISTRAR”) UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE REGISTRAR AND THE CORPORATION, (OR, IF REQUIRED BY THE REGISTRAR, AN OPINION OF COUNSEL SATISFACTORY TO THE REGISTRAR) TO THE EFFECT THAT THE SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT;


 

- C6 -

provided that, if any such Notes are being sold under clause (v)(b) above, and provided that the Corporation is a “foreign issuer” within the meaning of Regulation S at the time of sale, the legend may be removed by providing a declaration to Computershare Trust Company of Canada, as registrar and transfer agent for the Notes (or any successor registrar for the Notes), to the following effect (or as the Corporation may prescribe from time to time and, if required by the registrar, an opinion of counsel of recognized standing reasonably satisfactory to the registrar to the effect such legend can be removed):

“The undersigned (A) acknowledges that the sale of the                      Notes, represented by certificate numbers                     , to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”), and (B) certifies that (1) it is not an “affiliate” (as defined in Rule 405 under the 1933 Act) of Hydro One Inc., (2) the offer of such Notes was not made to a person in the United States and at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believe that the buyer was outside the United States, (3) neither the seller nor any person acting on its behalf engaged in any “directed selling efforts” in connection with the offer and sale of such Notes (as such term is defined in Regulation S under the 1933 Act), (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the Notes are “restricted securities” (as that term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace the Notes sold in reliance on Rule 904 of Regulation S under the 1933 Act with fungible unrestricted Notes, and (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the 1933 Act.”;

provided, further, that, if any such Notes are being sold under clause (v)(c)(y) above, the legend may be removed by delivery to Computershare Trust Company of Canada, as registrar for the Notes (or any successor registrar) of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the 1933 Act or state securities laws;


 

- C7 -

  (vii) it understands that the Notes sold in the United States as part of an issue which is book-entry only and issued in the form of fully registered global notes held by CDS Clearing and Depository Services Inc. or a successor depository in Canada will bear a different CUSIP number (the “Restricted CUSIP”) from the CUSIP number (the “Canadian CUSIP”) borne by Notes of the same issue sold in Canada, provided that, if any such securities are being sold under clause (v)(b) above, the Restricted CUSIP may be replaced with the Canadian CUSIP by providing a declaration to Computershare Trust Company of Canada, as registrar and transfer agent for the Notes, in the form set forth above or in such other form and with such other supporting documentation as the Corporation and/or the registrar for the Notes may from time to time prescribe; and, provided further, that, if any such securities are being sold under subclause (v)(c)(y) above, the Restricted CUSIP may be replaced with the Canadian CUSIP by delivery to Computershare Trust Company of Canada of an opinion of counsel, of recognized standing reasonably satisfactory to the Corporation, that such Notes may be resold under Rule 144 and under applicable requirements of the 1933 Act or state securities laws;

 

  (viii) it understands and acknowledges that the Corporation (a) is not obligated to remain a “foreign issuer” within the meaning of Regulation S, (b) may not, at the time the Notes are resold by it or at any other time, be a foreign issuer, and (c) may engage in one or more transactions that could cause the Corporation not to be a foreign issuer;

 

  (ix) it consents to the Corporation making a notation on its records or giving instructions to any transfer agent of the Notes in order to implement the restrictions on transfer set forth and described herein; and

 

  (x) if required by applicable securities legislation, regulatory policy or order or by any securities commission, stock exchange or other regulatory authority, it will execute, deliver, file and otherwise assist the Corporation in filing reports, questionnaires, undertakings and other documents with respect to the ownership of the Notes.”

Each Dealer agrees that:

 

  (a) It will deliver to offerees, with respect to any Notes offered or sold in the United States, prior to such offeree’s purchase of any Notes, a copy of the private placement memorandum, including (i) the Canadian Prospectus relating to the Notes, (ii) the documents incorporated therein by reference and (iii) a U.S. covering memorandum containing disclosure relating to the U.S. offering (collectively, the “U.S. Private Placement Memorandum”).


 

- C8 -

  (b) At each Issuance Closing Date in respect of which offers and sales of Notes have been made in the United States, each Dealer selling Notes in the United States, together with its U.S. Affiliate, will provide a certificate, substantially in the form of Annex 1 to this Exhibit C, relating to the manner of the offer and sale of the Notes in the United States.


 

- C9 -

Annex 1 to Exhibit C

Dealers’ Certificate

In connection with offers and sales in the United States, pursuant to Rule 144A under the Securities Act of 1933, as amended (the “1933 Act”), if available, of unsecured medium term notes (the “Notes”) of Hydro One Inc. (the “Company”) pursuant to the Dealer Agreement dated as of September 4, 2013 among the Company and the dealers party thereto (the “Dealer Agreement”), the undersigned [INSERT NAME OF DEALER] (the “Dealer”) and [INSERT NAME OF U.S. AFFILIATE], in its capacity as agent in the United States for the Dealer (the “U.S. Affiliate”), each hereby certifies that:

 

  (a) the U.S. Affiliate is a duly registered broker or dealer with the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the United States Securities and Exchange Commission (the “SEC”) and is in good standing with FINRA and the SEC on the date hereof;

 

  (b) all offers and sales of the Notes in the United States have been conducted by us in accordance with the terms of the Dealer Agreement;

 

  (c) each offeree in the United States was provided, prior to time of such offeree’s purchase of any Notes, with a copy of the U.S. Private Placement Memorandum, including the final Canadian prospectus and the documents incorporated by reference therein and no other written material was used in connection with the offer or sale of the Notes in the United States;

 

  (d) immediately prior to our transmitting the U.S. Private Placement Memorandum to offerees in the United States, we had reasonable grounds to believe and did believe that each such offeree was a Qualified Institutional Buyer (as defined in Rule 144A under the 1933 Act), and on the date hereof, we continue to believe that each such offeree is a Qualified Institutional Buyer; and

 

  (e) no form of “general solicitation” or “general advertising” (within the meaning of Rule 502(c) of Regulation D under the 1933 Act) was used by us, including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or the Internet or broadcast over radio or television, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Notes in the United States.

Terms used in this certificate have the meanings given to them in the Dealer Agreement unless otherwise defined herein.


 

- C10 -

Dated this          day of                     , 201    .

 

[INSERT NAME OF DEALER]     [INSERT NAME OF U.S. AFFILIATE]
By:         By:    
 

Name:

Title:

     

Name:

Title:

EX-5.1 3 d587664dex51.htm EX-5.1 EX-5.1

Exhibit 5.1

 

LOGO

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Hydro One Inc.

We consent to the use of our Independent Auditors’ Report dated February 14, 2013, on the financial statements of Hydro One Inc., which comprise the consolidated balance sheets as at December 31, 2012 and 2011, the consolidated statements of operations and comprehensive income, changes in shareholder’s equity and cash flows for the years ended December 31, 2012 and 2011, and notes, comprising a summary of significant accounting policies and other explanatory information, which are incorporated by reference in the short form base shelf prospectus which is part of the registration statement on Amendment No. 1 to Form F-10.

/s/ KPMG LLP

Chartered Accountants, Licensed Public Accountants

Toronto, Canada

September 4, 2013

 

LOGO

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