EMRAF Emera Inc (PK)

DESCRIPTION OF THE NEW NOTES

As used below, the terms (i) “we,” “our,” and “us” refer to Emera Incorporated, Emera US Finance LP, Emera US Holdings Inc., and, if the context requires, Emera Incorporated’s subsidiaries, (ii) “Emera” refers to Emera Incorporated and, if the context requires, its subsidiaries, (iii) the “Issuer” refers to Emera US Finance LP, (iv) the “Guarantors” refers collectively to Emera Incorporated and Emera US Holdings Inc., and (v) “EUSHI” refers to Emera US Holdings Inc.

General

The old notes were issued, and the new notes will be issued, under an indenture dated as of June 16, 2016, as previously amended and supplemented on June 16, 2016 and June 4, 2021, and as to be amended and supplemented by one or more supplemental indentures (collectively, the “Indenture”), among us, the Guarantors and American Stock Transfer & Trust Company, LLC, as trustee (the “Trustee”). The notes will be fully and unconditionally guaranteed, on a joint and several basis, by the Guarantors (the “Guarantees”). The Indenture is subject to and governed by the Trust Indenture Act of 1939, as amended (the “TIA”). The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The following is a summary of the material terms and provisions of the notes and the Indenture. However, this summary does not purport to be a complete description of the notes or the Indenture and is subject to the detailed provisions of, and qualified in its entirety by reference to, the Indenture, a copy of which is available from us upon request. We urge you to read the Indenture carefully because it, and not the following description, will govern your rights as a holder of the notes.

The Indenture does not limit the aggregate principal amount of debt securities which the Issuer may issue under it and provides that the Issuer may issue debt securities under it from time to time in one or more series. The Old 2024 Notes and the Old 2031 Notes were issued as a separate series.

The Issuer may “reopen” each series of notes and issue additional notes of any series (the “additional notes”) from time to time without notice or the consent of holders of the notes. If the Issuer reopens a series of notes, the period of any resale restriction applicable to the notes of such series may be extended to the last day of the term of any resale restrictions imposed on any notes of such series sold under any such reopening. The new notes of each series and any additional notes of that series subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments and redemptions; provided that if such additional notes are not fungible with the notes of the applicable series offered hereby for U.S. federal income tax purposes, such additional notes will have a separate CUSIP and/or ISIN number. Except as otherwise specified herein, all references to the notes of any series include any additional notes of that series.

The terms of the notes include those expressly set forth in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

This description of the notes is intended to be a useful overview of the material provisions of the notes, the Guarantees and the Indenture. Since this description is only a summary, you should refer to the Indenture for a complete description of the obligations of the Issuer and the Guarantors and your rights.

Interest

The Issuer issued the old notes initially with a maximum aggregate principal amount of $750 million, and will issue the new notes in such amounts as are tendered for exchange pursuant to this prospectus. Interest on the New 2024 Notes will begin to accrue on December 15, 2021, at the rate of 0.833% per annum. Interest on the New 2031 Notes will begin to accrue on December 15, 2021, at the rate of 2.639% per annum. Additional interest may also accrue on the notes in the circumstances described under “Additional Interest” above and all references to “interest” in this description include any such additional interest that may be payable on the notes.

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Interest on the notes of each series will be payable semi-annually in arrears on June 15 and December 15 of each year, beginning December 15, 2021, to the persons in whose names such notes are registered at the close of business on the preceding June 1 and December 1, respectively (whether or not a business day). In the event that any interest payment date for the notes (other than the interest payment date that is the maturity date of the notes) would otherwise be a day that is not a business day, the interest payment date will be postponed to the next succeeding business day and holders thereof will not be entitled to any further interest or other payment as a result of any such delay. Interest on the notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Ranking

Each series of the notes will:

The notes will also be structurally subordinated to any indebtedness and other liabilities of Emera’s subsidiaries (other than EUSHI and the Issuer). The notes will be fully and unconditionally guaranteed, on a joint and several basis, by each of the Guarantors pursuant to the Guarantees. Each Guarantee will be a direct, unsecured and unsubordinated obligation of each Guarantor and will have the same ranking with respect to indebtedness of such Guarantor as the notes will have with respect to the Issuer’s indebtedness. See “–Guarantees.”

As of June 30, 2021 the Issuer and the Guarantors had Cdn$5.8 billion of indebtedness, none of which was secured, and Emera’s subsidiaries (other than EUSHI and the Issuer) had Cdn$9.5 billion in indebtedness.

Guarantees

Each Guarantor will fully and unconditionally guarantee, on a joint and several basis, the due and punctual payment of the principal of, premium, if any, and interest on the notes of each series and any other obligations of the Issuer under the notes of each series when and as they become due and payable, whether at stated maturity, upon redemption, by acceleration or otherwise if the Issuer is unable to satisfy these obligations.

Emera is a holding company and conducts substantially all of its business through its direct and indirect operating subsidiaries. EUSHI, a direct and indirect wholly owned subsidiary of Emera, serves as a holding company for Emera’s current assets located in the United States. The principal sources of income of Emera and EUSHI are the dividends and distributions they receive from their subsidiaries.

The Guarantees will be the joint and several obligations exclusively of Emera and EUSHI. None of Emera’s direct and indirect subsidiaries (other than EUSHI) will guarantee or otherwise be responsible for the payment of principal of, any premium or interest or other payments required to be made by the Guarantors under the Guarantees. Accordingly, obligations of the Guarantors under the Guarantees will be structurally subordinated to all existing and future liabilities (including trade payables and indebtedness) of Emera’s direct and indirect subsidiaries (other than EUSHI). In the event of an insolvency, liquidation or other reorganization of any of Emera’s subsidiaries (other than EUSHI), the creditors of the Guarantors (including the holders of the notes) will have no right to proceed against the assets of such subsidiary. Also, creditors of such subsidiary would generally be entitled to payment in full from such assets before any assets are made available for distribution to the Guarantors. As of June 30, 2021, Emera’s subsidiaries (other than EUSHI and the Issuer) had Cdn$9.5 billion of indebtedness.

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The Indenture provides that upon a default in payment of principal or any premium or interest on a note, the holder of the notes may institute legal proceedings directly against the Guarantors to enforce the Guarantees without first proceeding against the Issuer. The obligations of each Guarantor under the Guarantees of the notes will be limited as necessary to prevent such Guarantees from constituting a fraudulent conveyance or fraudulent transfer under applicable law

Optional Redemption

Prior to the maturity date, the New 2024 Notes will be redeemable, at the Issuer’s option, at any time in whole, or from time to time in part, at a price equal to the greater of:

plus, in either case, accrued and unpaid interest to the date of redemption.

Prior to the Par Call Date, the New 2031 Notes will be redeemable, at the Issuer’s option, at any time in whole, or from time to time in part, at a price equal to the greater of:

plus, in either case, accrued and unpaid interest to the date of redemption.

On or after the Par Call Date, the New 2031 Notes will be redeemable, at the Issuer’s option, at any time in whole, or from time to time in part, at a price equal to 100% of the principal amount of the New 2031 Notes to be redeemed plus accrued and unpaid interest on the notes to be redeemed to the date of redemption.

For purposes of determining the optional redemption price, the following definitions are applicable:

“Comparable Treasury Issue” means (i) in the case of the New 2024 Notes, the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the New 2024 Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the notes of such series, and (ii) in the case of the New 2031 Notes, the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the New 2031 Notes to be redeemed, calculated as if the maturity date of such notes were the Par Call Date (the “Remaining Life”), that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life of the New 2031 Notes.

“Comparable Treasury Price” means, with respect to any redemption date and as determined by the Independent Investment Banker, (i) the average of the Reference Treasury Dealer Quotations obtained by the Independent Investment Banker for the redemption date, after excluding the highest and lowest of the Reference Treasury Dealer Quotations, or (ii) if the Independent Investment Banker obtains fewer than four Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

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“Independent Investment Banker” means J.P. Morgan Securities LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC or Scotia Capital (USA) Inc. (and their respective successors), or, if each of such firms is unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by us.

“Par Call Date” means March 15, 2031 (three months prior to the maturity date).

“Primary Treasury Dealer” means any primary U.S. Government securities dealer in the United States.

“Reference Treasury Dealer” means (i) each of J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Bank of Nova Scotia, New York Agency, an affiliate of Scotia Capital (USA) Inc., (ii) a Primary Treasury Dealer selected by MUFG Securities Americas Inc., (or, in each case, their respective affiliates or successors which are Primary Treasury Dealers), and any other Primary Treasury Dealer designated by, and not affiliated with, J.P. Morgan Securities LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC and Bank of Nova Scotia, New York Agency, an affiliate of Scotia Capital (USA) Inc., or their respective affiliates or successors, provided, however, that if any of the foregoing, or any of their respective designees, ceases to be a Primary Treasury Dealer, the Issuer will appoint another Primary Treasury Dealer as a substitute and (iii) any other Primary Treasury Dealer selected by the Issuer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date for the notes of a series, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue for such notes (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by the Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

“Treasury Yield” means, with respect to any redemption date applicable to the notes of a series, the rate per annum equal to the semi-annual equivalent yield to maturity (computed by the Independent Investment Banker as of the third business day immediately preceding such redemption date) of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date.

The Issuer will deliver notice of redemption at least 10 days but not more than 60 days before the applicable redemption date to each holder of the notes to be redeemed. If the Issuer elects to redeem the notes in part, the Trustee will select the notes to be redeemed in a fair and appropriate manner in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances (or, in the case of notes evidenced by global notes, in accordance with DTC’s applicable procedures).

Notes called for redemption will be redeemed in principal amounts of US$2,000 or any integral multiple of US$1,000 in excess of US$2,000 thereof. Upon the payment of the redemption price, premium, if any, plus accrued and unpaid interest, if any, to the date of redemption, interest will cease to accrue on and after the applicable redemption date on the notes called for redemption.

Notice of any redemption of notes may, at our discretion, be given subject to one or more conditions precedent, including, but not limited to, completion of a corporate transaction that is pending (such as an equity or equitylinked offering, an incurrence of indebtedness or an acquisition or other strategic transaction involving a change of control in us or another entity). If such redemption is so subject to satisfaction of one or more conditions precedent, such notice shall describe each such condition, and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied or otherwise waived by the relevant redemption date.

Any notice of redemption may provide that payment of the redemption price and the performance of our obligations with respect to such redemption may be performed by another person.

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Additional Amounts

All payments made by or on behalf of Emera, EUSHI or the Issuer under or with respect to the notes or the Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future tax, duty, levy, impost, assessment or other governmental charge imposed or levied by or on behalf of the Government of Canada or any province or territory thereof or by any authority or agency therein or thereof having power to tax (“Canadian Taxes”), unless Emera, EUSHI or the Issuer, as the case may be, is required to withhold or deduct Canadian Taxes by law or by the interpretation or administration thereof. If Emera, EUSHI or the Issuer, as the case may be, is so required to withhold or deduct any amount for or on account of Canadian Taxes from any payment made under or with respect to the notes or the Guarantees, Emera, EUSHI or the Issuer, as the case may be, will pay to each holder of such notes as additional interest such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each such holder after such withholding or deduction (and after deducting any Canadian Taxes on such Additional Amounts) will not be less than the amount such holder would have received if such Canadian Taxes had not been withheld or deducted. However, no Additional Amounts will be payable with respect to a payment made to a recipient or beneficial owner of such payment:

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In addition, no Additional Amounts will be payable on account of:

The Issuer will also (i) make such withholding or deduction and (ii) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law.

The Issuer will furnish to the holders of the notes within 60 days after the date the payment of any Canadian Taxes is due pursuant to applicable law, certified copies of tax receipts or other documents evidencing such payment by the Issuer.

In the event the Issuer fails to remit any Canadian Taxes in respect of which Additional Amounts are payable, the Issuer will indemnify and hold harmless each holder of notes (other than, for certainty, a recipient or beneficial owner not entitled to receive Additional Amounts) and upon written request reimburse each such holder for the amount, excluding any payment of Additional Amounts by the Issuer, of:

Wherever in the Indenture there is mentioned, in any context, the payment of principal, premium, if any, interest or any other amount payable under or with respect to the notes or the Guarantees, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Optional Tax Redemption

The notes will be subject to redemption at any time, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof together with accrued and unpaid interest, if any, to, but excluding, the date fixed

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for redemption, upon the giving of a notice as described below, if the Issuer (or its successor) determines that (i) as a result of (A) any amendment to or change (including any announced prospective change) in the laws (or any regulations thereunder) of Canada (or the jurisdiction of organization of the successor to the Issuer, EUSHI or Emera, as the case may be) (a “Relevant Taxing Jurisdiction”) or of any political subdivision or taxing authority thereof or therein, as applicable, or (B) any amendment to or change in an interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination), which amendment or change is announced or becomes effective on or after May 25, 2021 (or the date a party organized in a jurisdiction other than Canada or the United States becomes a successor to the Issuer, EUSHI or Emera, as the case may be), the Issuer, EUSHI or Emera, as the case may be, has or will become obligated to pay, on the next succeeding date on which interest is due, Additional Amounts with respect to the notes or the Guarantees as described under “—Additional Amounts,” (ii) on or after May 25, 2021 (or the date a party organized in a jurisdiction other than Canada or the United States becomes a successor of the Issuer, EUSHI or Emera), any action has been taken by any taxing authority of, or any decision has been rendered by a court of competent jurisdiction in, a Relevant Taxing Jurisdiction or any political subdivision or taxing authority thereof or therein, including any of those actions specified in (i) above, whether or not such action was taken or decision was rendered with respect to the Issuer, EUSHI or Emera, as the case may be, or any change, amendment, application or interpretation shall be officially proposed, which, in any such case, in the written opinion to the Issuer, EUSHI or Emera, as the case may be, of Canadian legal counsel of recognized standing, will result in the Issuer, EUSHI or Emera, as the case may be, becoming obligated to pay, on the next succeeding date on which interest is due, Additional Amounts with respect to the notes and, in any such case, in the business judgment of the Issuer, EUSHI or Emera, as the case may be, the Issuer, EUSHI or Emera, as the case may be, determines that such obligation cannot be avoided by the use of reasonable measures available to the Issuer, EUSHI or Emera, as the case may be, or (iii) an “interest tax event” has occurred within 90 days of the date fixed for redemption.

“Interest tax event” means the receipt by the Issuer, EUSHI or Emera of an opinion of independent counsel experienced in such matters to the effect that, as a result of any:

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it is more likely than not that the Issuer or its partners (other than Emera acting in its capacity as Guarantor) will be denied a current deduction in whole or in part in calculating its income tax liability in the United States or Canada that is attributable to any portion of the interest payable on the notes.

In the event that we elect to redeem a series of notes pursuant to the provisions set forth in the preceding paragraph, we shall deliver to the Trustee a certificate, signed by an authorized officer, stating that we are entitled to redeem such series of notes pursuant to their terms.

Notice of intention to redeem such series of notes will be given not more than 60 nor less than 30 days prior to the date fixed for redemption and will specify the date fixed for redemption.

Covenants

Various capitalized terms used within this “Covenants” subsection are defined at the end of this subsection.

Limitation On Liens

While the notes remain outstanding, neither the Issuer nor the Guarantors will create, incur, issue, assume or guarantee any indebtedness for borrowed money secured by a mortgage, charge, lien, pledge or security interest (together, “liens”) in any shares of the capital stock or other equity interests of any subsidiary now or hereafter directly owned by the Issuer or the Guarantors, or otherwise encumber any assets owned directly by the Issuer or the Guarantors unless at the same time all the notes then outstanding shall be secured equally and ratably with such indebtedness until such time as such indebtedness is no longer secured by such lien; provided that this covenant will not apply to each of the following:

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Consolidation, Merger, Conveyance or Transfer

The Indenture limits the ability of the Issuer and the Guarantors to enter into mergers, consolidations or transfers of all of their respective assets. Accordingly, neither the Issuer nor the Guarantors are permitted to consolidate or merge with any other entity or convey, transfer or lease all or substantially all of its assets or properties to any entity unless:

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Provision of Financial Information

Regardless of whether Emera is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise reports on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Indenture requires Emera to provide to the Trustee:

Emera is a foreign private issuer eligible to use the Multi-Jurisdictional Disclosure System available to certain issuers incorporated pursuant to the laws of a Canadian province. As such, Emera is exempt from certain sections of the Exchange Act that U.S. issuers would otherwise be subject to, including the requirement to provide information statements or proxy statements that comply with U.S. securities laws and to file reports under Section 16 of the Exchange Act. For the avoidance of doubt, none of the above reporting requirements shall be construed to require such statements or reports that would not otherwise be required to be filed by foreign private issuers subject to the Multi-Jurisdictional Disclosure System.

Each such report, to the extent permitted by the rules and regulations of the SEC, will be prepared in accordance with Canadian disclosure requirements, provided, however, that Emera shall not be obligated to file such reports with the SEC if the SEC does not permit such filings.

Nothing herein shall be construed to require the registered public accounting firm that prepares or issues the audit report for Emera to attest to, and report on, the assessment made by the management of Emera pursuant to the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, unless otherwise required by the Exchange Act.

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Event Risk

Except for the limitations described above under the subsection “—Limitation on Liens,” neither the Indenture, the Guarantees nor the notes will afford holders of the notes protection in the event of a highly leveraged transaction involving the Issuer, Emera or EUSHI, as applicable, or will contain any restrictions on the amount of additional indebtedness that the Issuer, Emera or EUSHI, as applicable, may incur.

Definitions

“Lease Liabilities” means a lessee’s obligation to make the lease payments arising from a lease, measured on a discounted basis;

“Common Shares” means shares of any class or classes of the share capital of a corporation or Securities representing ownership interests in any Person other than a corporation, the rights of the holders of which to participate in the distribution of assets upon the voluntary or involuntary liquidation, dissolution or winding-up of such corporation or other Person are not restricted to a fixed sum or to a fixed sum plus accrued dividends or other periodic distributions;

“Financial Instrument Obligations” means obligations arising under:

“Generally Accepted Accounting Principles” means, as at any date of determination, generally accepted accounting principles in effect in the United States at such date;

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

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provided that obligations of such Person or of another Person of the type referred to in clauses (i) through (iii) of this definition shall exclude trade accounts payable, dividends and other distributions payable to shareholders, future income taxes, obligations in respect of Preferred Shares, accrued liabilities arising in the ordinary course of business which are not overdue or which are being contested by such Person or such other Person in good faith, and non-monetary obligations in respect of performance guarantees;

“Non-Recourse Debt” means any Indebtedness incurred to finance or refinance the creation, development, design, engineering, procurement, construction, servicing, management, operation, ownership and/or acquisition of any project or asset and any increases in or extensions, renewals or refunding of any such Indebtedness in respect of which the person or persons to whom any such Indebtedness is or may be owed by the relevant borrower has or have no recourse whatsoever to any of the Issuer, Emera or EUSHI for the repayment of that Indebtedness other than:

“Person” means an individual, a corporation, a partnership, a trustee or an unincorporated organization; and pronouns have a similarly extended meaning;

“Preferred Shares” means

(i) Securities which on the date of issue thereof by a Person:

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“Purchase Money Mortgage” means any mortgage, pledge, charge, security interest or other encumbrance created, issued or assumed by the Issuer or the Guarantors to secure a Purchase Money Obligation; provided that such mortgage, pledge, charge, security interest or other encumbrance is limited to the property (including the rights associated therewith) acquired, constructed, installed or improved in connection with such Purchase Money Obligation;

“Purchase Money Obligation” means Indebtedness of the Issuer or the Guarantors incurred or assumed to finance the purchase price, in whole or in part, of any property or incurred to finance the cost, in whole or in part, of construction or installation of or improvements to any property; provided that such Indebtedness is incurred or assumed substantially concurrently with the purchase of such property 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; and

“Securities” means any stock, shares, units, installment receipts, voting trust certificates, bonds, debentures, notes, other evidences of indebtedness, or other documents or instruments commonly known as securities or any certificates of interest, shares or participations in temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe for, purchase or acquire any of the foregoing.

Mandatory Redemption; Sinking Fund

Neither the Issuer nor the Guarantors will be required to make mandatory redemption or sinking fund payments with payments respect to the notes.

Book-entry; Delivery and Form

The notes will initially be issued only in registered, book-entry form, in denominations of US$2,000 and any integral multiples of US$1,000 in excess thereof as described under “—Book-Entry System.” We will issue one or more global notes in denominations that together equal the total principal amount of the outstanding notes of each series.

Modification of the Indenture

Amendments of the Indenture and any series of notes may be made by the Issuer, the Guarantors and the Trustee with the consent of the holders of a majority in principal amount of the outstanding series of notes affected thereby; provided, however, that no such amendment may, without the consent of the holder of each outstanding note affected thereby:

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Without the consent of any holder of outstanding notes, the Issuer, the Guarantors and the Trustee may amend the Indenture and the notes to:

The holders of a majority in principal amount of the outstanding notes of any series may, on behalf of the holders of all notes of such series, waive compliance with any covenant or any past default under the Indenture with respect to such notes, except a default in the payment of the principal of, premium, if any, or interest on any note of that series or in respect of a provision which under the Indenture cannot be amended without the consent of the holder of each outstanding note affected.

It is not necessary for the consent of the holders under the Indenture to approve the particular form of any proposed amendment or waiver. It is sufficient if such consent approves the substance of the proposed amendment or waiver. A consent to any amendment or waiver under the Indenture by any holder of notes given in connection with a tender of such holder’s notes will not be rendered invalid by such tender. After an amendment or waiver under the Indenture requiring consent of the holders becomes effective, the Issuer will deliver to the holders and the Trustee a notice briefly describing such amendment or waiver. However, the failure to give such notice, or any defect in the notice, will not impair or affect the validity of the amendment or waiver.

Events of Default

The Indenture provides, with respect to any series of notes, that any of the following events constitutes an Event of Default:

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If an event of default (other than one described in clause (5) above) occurs and is continuing with respect to a series of notes, either the Trustee or the holders of at least 25% in principal amount of the outstanding notes of that series may declare the principal of, premium, if any, and accrued and unpaid interest on those notes to be due and payable immediately. If any event of default described in clause (5) above occurs, the principal of, premium, if any, and accrued and unpaid interest on the notes will be automatically due and payable immediately, without any declaration, notice or other act on the part of the Trustee or any holder. However, any time after an acceleration with respect to the notes of any series has occurred, but before a judgment or decree based on such acceleration has been obtained, the holders of a majority in principal amount of outstanding notes of that series may, under some circumstances, rescind and annul such acceleration. The majority-holders, however, may not annul or waive a continuing default in payment of principal of, premium, if any, or interest on the notes of that series.

The Trustee will be entitled to receive reasonable indemnification satisfactory to it from the holders of the notes before the Trustee exercises any of its rights or powers under the Indenture. This indemnification is subject to the Trustee’s duty to act with the required standard of care during a default.

The holders of a majority in principal amount of the outstanding notes of any series may direct the time, method and place of:

This right of the holders of the notes is, however, subject to the provisions in the Indenture providing for the indemnification of the Trustee and other specified limitations.

In general, the holders of notes of any series may institute an action against the Issuer or the Guarantors or any other obligor under the notes only if the following four conditions are fulfilled:

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The above four conditions do not apply to actions by holders of the notes against the Issuer or the Guarantors or any other obligor under the notes for payment of principal of, premium, if any, or interest on or after the due date.

The Indenture contains a covenant that the Issuer, the Guarantors and any other obligor under the notes will file annually with the Trustee a statement by an officer as to whether or not the Issuer or the Guarantors, as the case may be, to his or her knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults, provided, however, that a failure to deliver such statement of a default shall not constitute a default under the Indenture, if such default is remedied within any applicable cure period.

Discharge, Legal Defeasance and Covenant Defeasance

The Issuer may discharge or defease its obligations under any series of notes as set forth below.

Under terms specified in the Indenture, the Issuer may discharge certain obligations to holders of the notes of any series that have not already been delivered to the Trustee for cancellation. The notes of such series must also:

The Issuer may discharge the notes of any series by, among other things, irrevocably depositing an amount certified to be sufficient to pay at final maturity, or upon redemption, the principal, premium, if any, and interest on the notes of such series. The Issuer may make the deposit in cash, U.S. Government obligations, or a combination thereof, as defined in the Indenture.

The Issuer may terminate all its obligations under the notes of any series and the Indenture (as it applies to such series) at any time, except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the notes, to replace mutilated, destroyed, lost or stolen notes and to maintain a registrar and paying agent in respect of the notes. This is referred to as “legal defeasance.” If the Issuer exercises its legal defeasance option with respect to a series of notes, the Guarantees in effect at such time will terminate with respect to that series.

Under terms specified in the Indenture, the Issuer and the Guarantors may be released with respect to any outstanding notes of any series from the obligations imposed by the sections of the Indenture that contain the covenants described above under “—Guarantees,” “—Covenants—Limitation on Liens” and “—Covenants—Consolidation, merger, conveyance or transfer.” In that case, the Issuer and the Guarantors would no longer be required to comply with these sections without the creation of an event of default under such series of notes. This is typically referred to as “covenant defeasance.” If the Issuer exercises the covenant defeasance option with respect to a series of notes, the Guarantees of such series of notes in effect at such time will terminate. The Issuer may exercise the legal defeasance option notwithstanding the prior exercise of the covenant defeasance option.

Legal defeasance or covenant defeasance with respect to a series of notes may be effected by the Issuer only if, among other things:

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Payments on the Notes; Paying Agent and Registrar

The Issuer will pay principal of, premium, if any, and interest on any notes issued in certificated form (“Certificated Notes”) at the office or agency we designate in The City of New York, except that the Issuer may pay interest on any Certificated Notes either at the corporate trust office of the trustee in The City of New York or, at the Issuer’s option, by check mailed to holders of the notes at their registered addresses as they appear in the registrar’s books. In addition, if a holder of any Certificated Notes has given wire transfer instructions in accordance with the Indenture, the Issuer will make all payments on those notes by wire transfer.

The Issuer has initially designated the Trustee, at its corporate trust office in The City of New York, to act as the Issuer’s paying agent and registrar. The Issuer may, however, change the paying agent or registrar without prior notice to the holders of the notes, and the Issuer or any of the Issuer’s subsidiaries may act as paying agent or registrar.

The Issuer will pay principal of, premium, if any, and interest on, any note in global form registered in the name of or held by DTC or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such global note.

The Issuer will pay principal of, premium, if any, and interest on the notes in U.S. dollars.

Transfer and Exchange

A holder of notes may transfer or exchange notes at the office of the registrar in accordance with the Indenture. The registrar and the Trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge will be imposed by us, the Trustee or the registrar for any registration of transfer or exchange of notes, but the Issuer may require a holder or beneficial owner to pay a sum sufficient to cover any transfer tax or other similar governmental charge or other fee required by law. The Issuer will not be required to transfer or exchange any note selected for redemption. Also, the Issuer will not be required to transfer or exchange any note for a period of 15 days before sending a notice of redemption. The registered holder of a note will be treated as the owner of it for all purposes.

Concerning the Trustee

The Trustee is one of a number of banks with which we and our affiliates maintain ordinary banking relationships.

Consent to Jurisdiction and Service

Under the Indenture, Emera has irrevocably appointed the Issuer as its agent for service of process in any suit, action or proceeding arising out of or relating to the Indenture, the notes and the Guarantees and for actions brought under federal or state securities laws brought in any federal or state court located in The City of New York, and has submitted to such non-exclusive jurisdiction.

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Book-entry System

The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience and are not intended to serve as a representation or warranty of any kind. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Neither we nor the initial purchasers of the notes take any responsibility for these operations and procedures, and investors are urged to contact the relevant system or its participants directly to discuss these matters.

DTC has advised us that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers of the notes), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised us that, pursuant to procedures established by it:

Investors in the notes represented by the 144A global notes who are Participants in DTC’s system may hold their interests therein directly through DTC. Investors in such notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants. Investors in the notes represented by the Regulation S global notes must initially hold their interests therein through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations that are participants. Investors may also hold interests in the Regulation S global notes through Participants in DTC’s system. Euroclear and Clearstream will hold interests in the global notes on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank SA/NV, as operator of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a global note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.

The laws of some jurisdictions may require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a global note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a global note to pledge such interests to Persons that do not participate in DTC’s system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of an interest in the global notes will not have notes registered in their names, will not receive physical delivery of Certificated Notes and will not be considered the registered owners or “holders” thereof under the Indenture for any purpose.

Payments in respect of the principal of, and interest and premium, if any, on, a global note registered in the name of the nominee of DTC will be payable to the nominee in its capacity as the registered holder under the

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Indenture. Under the terms of the Indenture, we and the Trustee will treat the persons in whose names the notes, including the global notes, are registered as the owners thereof for the purpose of receiving such payments and for all other purposes. Consequently, neither we, the Trustee, nor any agent of any of such parties have or will have any responsibility or liability for:

DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on DTC’s records. Payments by the Participants and the Indirect Participants to the beneficial owners of the notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of us, DTC or the Trustee. Neither we nor the Trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the notes, and we and the Trustee may conclusively rely on and will be protected in conclusively relying on instructions from DTC or its nominee for all purposes.

Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its depository; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its depository to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant global note, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised us that it will take any action permitted to be taken by a holder of the notes only at the direction of one or more Participants to whose account DTC has credited the interests in the global notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an event of default under the Indenture, DTC reserves the right to exchange the global notes for Certificated Notes and to distribute such notes to its Participants.

Although DTC, Euroclear and Clearstream have agreed to the preceding procedures to facilitate transfers of interests in the global notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither we, the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

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Governing Law

The Indenture, the notes and the Guarantees will be governed by, and construed in accordance with, the laws of the State of New York.

Exchange of Global Notes for Certificated Notes

A global note is exchangeable for Certificated Notes if (1) DTC (A) notifies us that it is unwilling or unable to continue as depository for the global note or (B) has ceased to be a clearing agency registered under the Exchange Act, and, in either case, we fail to appoint a successor depository within 90 days, (2) we, at our option but subject to DTC’s requirements, notify the Trustee in writing that we elect to cause the issuance of the Certificated Notes; provided that in no event shall the Regulation S temporary global notes be exchanged for Certificated Notes prior to the receipt of any certificates required under the provisions of Regulation S; or (3) there has occurred and is continuing an event of default under the Indenture and DTC notifies the Trustee of its decision to exchange global notes for Certificated Notes.

In all cases, Certificated Notes delivered in exchange for any global note or beneficial interest therein will be registered in names, and issued in minimum denominations of US$2,000 and integral multiples of US$1,000 in excess thereof, requested by or on behalf of DTC (in accordance with its customary procedures).

Neither we nor the Trustee will be liable for any delay by a global note holder or DTC in identifying the beneficial owners of the notes and we and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the global note holder or DTC for all purposes.

Same Day Settlement and Payment

Payments in respect of the notes represented by a global note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by the global note holder. With respect to Certificated Notes, we will make all payments of principal, premium, if any, and interest in the manner described above under “—Payments on the notes; Paying Agent and Registrar.” We expect that secondary trading in the Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a global note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a global note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

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