TABLE OF CONTENTS
Prospectus Supplement
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Page
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About This Prospectus Supplement
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S-1
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Risk Factors
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S-2
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Description of the Notes
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S-12
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Certain Income Tax Consequences
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S-34
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Certain ERISA Considerations
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S-34
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Use of Proceeds
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S-36
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Supplemental Plan of Distribution (Conflicts of Interest)
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S-37
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Documents to be Filed as Part of the Registration Statement
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S-40
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Schedule 1 – Special Rate Calculation Terms
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S-41
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Prospectus dated December 29, 2021
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Page
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ABOUT THIS PROSPECTUS
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1
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PRESENTATION OF FINANCIAL INFORMATION
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2
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CAUTION REGARDING FORWARD-LOOKING STATEMENTS
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3
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WHERE YOU CAN FIND MORE INFORMATION
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5
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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6
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RISK FACTORS
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7
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THE BANK OF NOVA SCOTIA
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13
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CONSOLIDATED CAPITALIZATION OF THE BANK
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15
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USE OF PROCEEDS
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16
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DESCRIPTION OF COMMON SHARES AND PREFERRED SHARES
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17
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DESCRIPTION OF THE DEBT SECURITIES WE MAY OFFER
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23
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DESCRIPTION OF CERTAIN PROVISIONS RELATING TO THE DEBT SECURITIES WE MAY OFFER
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43
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LEGAL OWNERSHIP AND BOOK-ENTRY ISSUANCE
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44
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UNITED STATES TAXATION
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51
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CANADIAN TAXATION
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65
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CERTAIN CONSIDERATIONS FOR ERISA AND OTHER EMPLOYEE BENEFIT PLANS
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67
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PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
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69
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LIMITATIONS ON ENFORCEMENT OF U.S. LAWS
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72
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LEGAL MATTERS
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72
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EXPERTS
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72
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OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
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73
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You should rely only on the information incorporated by reference or provided in this Prospectus Supplement, any
applicable Product Prospectus Supplement or the applicable Pricing Supplement (collectively, the “applicable Supplements”), and the accompanying Prospectus. We have not authorized anyone to provide you with different information. The aforementioned
documents do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the notes described in the applicable Supplements nor do they constitute an offer to sell or a solicitation of an offer to buy such notes in
any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. The delivery of the accompanying Prospectus and any applicable Supplements at any time does not imply that the information they contain is
correct as of any time subsequent to their respective dates.
About This Prospectus Supplement
This Prospectus Supplement and the accompanying Prospectus provide you with a general description of the notes we may offer. Capitalized
terms used but not defined herein shall have the meaning assigned to them in the accompanying Prospectus. The applicable Pricing Supplement will provide specific information about the terms of the notes being offered. The applicable Pricing
Supplement may include a discussion of any risk factors or other special considerations that apply to those notes and may also add, update or change the information in the accompanying Prospectus and the other applicable Supplements. If there is any
inconsistency between the terms of the notes described in the accompanying Prospectus, this Prospectus Supplement, the applicable Product Prospectus Supplement and the applicable Pricing Supplement, the following hierarchy will govern: first, the
applicable Pricing Supplement; second, the applicable Product Prospectus Supplement; third, this Prospectus Supplement; and last, the accompanying Prospectus.
Unless otherwise specified in the applicable Supplement:
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all dollar amounts are expressed in U.S. dollars;
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“the Bank”, “we”, “us” and “our” mean The Bank of Nova Scotia together, where the context requires, with its subsidiaries; and
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“you”, “your” and “holder” means a prospective purchaser or a purchaser of notes, or a beneficial or registered holder of notes, provided that a reference to “registered holder” means a registered holder of notes (see “Legal Ownership and
Book-Entry Issuance” and “Description of the Debt Securities We May Offer” in the Prospectus and “Global Notes” under the heading “Description of the Notes” in this Prospectus Supplement).
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Risk Factors
Investing in the notes involves risks. You should understand the risks of investing in the notes and should reach an
investment decision only after careful consideration with your advisors of the suitability of the notes in light of your particular financial circumstances, the following risk factors and the other information included or incorporated by reference in
the accompanying Prospectus and the applicable Supplements. We have no control over a number of matters, including economic, financial, regulatory, geographic, judicial and political events, that are important in determining the existence, magnitude
and longevity of these risks and their influence on the value of, or the payments made on or settlement of obligations with respect to, the notes. You should not purchase the notes unless you understand and can bear these investment risks.
Risks Relating to Return Characteristics
Investors in Indexed Notes Could Lose Their Entire Investment
Indexed notes may present a high level of risk, and those who invest in indexed notes may lose their entire investment. We use the term
“indexed notes” to mean notes with an amount of principal and/or interest payable that will be determined by reference to the price, value or level of one or more equity securities, exchange traded funds, indices, currencies, commodities, financial
or economic measures, or indices or baskets of the aforementioned items or pursuant to a formula. We refer to each of these as an “index.” The direction and magnitude of the change in the price, value or level of the relevant index will determine the
amount of principal and/or any interest payable on the indexed note. The terms of a particular indexed note may or may not include a return of a percentage of the face amount at maturity or a minimum interest rate. Thus, if you purchase an indexed
note, you may lose all or a portion of the principal or other amount you invest and may receive no interest on your investment.
For Certain Types of Notes, the Interest Rate Payable During the Initial Interest Period May Not Be Indicative of the Interest Rate
Payable During Subsequent Interest Periods.
The interest rate of certain notes that we may offer may be based on a different rate during the initial interest period than in
subsequent interest periods. In particular, during the interest period(s) where a fixed rate of interest (or other financial measure) applies, this fixed rate of interest (or other financial measure) may be higher than the floating rate of interest
(or other financial measure) that will be applicable during subsequent interest period(s). As noted above, the interest rate during the interest period where a floating rate of interest is applicable is uncertain and could be equal to or less than
0%.
The Interest Rate on the Notes Will Be Limited if the Notes have a Maximum Interest Rate.
If the applicable Pricing Supplement specifies that your notes have a maximum interest rate, the interest rate payable on your notes
during any period will be limited to the maximum rate specified in the applicable Pricing Supplement. Therefore, the return you receive during any interest period may be less than what you would have received had you invested in a security that was
not subject to a maximum interest rate.
Risks Relating to Characteristics of Indices
The Issuer of a Security or Currency That Serves as an Index Could Take Actions That May Adversely Affect an Indexed Note
The issuer of a security that serves as an index or part of an index for an indexed note will have no involvement in the offer and sale of
the indexed note and no obligations to the holder of the indexed note. The issuer may take actions, such as a merger or sale of assets, without regard to the interests of the holder. Any of these actions could adversely affect the value of a note
indexed to that security or to an index of which that security is a constituent.
If the index for an indexed note includes a non-U.S. dollar currency or other asset denominated in a non-U.S. dollar currency, the
government that issues that currency will also have no involvement in the offer and sale of the indexed note and no obligations to the holder of the indexed note. That government may take actions that could adversely affect the value of the note. See
“— Risks Relating to Characteristics of Currency Exchange Rates — There are Risks Relating to Notes Denominated or Payable in or Linked to a Non-U.S. Dollar Currency” below for more information about these kinds of government actions.
An Indexed Note May Be Linked to a Volatile Index, Which Could Hurt the Value of, and Return on, Your Investment
Some indices are highly volatile, which means that their value may change significantly, up or down, over a short period of time. The amount of any principal and/or interest that can be expected to
become payable on an indexed note may vary substantially from time to time. Because the amounts payable with respect to an indexed note are generally calculated based on the value or level of the relevant index on a specified date or over a limited
period of time, volatility in the index increases the risk that the return on the indexed note may be adversely affected by a fluctuation in the level of the relevant index. The volatility of an index may be affected by political or economic
events, including governmental actions, and/or by the activities of participants in the relevant markets. Any of these events or activities could adversely affect the value of, and return on, an indexed note.
An Index to Which a Note Is Linked Could Be Changed or Become Unavailable
Some indices compiled by us, our affiliates or third parties may consist of or refer to several or many different index constituents. The
sponsor of such an index typically reserves the right to alter the composition of the index and the manner in which the value or level of the index is calculated. An alteration may result in a decrease in the value of or return on an indexed note
that is linked to the index. The indices for our indexed notes may include published indices of this kind or customized indices developed by us, our affiliates or third parties in connection with particular issues of indexed notes.
A published index may become unavailable, or a customized index may become impossible to calculate in the normal manner, due to events
such as war, natural disasters, cessation of publication of the index or a suspension or disruption of trading in one or more index constituents on which the index is based. If an index becomes unavailable or impossible to calculate in the normal
manner, the terms of a particular indexed note may allow us to delay determining the amount payable as principal or interest on an indexed note, or we may use an alternative method to determine the value of the unavailable index. Alternative methods
of valuation are generally intended to produce a value similar to the value resulting from reference to the relevant index. However, it is unlikely that any alternative method of valuation we use will produce a value identical to the value that the
actual index would have produced. If we use an alternative method of valuation for a note linked to an index of this kind, the value of the note and/or its rate of return may be lower than it otherwise would be.
Some indexed notes are linked to indices that are not commonly used or that have been developed only recently. The lack of a trading
history may make it difficult to anticipate the volatility or other risks associated with an indexed note of this kind. In addition, trading in these indices or their index constituents, or options or futures contracts on these indices or index
constituents, may be limited, which could increase their volatility and decrease the value of the related indexed notes and/or their rates of return.
Notes Linked to the CPI Are Subject to Additional Risks.
If the interest rate on your notes is linked to the CPI, as described further under “Description of the Notes — Interest Rates — Consumer
Price Index”, the level of the CPI may decrease during periods of little or no inflation (and will decrease during periods of deflation). In such a case, depending on the terms of your notes specified in the applicable Pricing Supplement, the
interest rate on your notes during any interest period may be small, and may even be equal to or less than 0.00%.
The CPI Itself and the Method by which the Bureau of Labor
Statistics of the U.S. Bureau of Labor Statistics (“BLS”) Calculates the CPI May Change In the Future. If the interest rate on your notes is linked to the CPI, the BLS may change the
method by which it calculates the CPI, which could affect the level of the CPI used to calculate the interest rate (or, if applicable, determine whether the CPI is within the reference rate range) applicable to your notes. In particular, changes in
the way the CPI is calculated could reduce the level of the CPI, which, if the interest rate on your notes is a floating rate of interest linked to the CPI, will result in lower interest payments during the applicable interest period(s), and in
turn reduce the market value of the notes.
Consumer Prices May Change Unpredictably, Affecting the Level
of the CPI and the Market Value of the Notes in Unforeseeable Ways. Market prices of the consumer items underlying the CPI may fluctuate based on numerous factors, including: changes
in supply and demand relationships; weather; agriculture; trade; fiscal, monetary, and exchange control programs; domestic and foreign political and economic events and policies; disease; technological developments; and changes in interest rates.
These factors may affect the level of the CPI and the market value of the notes in varying ways, and different factors may cause the level of the CPI to move in inconsistent directions at inconsistent rates.
Current Pricing Information About the Applicable Index and/or Index Constituents May Not Be Available Due to Time Zone Differences
Special risks may also be presented because of differences in time zones between the United States and the market for the applicable index and/or index constituents, such that the applicable index
and/or index constituents are traded on a foreign exchange that is not open when the trading market for the notes in the United States, if any, is open or where trading occurs in the applicable index and/or index constituents during times when the
trading market for the notes in the United States, if any, is closed. In such cases, holders of the notes may have to make investment decisions at a time when current pricing information regarding the applicable index and/or index constituents is
not available.
Historical Information About Indices Is Not Indicative of Future Performance
If we issue an indexed note, we may include historical information about the relevant index in the applicable Pricing Supplement. Any
historical information about indices that we may provide will be furnished as a matter of information only, and you should not regard such information as indicative of future performance of the relevant index. You are urged to conduct your own
research and analysis into the relevant index.
Risks Relating to Characteristics of Interest Rates
Floating Rates of Interest are Uncertain and Could be Equal to or Less Than 0.0%
If your notes are floating rate notes or otherwise directly linked to a floating rate for some portion of the notes’ term, no interest
will accrue on the notes with respect to any interest period for which the applicable floating rate specified in the applicable Pricing Supplement is zero on the related interest rate reset date. Floating interest rates, by their very nature,
fluctuate, and may be equal to or less than 0.0%. Also, in certain economic environments, floating rates of interest may be less than fixed rates of interest for instruments with a similar credit quality and term. As a result, the return you receive
on your notes may be less than that of a fixed rate security issued for a similar term by a comparable issuer. Even if your yield on the notes is positive, and even if your notes have a specified fixed rate of interest for one or more interest
periods, the return on your investment may not compensate you for the opportunity cost when you take into account factors, such as inflation, that affect the time value of money.
Changes to, Uncertainty in Respect of or the Discontinuation of LIBOR or EURIBOR May Adversely Affect the Market Value of and Return on
the Notes, Including Where LIBOR or EURIBOR May Not Be Available
Various interest rates and other indices that are deemed to be “benchmarks”, including the London interbank, offered rate (“LIBOR”) which
is relevant for purposes of calculating the CMS rate, are the subject of recent national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective, including the European Union (“EU”) Benchmark
Regulation (Regulation (EU) 2016/1011) (the “Benchmarks Regulation”), which compliance date was January 1, 2018, while others are still to be implemented. These reforms and other pressures may cause LIBOR to disappear entirely, to perform differently
than in the past (as a result of a change in methodology or otherwise), create disincentives for market participants to continue to administer or contribute to LIBOR or have other consequences that cannot be predicted. On July 27, 2017, the Chief
Executive of the FCA, which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. On March 5, 2021, ICE and the FCA announced that all LIBOR settings will either cease
to be provided by any benchmark administrator, or no longer be representative immediately after December 31, 2021 for all GBP, EUR, CHF and JPY LIBOR and for one-week and two-month USD LIBOR tenors, and immediately after June 30, 2023 for the
remaining USD LIBOR tenors.
It is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR,
whether LIBOR rates will cease to be published or supported before these dates or whether any additional reforms to LIBOR may be enacted in the United Kingdom, the EU or elsewhere. Any changes to, or the discontinuance or non-representativeness of,
3-month U.S. dollar LIBOR and any uncertainty as to what these changes may be, may adversely affect the market value of, and the amount of interest payable on, notes that are linked either directly or indirectly to LIBOR.
The administrator of EURIBOR has also undertaken a number of reforms related to the governance, technical framework and manner of
calculation of EURIBOR in response to these regulatory changes, including the Benchmarks Regulation and may make further such changes, or discontinue EURIBOR permanently. It is not possible to predict any changes in the methods pursuant to which the
EURIBOR rates are determined, or any other reforms to EURIBOR or any other relevant benchmarks that will be enacted in the EU and elsewhere, each of which
may adversely affect the market value of, and the amount of interest payable on, EURIBOR-linked notes. Any such changes could cause EURIBOR to perform
differently than in the past, or to cease to exist.
Based on the foregoing, investors in the notes should be aware that:
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(a)
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any of the reforms or pressures described above or any other changes to the relevant benchmark could affect the level of the published
rate, including to cause it to be lower and/or more volatile than it would otherwise be; and
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(b)
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if EURIBOR is discontinued or becomes non-representative prior to the maturity of certain EURIBOR notes, then the rate of interest on such
notes will be determined by the fallback provisions provided for under “Description of the Notes — Interest Rates — EURIBOR Notes” herein. Such provisions may not operate as intended depending on market circumstances and the
availability of rates information at the relevant time. This may result, to the extent that other fallback provisions provided for in this Prospectus Supplement are not applicable, in the effective application of a fixed rate based on
the EURIBOR rate that applied in the last period for which the EURIBOR rate was available.
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Changes to, Uncertainty in Respect of or the Discontinuation of CMS Rates May Adversely Affect the Market Value of and Return on the
Notes, Including Where the Applicable CMS Rates May Not Be Available
CMS rates represent the rate for the fixed rate of interest (paid semi-annually) of a U.S. dollar swap of a specified
term where the floating rate of interest is equal to the 3-month USD LIBOR rate for that same maturity. As a result, the CMS rate is significantly affected by actual or anticipated changes in the level of the 3-month USD LIBOR. Given the uncertainty
regarding LIBOR, there can be no assurance that the CMS rates will continue in their current form throughout the term of the notes. It is possible that, following the discontinuance of 3-month USD LIBOR (currently expected to occur after June 30,
2023) —and possibly beforehand — publication of the CMS rates will be discontinued or the CMS rates will cease to be representative of then-prevailing interest rates. In that circumstance, the calculation agent will have discretion to select a
successor rate (as described below under “Description of the Notes — CMS Rate Notes”). There can be no assurance that the characteristics of any successor rates selected by the calculation agent will be a suitable replacement for the CMS rate. In
selecting a successor rate, the calculation agent will select the rate it determines is most likely to produce the economic equivalent of the affected CMS rate, but any successor rate may perform differently than the floating reference rates and
could adversely affect the market value of, and the amount of interest payable on, your notes.
SOFR is a Relatively New Reference Rate and its Composition and Characteristics Are Not the Same as LIBOR
On June 22, 2017, the Alternative Reference Rates Committee (“ARRC”) convened by the Board of Governors of the
Federal Reserve System and the Federal Reserve Bank of New York (“FRBNY”) identified the Secured Overnight Financing Rate (“SOFR”) as the rate that, in the consensus view of the ARRC, represented best practice for use in certain new U.S. dollar
derivatives and other financial contracts. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, and has been published by the FRBNY since April 2018. The FRBNY has also published hypothetical
historical indicative Secured Overnight Financing Rates from 2014. Investors should not rely on any historical changes (whether actual or hypothetical) or trends in SOFR as an indicator of future changes in SOFR.
Further, the composition and characteristics of SOFR are not the same as those of LIBOR, and SOFR is fundamentally different from LIBOR
for two key reasons. First, SOFR is a secured rate, while LIBOR is an unsecured rate. Second, SOFR is an overnight rate, while LIBOR is a forward-looking rate that represents interbank funding over different maturities (e.g., three months). As a
result, there can be no assurance that SOFR, however calculated for an offering of the notes, will perform in the same way as LIBOR would have at any time, including, without limitation, as a result of changes in interest and yield rates in the
market, market volatility or global or regional economic, financial, political, regulatory, judicial or other events.
SOFR May Be More Volatile Than Other Benchmark or Market Rates
Since the initial publication of SOFR, daily changes in SOFR have, on occasion, been more volatile than daily changes
in other benchmark or market rates, such as USD LIBOR. Although changes in compounded SOFR generally are not expected to be as volatile as changes in daily levels of SOFR, the market value of, and return on, any SOFR-linked notes may fluctuate more
than floating rate securities that are linked to less volatile rates. In addition, the volatility of SOFR has reflected the underlying volatility of the overnight U.S. Treasury repo market. The FRBNY has at times conducted operations in the overnight
U.S. Treasury repo market in order to help maintain the federal funds rate within a target range. There can be no assurance that the FRBNY will continue to conduct such operations in the future, and the duration and extent of any such operations is
inherently uncertain. The effect of any such operations, or of the cessation of such operations to the extent they are commenced, is uncertain and could be materially adverse to investors in SOFR-linked notes.
Any Failure of SOFR to Gain Market Acceptance Could Adversely Affect the Market Value of and Return on the Notes
According to the ARRC, SOFR was developed for use in certain U.S. dollar derivatives and other financial contracts as
an alternative to USD LIBOR in part because it is considered a good representation of general funding conditions in the overnight U.S. Treasury repurchase agreement market. However, as a rate based on transactions secured by U.S. Treasury securities,
it does not measure bank-specific credit risk and, as a result, is less likely to correlate with the unsecured short-term funding costs of banks. This may mean that market participants may not consider SOFR a suitable replacement or successor for all
of the purposes for which USD LIBOR historically has been used (including, without limitation, as a representation of the unsecured short-term funding costs of banks), which may, in turn, lessen market acceptance of SOFR. Any failure of SOFR to gain
market acceptance could adversely affect the market value of, and return on, SOFR-linked notes
In addition, if SOFR does not prove to be widely used as a benchmark in comparable floating rate securities, the
trading price of SOFR-linked notes may be lower than those of securities that are linked to rates that are more widely used. Similarly, market terms for floating-rate debt securities linked to SOFR, such as the manner of determining SOFR, the spread
over the base rate reflected in interest rate provisions or, if applicable, the manner of compounding the base rate, may evolve over time, and trading prices of earlier issued SOFR-linked notes may be lower than those of later-issued SOFR-based debt
securities as a result. Investors may not be able to sell their notes at all or may not be able to sell their notes at prices that will provide them with a yield comparable to similar investments that have a developed secondary market, and may
consequently suffer from increased pricing volatility and market risk.
SOFR May Be Modified or Discontinued and the Notes May Bear Interest By Reference to a Rate Other Than SOFR, Which Could Adversely Affect
the Market Value of and Return on the Notes
SOFR and the SOFR Index (as defined herein) is published by the FRBNY based on data received by it from sources other
than us, and we have no control over its methods of calculation, publication schedule, rate revision practices or availability of SOFR or the SOFR Index at any time. There can be no guarantee, particularly given its relatively recent introduction,
that SOFR or the SOFR Index will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of investors in notes linked to SOFR or the SOFR Index. If the manner in which SOFR or the SOFR Index is calculated
is changed, that change may result in a reduction in the amount of interest payable on the notes and the trading prices of the notes. In addition, the FRBNY may withdraw, modify or amend the published SOFR or the SOFR Index data in its sole
discretion and without notice. Except as indicated elsewhere herein or in the applicable Pricing Supplement, the interest rate for any interest period will not be adjusted for any modifications or amendments to SOFR data that the FRBNY may publish
after a specified time.
If the calculation agent determines that a Benchmark Transition Event (as defined herein) and its related Benchmark
Replacement Date (as defined herein) have occurred in respect of SOFR or the SOFR Index, then the interest rate on the affected notes will no longer be determined by reference to SOFR or the SOFR Index, as applicable, but instead will be determined
by reference to a different rate, plus a spread adjustment, which we refer to as a “Benchmark Replacement”, as further described under the caption “Description of the Notes — SOFR Notes”.
If a particular Benchmark Replacement (as defined herein) or Benchmark Replacement Adjustment (as defined herein) cannot be determined, then the next-available Benchmark
Replacement or Benchmark Replacement Adjustment will apply. These replacement rates and adjustments may be selected, recommended or formulated by (i) the Relevant Governmental Body (as defined herein) (such as the ARRC), (ii) the International
Swaps and Derivatives Association, Inc. (“ISDA”) or (iii) in certain circumstances, the calculation agent. In addition, the terms of the notes expressly authorize the calculation agent to make Benchmark Replacement Conforming Changes (as defined
herein) with respect to, among other things, changes to the definition of “interest period”, the timing and frequency of determining rates and making payments of interest and other administrative matters. The determination of a Benchmark
Replacement, the calculation of the interest rate on the affected notes by reference to a Benchmark Replacement (including the application of a Benchmark Replacement Adjustment), any implementation of Benchmark Replacement Conforming Changes and
any other determinations, decisions or elections that may be made under the terms of the notes in connection with a Benchmark Transition Event, could adversely affect the market value of, and return on, the notes.
In addition, (i) the composition and characteristics of the Benchmark Replacement will not be the same as those of SOFR (however it is calculated in respect of the affected notes)
or the SOFR Index, as applicable, the Benchmark Replacement may not be the economic equivalent of SOFR or the SOFR Index, there can be no assurance that the Benchmark Replacement will perform in the same way as SOFR or the SOFR Index would have at
any time and there is no guarantee that the Benchmark Replacement will be a comparable substitute for SOFR or the SOFR Index (each of which means that a Benchmark Transition Event could adversely affect the market value of, and return on, of the
notes), (ii) any failure of the Benchmark Replacement to gain market acceptance could adversely affect the notes, (iii) the Benchmark Replacement may have a very limited history and the future performance of the Benchmark Replacement may not be
predicted based on historical performance, (iv) the secondary trading market for notes linked to the Benchmark Replacement may be limited and (v) the administrator of the Benchmark Replacement may make changes that could change the value of the
Benchmark Replacement or discontinue the Benchmark Replacement and has no obligation to consider your interests in doing so.
The interest rate on SOFR-linked notes is based on a Compounded SOFR rate and the SOFR Index, which is relatively new in the marketplace.
For each interest period, the interest rate on floating-rate notes linked to SOFR may be based on Compounded SOFR,
which may be calculated using the SOFR Index (as defined herein) published by the FRBNY according to the specific formula described under “Description of the Notes — SOFR Notes”, rather than the SOFR rate published on or in respect of a particular
date during such interest period or an arithmetic average of SOFR rates during such period. For this and other reasons, the interest rate on a note linked to the Compounded SOFR or the SOFR Index during any interest period will not necessarily be the
same as the interest rate on other SOFR-linked investments that use an alternative basis to determine the applicable interest rate, including, potentially, other notes based on Compounded SOFR. Further, if the interest rate is based on Compounded
SOFR and the SOFR rate in respect of a particular date during an interest period is negative, its contribution to Compounded SOFR or the SOFR Index, as applicable, will be less than one, resulting in a reduction to Compounded SOFR used to calculate
the interest payable on notes linked to the Compounded SOFR on the interest payment date for such interest period.
Very limited market precedent exists for securities that use SOFR as the interest rate and the method for calculating
an interest rate based upon SOFR varies. In addition, the FRBNY only began publishing the SOFR Index on March 2, 2020 and, as discussed above, only began publishing SOFR in April 2018. Accordingly, the use of the SOFR Index or the specific formula
for the Compounded SOFR used in a note linked to the Compounded SOFR may not be widely adopted by other market participants, if at all. If the market adopts a different calculation method, that may adversely affect the market value of, and return on,
notes linked to the Compounded SOFR.
Compounded SOFR with respect to a particular interest period will only be capable of being determined near the end of the relevant
interest period.
If the interest rate on your notes is based on Compounded SOFR or the SOFR Index, the level of Compounded SOFR
applicable to a particular interest period and, therefore, the amount of interest payable with respect to such interest period, will be determined on the interest determination date (as defined further below ) for such interest period. Because each
such date will be near the end of such interest period, you will not know the amount of interest payable with respect to a particular interest period until shortly before the related interest payment date and it may be difficult for you to reliably
estimate the amount of interest that will be payable on each such interest payment date. In addition, some investors may be unwilling or unable to trade notes linked to the Compounded SOFR or the SOFR Index without changes to their information
technology systems, both of which could adversely impact the liquidity and trading price of notes linked to the Compounded SOFR or the SOFR Index.
Risks Relating to Characteristics of Currency Exchange Rates
There are Risks Relating to Notes Denominated or Payable in or Linked to a Non-U.S. Dollar Currency
If you intend to invest in a non-U.S. dollar note – e.g., a note whose principal and/or interest is payable in a currency other than U.S.
dollars or that may be settled by delivery of or reference to a non-U.S. dollar currency or index denominated in or otherwise linked to a non-U.S. dollar currency – you should consult your own financial and legal advisors as to the currency risks
entailed by your investment. Notes of this kind may not be an appropriate investment for investors who are unsophisticated with respect to non-U.S. dollar currency transactions.
An Investment in a Non-U.S. Dollar Note Involves Currency-Related Risks
An investment in a non-U.S. dollar note entails significant risks that are not associated with a similar investment in a note that is
payable solely in U.S. dollars and where settlement value is not otherwise based on a non-U.S. dollar currency. These risks include the possibility of significant changes in rates of exchange between the U.S. dollar and the various non-U.S. dollar
currencies or composite currencies and the possibility of the imposition or modification of foreign exchange controls or other conditions by either the United States or non-U.S. governments. These risks generally depend on factors over which we have
no control, such as economic and political events and the supply of and demand for the relevant currencies in the global markets.
Changes in Currency Exchange Rates Can Be Volatile and Unpredictable
Rates of exchange between the U.S. dollar and many other currencies have been highly volatile, and this volatility may continue and
perhaps spread to other currencies in the future. Fluctuations in currency exchange rates could adversely affect an investment in a note denominated in, or where value is otherwise linked to, a specified currency other than U.S. dollars. Depreciation
of the specified currency against the U.S. dollar could result in a decrease in the U.S. dollar-equivalent value of payments on the note, including the principal payable at maturity. That in turn could cause the market value of the note to fall.
Depreciation of the specified currency against the U.S. dollar could result in a loss to the investor on a U.S. dollar basis.
Government Policy Can Adversely Affect Foreign Currency Exchange Rates and an Investment in a Non-U.S. Dollar Note
Foreign currency exchange rates can either float or be fixed by sovereign governments. From time to time, governments use a variety of
techniques, such as intervention by a country’s central bank or imposition of regulatory controls or taxes, to affect the exchange rate of their currencies. Governments may also issue a new currency to replace an existing currency or alter the
exchange rate or exchange characteristics by devaluation or revaluation of a currency. Thus, a special risk in purchasing non-U.S. dollar notes is that their yields or payouts could be significantly and unpredictably affected by governmental actions.
Even in the absence of governmental action directly affecting currency exchange rates, political or economic developments in the country issuing the specified currency for a non-U.S. dollar note or elsewhere could lead to significant and sudden
changes in the exchange rate between the U.S. dollar and the specified currency. These changes could affect the value of the note as participants in the global currency markets move to buy or sell the specified currency or U.S. dollars in reaction to
these developments.
Governments have imposed from time to time and may in the future impose exchange controls or other conditions, including taxes, with
respect to the exchange or transfer of a specified currency that could affect exchange rates as well as the availability of a specified currency for a note at its maturity or on any other payment date. In addition, the ability of a holder to move
currency freely out of the country in which payment in the currency is received or to convert the currency at a freely determined market rate could be limited by governmental actions.
Historical Information About Exchange Rates May Not Be Indicative of Future Performance
If we issue a non-U.S. dollar note, we may include in the applicable Pricing Supplement a currency supplement that provides information
about historical exchange rates for the relevant non-U.S. dollar currency or currencies. Any historical information about exchange rates that we may provide will be furnished as a matter of information only, and you should not regard such information
as indicative of future performance in currency exchange rates. That rate will likely differ from the exchange rate used under the terms that apply to a particular note.
Non-U.S. Investors May Be Subject to Certain Additional Risks
If we issue a U.S. dollar note and you are a non-U.S. investor who purchased such notes with a currency other than U.S. dollars, changes
in rates of exchange may have an adverse effect on the value, price or income of your investment.
Risks Relating to Hedging Activities and Conflicts of Interest
We May Engage in Hedging Activities that Could Adversely Affect an Indexed Note
In order to hedge an exposure on a particular offering of notes, we may, directly or through our affiliates or other agents, enter into
transactions involving the applicable index, index constituents and/or applicable rate for the note, or involving derivative instruments, such as swaps, options or futures, on the applicable index, index constituents and/or rate. To the extent that
we enter into hedging arrangements with a non-affiliate, including a non-affiliated agent, such non-affiliate may enter into similar transactions. Engaging in transactions of this kind could adversely affect the market value of, and return on, any
such notes. It is possible that we or the hedging counterparty could achieve substantial returns from our hedging transactions while the value of such notes may decline.
We are under no obligation to hedge our exposure under a particular offering of notes. There can be no assurance that any hedging
transactions we may choose to undertake will be maintained over the term of the note or will be successful. Regardless of whether we engage in hedging transactions, you have no claim to or in respect of any
particular asset which we hold and depend upon our creditworthiness for payment of any amounts due under a note.
We May Have Conflicts of Interest Regarding an Indexed Note
SCUSA and our other affiliates and unaffiliated agents may have conflicts of interest with respect to some offerings of notes. SCUSA and
our other affiliates and unaffiliated agents may engage in trading, including trading for hedging purposes, for their proprietary accounts or for other accounts under their management, in an offering of notes and in the applicable index, index
constituents and/or rate or in other derivative instruments related to the foregoing. These trading activities could adversely affect the market value of, and return on, such notes. We and our affiliates and unaffiliated agents may also issue or
underwrite securities or derivative instruments that are linked to the same index or rate as one or more linked notes. Introducing competing products into the marketplace in this manner could adversely affect the market value of, and return on, any
such notes. Additionally, for floating rate notes linked to certain floating rates, the calculation agent may have the discretion to replace the applicable floating rate following the occurrence of certain events and may make other changes to the
terms of the affected notes, such as the spread, as discussed elsewhere herein.
We or our affiliates or an unaffiliated entity that provides us a hedge in respect of a particular offering of notes may serve as
calculation agent and/or exchange rate agent for such notes and may have considerable discretion in calculating the amounts payable in respect of the notes. To the extent that we or another of our affiliates or such an unaffiliated entity calculates
or compiles a particular index, it may also have considerable discretion in performing the calculation or compilation of the index. Exercising discretion in this manner could adversely affect the market value of, and return on, an indexed note based
on the index or the rate of return on such notes.
The Calculation Agent Will Make Determinations With Respect to SOFR-Linked Notes.
The calculation agent will make certain determinations with respect to SOFR-linked notes as further described below under “Description of
the Notes — SOFR Notes”. In addition, if a benchmark transition event and its related benchmark replacement date (each as defined therein) have occurred, the calculation agent will make certain determinations with respect to SOFR-linked notes, as
further described herein. Any determination, decision or election pursuant to the benchmark replacement provisions not made by the calculation agent will be made by us. Any of these determinations may adversely affect the value of SOFR-linked notes,
the return on SOFR-linked notes and the price at which you can sell such SOFR-linked notes. Moreover, certain determinations may require the exercise of discretion and the making of subjective judgments, such as with respect to SOFR or the SOFR Index
or the occurrence or non-occurrence of a benchmark transition event and any benchmark replacement conforming changes. These potentially subjective determinations may adversely affect the value of SOFR-linked notes, the return on SOFR-linked notes and
the price at which you can sell such SOFR-linked notes.
Risks Relating to Liquidity
The Notes Lack Liquidity
The notes will not be listed on any securities exchange or automated quotation system. Therefore, there may be little or no secondary
market for the notes. Scotia Capital (USA) Inc. or any other dealer may, but is not obligated to, make a market in the notes. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the notes easily. The
price at which you may be able to trade your notes is likely to depend on the price, if any, at which Scotia Capital (USA) Inc. or any other dealer, if they choose to make a market in the notes, is willing to purchase the notes from you. If at any
time Scotia Capital (USA) Inc. or any other dealer were not to make a market in the notes, it is likely that there would be no secondary market for the notes. Accordingly, you should be willing to hold your notes to maturity.
Risks Relating to General Credit Characteristics
An Investment in the Notes Is Subject to Our Credit Risk
An investment in any of the notes issued under our Senior Note Program is subject to our credit risk. Any payment to be made on the notes,
including any repayment of principal, depends on the ability of the Bank to satisfy its obligations as they come due. Further, the existence of a trading market for, and the market value of, any of the notes may be impacted by market perception of
our creditworthiness. If market perception of our creditworthiness were to decline for any reason, the market value of your notes and the availability of a trading market for the notes may be adversely affected.
Risks Relating to Canadian and U.S. Federal Income Taxation
Significant Aspects of the Tax Treatment of an Investment in Indexed Notes Are Uncertain
We do not plan to request a ruling from the Internal Revenue Service or from any Canadian authorities regarding the tax treatment of an
investment in indexed notes, and the Internal Revenue Service, the Canada Revenue Agency or a court may not agree with the tax treatment described in the applicable Product Prospectus Supplement or Pricing Supplement.
Further, the treatment of indexed notes for U.S. federal income tax purposes is often unclear due to the absence of any authority
specifically addressing the issues presented by any particular indexed note.
Thus, in addition to reading the applicable discussions herein under “Certain Income Tax Consequences” and the tax treatment described in
the applicable Product Prospectus Supplement and Pricing Supplement, you should independently evaluate the federal income tax consequences of purchasing an indexed note that apply in your particular circumstances and consult your tax advisor about
your tax situation.
Non-U.S. Investors May Be Subject to Certain Additional Risks
The applicable Product Prospectus Supplement contains a general discussion of material U.S. and Canadian tax consequences of the
applicable notes. If you are a non-U.S. investor, you should consult your tax advisor as to the consequences, under the tax laws of the country where you are resident for tax purposes, of acquiring, holding and disposing of notes and receiving
payments of principal or other amounts under the notes.
Risks Relating to Bail-inable Notes
If the Applicable Pricing Supplement Specifies that the Notes are Bail-inable Notes, such Notes will be Subject to Risks of Conversion in
Whole or in Part — by Means of a Transaction or Series of Transactions and in One or More Steps — into Common Shares of the Bank or Any of its Affiliates, Under Canadian Bank Resolution Powers
Under Canadian bank resolution powers, if the Canada Deposit Insurance Corporation (“CDIC”) were to take action under the Canadian bank
resolution powers with respect to the Bank, this could result in holders or beneficial owners of bail-inable notes being exposed to losses and conversion of the notes in whole or in part — by means of a transaction or series of transactions and in
one or more steps — into common shares of the Bank or any of its affiliates, and you will be obligated to accept those common shares. As a result, if the applicable Pricing Supplement specifies that the notes are bail-inable notes, you should
consider the risk that you may lose all or part of your investment, including the principal amount plus any accrued interest, if the CDIC were to take action under the Canadian bank resolution powers, including the bail-in regime, and that any
remaining outstanding notes, or common shares of the Bank or any of its affiliates into which bail-inable notes are converted, may be of little value at the time of a bail-in conversion and thereafter.
Please see the discussion in the accompanying Prospectus under “Risk Factors —
Risks Related to the Bank’s Debt Securities” and “Description of the Debt Securities We May Offer ― Canadian Bank Resolution Powers” for additional information.
The senior debt securities indenture will provide only limited acceleration and enforcement rights for bail-inable notes and includes
other provisions intended to qualify notes as TLAC.
If the applicable Pricing Supplement specifies that the notes are bail-inable notes, holders and beneficial owners of such notes may only
exercise, or direct the exercise of, the rights described under “Description of the Debt Securities We May Offer — Events of Default — Remedies If an Event of Default Occurs” in the accompanying Prospectus where an Order has not been made under
Canadian bank resolution powers pursuant to subsection 39.13(1) of the CDIC Act in respect of the Bank. Notwithstanding the exercise of those rights, such notes will continue to be subject to bail-in conversion until repaid in full.
The senior debt securities indenture also provides that holders or beneficial owners of bail-inable notes will not be entitled to
exercise, or direct the exercise of, any set-off or netting rights with respect to the notes. In addition, where an amendment, modification or other variance that can be made to the senior debt securities indenture or the notes as described under
“Description of the Debt Securities We May Offer — Modification and Waiver of the Debt Securities” in the accompanying Prospectus would affect the recognition of those notes by the Superintendent of Financial Institutions (Canada) (the
“Superintendent”) as TLAC, that amendment, modification or variance will require the prior approval of the Superintendent.
Please see the discussions in the accompanying Prospectus referenced above for additional information.
We may redeem bail-inable notes after the occurrence of a TLAC Disqualification Event
If the applicable Pricing Supplement specifies that the notes are bail-inable notes, we may, at our option, on not less than 30 days’ and
not more than 45 days’ prior notice to the holders of such notes, redeem all but not less than all of such notes prior to their stated maturity date on, or within 90 days after, the occurrence of a TLAC Disqualification Event (as defined in the
accompanying Prospectus), at a redemption price equal to 100% of the principal amount thereof, plus any accrued and unpaid interest to, but excluding, the date fixed for redemption. If we redeem your bail-inable notes, you may not be able to reinvest
the redemption proceeds in securities offering a comparable anticipated rate of return. Additionally, although the terms of bail-inable notes are anticipated to be established to satisfy the TLAC criteria within the meaning of the TLAC Guideline to
which the Bank is subject, it is possible that any bail-inable notes may not satisfy the criteria in future rulemakings or interpretations.
See “Description of the Notes — Provisions Specific to Bail-inable Notes — TLAC Disqualification Event Redemption” herein and “Description
of the Debt Securities We May Offer — Canadian Bank Resolution Powers — TLAC Guideline” in the accompanying Prospectus for additional information.
Description of the Notes
You should carefully read the description of the terms and provisions of our senior debt securities and our senior debt securities
indenture under “Description of the Debt Securities We May Offer” in the accompanying Prospectus. That section, together with the applicable Supplements, summarizes all the material terms of our senior debt securities indenture and your note. They do
not, however, describe every aspect of our senior debt securities indenture and your note. For example, in this section entitled “―Description of the Notes,” we use terms that have been given special meanings in our senior debt securities indenture,
but we describe the meanings of only the more important of those terms. The specific terms of any series of notes will be described in any applicable Product Prospectus Supplement and the applicable Pricing Supplement. As you read this section and
the applicable Supplements, please remember that the specific terms of your note as described in the applicable Supplement will supplement and, if applicable, may modify or replace the general terms described in this section and/or the applicable
Product Prospectus Supplement. If there is any inconsistency between the terms of the notes described in the accompanying Prospectus, this Prospectus Supplement, the applicable Product Prospectus Supplement and the applicable Pricing Supplement, the
following hierarchy will govern: first, the applicable Pricing Supplement; second, the product prospectus supplement (if any); third, this Prospectus Supplement; and last, the accompanying Prospectus.
General
The notes will be limited to an aggregate offering price of notes specified in the accompanying Prospectus, at the Bank’s option if so
specified in the applicable Pricing Supplement, the equivalent of this amount in any currency or currency unit other than U.S. dollars. The Bank may issue notes pursuant to one or more other prospectus supplements under the Prospectus and the
aggregate amount of the notes that may be offered under this Prospectus Supplement may be subject to reduction as a result of the sale by the Bank of other securities (including notes and unsecured subordinated notes of the Bank) pursuant to one or
more other prospectus supplements under the Prospectus.
Notes may be issued at various times and in different series, any series of which may be comprised of one or more tranches of notes. The
Bank may issue as many distinct series of notes as it wishes. The series of which the notes are a part will be identified in any applicable Product Prospectus Supplement and the applicable Pricing Supplement.
The notes will constitute the Bank’s unsecured and unsubordinated obligations and will constitute deposit liabilities of the Bank for
purposes of the Bank Act and will rank on a parity with all of the Bank’s other senior unsecured debt including deposit liabilities, other than certain governmental claims in accordance with applicable law, and prior to all of the Bank’s subordinated
debt. The notes will not constitute deposits that are insured under the Canada Deposit Insurance Corporation Act (Canada) or by the United States Federal Deposit Insurance Corporation or any other Canadian or U.S. government agency or
instrumentality.
The notes will be issued under a senior debt securities indenture, as amended or supplemented from time to time, among the Bank,
Computershare Trust Company, National Association, as United States trustee, and Computershare Trust Company of Canada, as Canadian trustee, which is more fully described in the Prospectus under the heading “Description of the Debt Securities We May
Offer”. The indenture is subject to, and governed by, the Trust Indenture Act of 1939, as amended. Whenever we refer to specific provisions or defined terms in the indenture, those provisions or defined terms are incorporated in this Prospectus
Supplement by reference. Section references used in this discussion are references to the indenture. Capitalized terms which are not otherwise defined shall have the meanings given to them in the indenture.
Subject to regulatory capital requirements applicable to the Bank, there is no limit on the amount of indebtedness that the Bank may
issue. The Bank has other unsubordinated debt outstanding and may issue additional unsubordinated debt at any time and without notifying you.
The Bank will offer notes under the Senior Note Program on a continuous basis through one or more agents. See “Supplemental Plan of
Distribution (Conflicts of Interest)” herein.
The indenture does not limit the aggregate principal amount of senior notes that we may issue. We may, from time to time, without the
consent of the holders of the notes, provide for the issuance of notes or other debt securities under the indenture in addition to the aggregate securities. Each note issued under this Prospectus Supplement will have a stated maturity that will be
specified in the applicable Pricing Supplement and may be subject to redemption or repayment before its stated maturity. Notes may be issued at significant discounts from their principal amount due on the stated maturity (or on any prior date on
which the principal or an installment of principal of a note becomes due and payable, whether by the declaration of acceleration, call for redemption at our option, repayment at the option of the holder or otherwise), and some notes may not bear
interest. We may from time to time, without the consent of the existing holders of the relevant notes, create and issue further notes having the same terms and conditions as such notes in all respects, except for the issue date, issue price and, if
applicable, the first payment of interest thereon.
Unless we specify otherwise in the other applicable Supplements, currency amounts in this Prospectus Supplement are expressed in U.S.
dollars, the notes will be denominated in U.S. dollars and payments of any principal, premium or interest on the notes will be made in U.S. dollars. If any note is to be denominated other than exclusively in U.S. dollars, or if any principal, premium
or interest on the note is to be paid in one or more currencies (or currency units or in amounts determined by reference to an index or indices) other than that in which that note is denominated, additional information (including authorized
denominations and related exchange rate information) will be provided in the applicable Supplement. Unless we specify otherwise in the applicable Supplement, notes denominated in U.S. dollars will be issued in minimum denominations of US$1,000 and
integral multiples of US$1,000 in excess thereof (except that non-U.S. investors may be subject to higher minimums).
Interest rates that we offer on the notes may differ depending upon, among other factors, the aggregate principal amount of notes
purchased in any single transaction. Notes with different variable terms other than interest rates may also be offered concurrently to different investors. We may change interest rates or formulas and other terms of notes from time to time, but no
change of terms will affect any note we have previously issued or as to which we have accepted an offer to purchase.
Global Notes
Unless otherwise specified in the applicable Pricing Supplement, each note issued under the Senior Note Program will be issued as a
book-entry note in fully registered form and will be represented by a global note that the Bank deposits with and registers in the name of a financial institution or its nominee called a depository. Unless otherwise specified in the applicable
Pricing Supplement, The Depository Trust Company, New York, New York, will be the depository for all notes in global form. See “Legal Ownership and Book-Entry Issuance” in the Prospectus.
Types of Notes
We may issue the following types of notes:
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Fixed Rate Notes. A note of this type will bear interest at a fixed rate described in the
applicable Pricing Supplement. This type includes zero-coupon notes, which bear no interest and are instead issued at a price lower than the principal amount.
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Floating Rate Notes. A note of this type will bear interest at rates that are determined by
reference to an interest rate formula. In some cases, the rates may also be adjusted by adding or subtracting a spread or multiplying by a spread multiplier and may be subject to a minimum rate or a maximum rate. The various interest rate
formulas and these other features are described below in “– Interest Rates – Floating Rate Notes.” If your note is a floating rate note, the formula and any adjustments that apply to the interest rate will be specified in the applicable
Pricing Supplement.
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Fixed-to-Floating Rate Notes. A note of
this type will bear interest at both a fixed rate for a certain period of time and at a floating rate for another certain period of time determined by reference to an interest rate formula, each as specified in the applicable Pricing
Supplement. We refer to these notes as “fixed-to-floating rate notes.” The rate for the floating-rate period(s) for a fixed-to-floating rate note will be set, calculated and paid in the same manner as for floating rate notes, as
described in this Prospectus Supplement and as specified in the applicable Pricing Supplement. Any references to or discussion of floating-rate notes in this Prospectus Supplement also applies to the floating-rate period(s) of
fixed-to-floating rate notes.
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Floating-to-Fixed Rate Notes. A note of this type will bear interest at both a floating rate for
a certain period of time and at a fixed rate for another certain period of time determined by reference to an interest rate formula, each as specified in the applicable Pricing Supplement. We refer to these notes as “floating-to-fixed rate
notes.” The rate for the floating-rate period(s) for a floating-to-fixed rate note will be set, calculated and paid in the same manner as for floating-rate notes, as described in this Prospectus Supplement and as specified in the applicable
Pricing Supplement. Any references to or discussion of floating-rate notes in this Prospectus Supplement also applies to the floating-rate period(s) of floating-to-fixed rate notes.
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Indexed Notes. A note of this type provides that the principal amount payable at its maturity,
and/or the amount of interest payable on an interest payment date, will be determined:
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by reference to one or more equity securities, exchange traded funds, indices, currencies, commodities, financial or economic measures;
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by reference to indices or baskets of the aforementioned items; or
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If you are a holder of an indexed note, you may receive a principal amount at maturity that is greater than, less than or equal to the
face amount of your note depending upon the value of the applicable index at maturity. That value may fluctuate over time. If you purchase an indexed note, the applicable Product Prospectus Supplement and applicable Pricing Supplement will include
information about the relevant index and how amounts that are to become payable will be determined by reference to that index. Before you purchase any indexed note, you should read carefully the discussion relating to indexed notes under “Risk
Factors” above.
Original Issue Discount Notes
A note may be an original issue discount note. A note of this type is issued at a price lower than its principal amount and provides that,
upon redemption or acceleration of its maturity, an amount less than its principal amount will be payable. An original issue discount note may be a zero-coupon note. A note issued at a discount to its principal may be considered an original issue
discount note for U.S. federal income tax purposes, regardless of the amount payable upon redemption or acceleration of maturity. The applicable Pricing Supplement will specify if an offering of notes is issued with, or is treated as being issued
with, original issue discount. You are urged to read see the tax discussion in the applicable Supplements for the U.S. federal income tax consequences of owning original discount notes.
Information in the Pricing Supplement
The applicable Pricing Supplement will describe one or more of the following terms of your note:
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the specified currency or currencies for principal and interest, if not U.S. dollars;
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the price at which we originally issue your note, expressed as a percentage of the principal amount, and the original issue date;
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whether your note is a fixed rate note, a floating rate note, a fixed-to-floating rate note, a floating-to-fixed rate or an indexed note;
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if your note is a fixed rate note, the per annum rate at which your note will bear interest, if any, and the interest payment dates;
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if your note is a floating rate note, the interest rate basis, which may be one of the interest rate bases described in “– Interest Rates – Floating Rate Notes” below; any applicable index currency or maturity, spread or spread
multiplier or initial, maximum or minimum rate; and the interest reset, determination, calculation and payment dates, all of which we describe under “– Interest Rates – Floating Rate Notes” below;
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if your note is an indexed note, the principal amount, if any, we will pay you at maturity, the amount of interest, if any, we will pay you on an interest payment date or the formula we will use to calculate these amounts, if any;
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if your note is an original issue discount note, the yield to maturity;
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if applicable, the circumstances under which your note may be redeemed at our option before the stated maturity, including any redemption commencement date, redemption price(s) and redemption period(s);
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if applicable, the circumstances under which you may demand repayment of your note before the stated maturity, including any repayment commencement date, repayment price(s) and repayment period(s);
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any special Canadian or United States federal income tax consequences of the purchase, ownership or disposition of a particular issuance of notes;
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the use of proceeds, if materially different than those discussed in this Prospectus Supplement; and
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any other terms of your note, which could be different from those described in this Prospectus Supplement.
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Market-Making Transactions
If you purchase your note in a market-making transaction, you will receive information about the price you pay and your trade and
settlement dates in a separate confirmation of sale. A market-making transaction is one in which an agent or other person resells a note that it has previously acquired from another holder. A market-making transaction in a particular note occurs
after the original sale of the note.
Redemption at the Option of the Bank; No Sinking Fund
If an initial redemption date is specified in the applicable Pricing Supplement, we may redeem the particular notes prior to their stated
maturity date at our option on any date on or after that initial redemption date in whole or from time to time in part in increments of US$1,000 or any other integral multiple of an authorized denomination specified in the applicable Pricing
Supplement (provided that any remaining principal amount thereof shall be at least US$1,000 or other minimum authorized denomination applicable thereto), at the redemption price or prices specified in that Pricing Supplement, together with unpaid
interest accrued thereon to the date of redemption. Unless otherwise specified in the applicable Pricing Supplement, we must give written notice to registered holders of the particular notes to be redeemed at our option not more than 45 nor less than
30 calendar days prior to the date of redemption.
If the applicable Pricing Supplement specifies that the notes are bail-inable notes, in the event that a redemption (for any reason) of
such notes would lead to a breach of the Bank’s Total Loss Absorbing Capacity (“TLAC”) requirements, such redemption would be subject to the prior approval of the Superintendent. See “Description of the Debt Securities We May Offer — Canadian Bank
Resolution Powers — TLAC Guideline” in the accompanying Prospectus for additional information.
The notes will not be subject to, or entitled to the benefit of, any sinking fund.
Repayment at the Option of the Holder
If one or more optional repayment dates are specified in the applicable Pricing Supplement, registered holders of the particular notes may require us to repay those notes prior to their stated maturity
date on any optional repayment date in whole or from time to time in part in increments of US$1,000 or any other integral multiple of an authorized denomination specified in the applicable Pricing Supplement (provided that any remaining principal
amount thereof shall be at least US$1,000 or other minimum authorized denomination applicable thereto), at the repayment price or prices specified in that Pricing Supplement, together with unpaid interest accrued thereon to the date of repayment. A
registered holder’s exercise of the repayment option will be irrevocable.
For any note to be repaid, the applicable trustee must receive, at its corporate trust office in the Borough of Manhattan, The City of New
York, not more than 45 nor less than 30 calendar days prior to the date of repayment, the particular notes to be repaid and, in the case of a book-entry note, repayment instructions from the applicable beneficial owner to the depositary and forwarded
by the depositary. Only the depositary may exercise the repayment option in respect of global notes representing book-entry notes. Accordingly, beneficial owners of global notes that desire to have all or any portion of the book-entry notes
represented thereby repaid must instruct the participant through which they own their interest to direct the depositary to exercise the repayment option on their behalf by forwarding the repayment instructions to the applicable trustee as aforesaid.
In order to ensure that these instructions are received by the applicable trustee on a particular day, the applicable beneficial owner must so instruct the participant through which it owns its interest before that participant’s deadline for
accepting instructions for that day. Different firms may have different deadlines for accepting instructions from their customers. Accordingly, beneficial owners should consult their participants for the respective deadlines. In addition, at the time
repayment instructions are given, each beneficial owner shall cause the participant through which it owns its interest to transfer the beneficial owner’s interest in the global note representing the related book-entry notes, on the depositary’s
records, to the applicable trustee.
We will comply with the applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
promulgated thereunder, and any other securities laws or regulations in connection with any repayment of notes at the option of the registered holders thereof.
Open Market Repurchases
We may at any time purchase notes at any price or prices in the open market or otherwise. Notes so purchased by us may, at our discretion,
be held, resold or surrendered to the applicable trustee for cancellation. Where our repurchase of bail-inable notes would result in the Bank not meeting the TLAC requirements applicable to it pursuant to the TLAC Guideline, we may only repurchase
those notes if we have obtained the prior approval of the Superintendent.
Interest
Each interest-bearing note will bear interest from its date of issue at the rate per annum, in the case of a fixed rate note, or pursuant
to the interest rate formula, in the case of a floating rate note, in each case as specified in the applicable Pricing Supplement, until the principal thereof is paid. We will make interest payments in respect of fixed rate notes and floating rate
notes in an amount equal to the interest accrued from and including the immediately preceding interest payment date in respect of which interest has been paid or from and including the date of issue, if no interest has been paid, to but excluding the
applicable interest payment date or the maturity date, as the case may be (each, an “interest period”). Notwithstanding the foregoing, for floating rate notes linked to certain floating rates, the applicable Pricing Supplement may specify an
alternative interest period or observation period over which interest will accrue.
Interest on fixed rate notes and floating rate notes will be payable in arrears on each interest payment date and on the maturity date.
The first payment of interest on any note originally issued between a regular record date and the related interest payment date will be made on the interest payment date immediately following the next succeeding record date to the registered holder
on the next succeeding record date. Unless otherwise specified in the applicable Pricing Supplement, the “regular record date” shall be the fifteenth calendar day, whether or not a “business day”, immediately preceding the related interest payment
date. “Business day” is defined below in Schedule 1 to this Prospectus Supplement. For the purpose of determining the holder at the close of business on a
regular record date when business is not being conducted, the close of business will mean 5:00 P.M. Eastern Standard Time, on that day.
Interest Rates
This subsection describes the different kinds of interest rates that may apply to your note, if it bears interest.
Fixed Rate Notes
The applicable Pricing Supplement will specify the interest payment dates for a fixed rate note as well as the maturity date. Interest on
fixed rate notes will be computed on the basis of a 360-day year consisting of twelve 30-day months or such other day count fraction set forth in the applicable Pricing Supplement.
If any interest payment date, redemption date, repayment date or maturity date of a fixed rate note falls on a day that is not a business
day, we will make the required payment of principal, premium, if any, and/or interest on the next succeeding business day, and no additional interest will accrue in respect of the payment made on that next succeeding business day.
Floating Rate Notes
In this subsection, we use several specialized terms relating to the manner in which floating interest rates are calculated. These terms
are defined in Schedule 1 to this Prospectus Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the following will apply to floating rate notes:
Interest Rate Basis. We currently expect to issue floating rate notes that bear interest at rates based on one or more of the following interest rate bases:
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Federal funds rate; and/or
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We describe each of the interest rate bases in further detail below in this subsection. If you purchase a floating rate note, the
applicable Pricing Supplement will specify the interest rate basis that applies to your note.
Calculation of Interest. Calculations relating to floating rate notes will be made by the calculation agent, an institution that we appoint as our agent for this purpose. That institution may include us or any affiliate of ours, such as
Scotia Capital Inc. The applicable Pricing Supplement for a particular floating rate note will name the institution that we have appointed to act as the calculation agent for that note as of its original issue date. We may appoint a different
institution to serve as calculation agent from time to time after the original issue date of the note without your consent and without notifying you of the change.
For each floating rate note, the calculation agent will determine, on the corresponding interest calculation date or on the interest
determination date, as described below, the interest rate applicable to each interest period. In addition, the calculation agent will calculate the amount of interest that has accrued during each interest period – that is, the period from and
including the original issue date, or the last date to which interest has been paid or made available for payment, to but excluding the payment date. For each interest period, the calculation agent will calculate the amount of accrued interest by
multiplying the face or other specified amount of the floating rate note by an accrued interest factor for the interest period. This factor will equal the sum of the interest factors calculated for each day during the interest period. The interest
factor for each day will be expressed as a decimal and will be calculated by dividing the interest rate, also expressed as a decimal, applicable to that day by 360 or by the actual number of days in the year, as specified in the applicable Pricing
Supplement. Notwithstanding the foregoing, for floating rate notes linked to certain floating rates, the applicable Pricing Supplement may specify an alternative interest period or observation period over which interest will accrue and alternative
dates on which the applicable interest rate will be determined.
Upon the request of the holder of any floating rate note, the calculation agent will provide for that note the interest rate then in
effect – and, if determined, the interest rate that will become effective on the next interest reset date. The calculation agent’s determination of any interest rate, and its calculation of the amount of interest for any interest period, will be
final and binding in the absence of manifest error.
All percentages resulting from any calculation relating to a note will be rounded upward or downward, as appropriate, to the next higher
or lower one hundred-thousandth of a percentage point (e.g., 9.876541% (or .09876541) being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being rounded up to 9.87655% (or .0987655)). All amounts used in or resulting from any
calculation relating to a floating rate note will be rounded upward or downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or to the nearest corresponding hundredth of a unit, in the case of a currency other than U.S. dollars,
with one-half cent or one-half of a corresponding hundredth of a unit or more being rounded upward.
In determining the interest rate basis that applies to a floating rate note during a particular interest period, the calculation agent may
obtain rate quotes from various banks or dealers active in the relevant market, as discussed below. Those reference banks and dealers may include the calculation agent itself and its affiliates, as well as any agent participating in the distribution
of the relevant floating rate notes and its affiliates, and they may include our affiliates.
Initial Interest Rate. For any floating rate note, the interest rate in effect from the original issue date to the first interest reset date will be the initial interest rate. We will specify the initial interest rate or the manner in which it
is determined in the applicable Pricing Supplement.
Spread or Spread Multiplier. In some cases, the interest rate basis for a floating rate note may be adjusted:
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by adding or subtracting a specified number of basis points, called the spread, with one basis point being 0.01%; or
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by multiplying the interest rate basis by a specified percentage, called the spread multiplier.
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If you purchase a floating rate note, the applicable Pricing Supplement will indicate whether a spread or spread multiplier will apply to
your note and, if so, the amount of the spread or spread multiplier.
Maximum and Minimum Rates. The actual interest rate, after being adjusted by the spread or spread multiplier, may also be subject to either or both of the following limits:
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a maximum rate – i.e., a specified upper limit that the actual interest rate in effect at any time may not exceed; and/or
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a minimum rate – i.e., a specified lower limit that the actual interest rate in effect at any time may not fall below.
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If you purchase a floating rate note, the applicable Pricing Supplement will indicate whether a maximum rate and/or minimum rate will
apply to your note and, if so, what those rates are.
Whether or not a maximum rate applies, the interest rate on a floating
rate note will in no event be higher than the maximum rate permitted by New York law, as it may be modified by U.S. law of general application and the Criminal Code (Canada). Under current New York law, the maximum rate of interest, with some
exceptions, for any loan made to a corporate borrower in an amount less than US$250,000 is 16% and for any loan in the amount of US$250,000 or more but less than US$2,500,000 is 25% per year on a simple interest basis. These limits do not apply
to loans of US$2,500,000 or more, except for the Criminal Code (Canada), which limits the rate to 60%.
The rest of this subsection describes how the interest rate and the interest payment dates will be determined, and how interest will be
calculated, on a floating rate note.
Interest Reset Dates. The rate of interest on a floating rate note, other than a SOFR-linked note or a floating rate note based on another backward-looking rate, will be reset, by the calculation agent described below, daily, weekly, monthly,
quarterly, semi-annually, annually or as otherwise specified in the applicable Pricing Supplement. The date on which the interest rate resets and the reset rate becomes effective is called the interest reset date. Except as otherwise specified in
the applicable Pricing Supplement, the interest reset date will be as follows:
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for floating rate notes that reset daily, each business day;
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for floating rate notes that reset weekly and are not treasury rate notes, the Wednesday of each week;
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for treasury rate notes that reset weekly, the Tuesday of each week;
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for floating rate notes that reset monthly, the third Wednesday of each month;
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for floating rate notes that reset quarterly, the third Wednesday of each of four months of each year as indicated in the applicable Pricing Supplement;
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for floating rate notes that reset semi-annually, the third Wednesday of each of two months of each year as indicated in the applicable Pricing Supplement;
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for floating rate notes that reset annually, the third Wednesday of one month of each year as indicated in the applicable Pricing Supplement; and
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for a floating rate note, the interest rate in effect on any particular day will be the interest rate determined with respect to the latest interest reset date that occurs on or before that day. There are several exceptions, however, to
the reset provisions described above.
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For a floating rate note other than a SOFR Index note or a floating rate note based on another backward looking rate, the interest rate in
effect on any particular day will be the interest rate determined with respect to the latest interest reset date that occurs on or before that day. There are several exceptions, however, to the reset provisions described above. For example, for a
SOFR-linked note, the interest rate in effect on any particular day will be the interest rate determined with respect to the interest period in which that day occurs.
If any interest reset date for a floating rate note would otherwise be a day that is not a business day, the interest reset date will be
postponed to the next day that is a business day. For a EURIBOR note, however, if that business day is in the next succeeding calendar month, the interest reset date will be the immediately preceding business day.
Interest Determination Dates. The interest rate that takes effect on an interest reset date (or, in the case of a SOFR-linked note or a floating rate note based on another backward looking rate, the interest rate determined for the applicable
interest period) will be determined by the calculation agent by reference to a particular date called an interest determination date. Unless otherwise specified in the applicable Pricing Supplement:
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for commercial paper rate, federal funds rate and U.S. prime rate notes, the interest determination date relating to a particular interest reset date will be the business day preceding the interest reset date;
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for EURIBOR notes, the interest determination date relating to a particular interest reset date will be the second euro business day preceding
the interest reset date. We refer to an interest determination date for a EURIBOR note as a EURIBOR interest determination date;
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for SOFR notes and floating rate notes based on other backward looking rates, the interest determination date relating to a particular interest period will be the date two U.S. government securities business
days (or such other day as specified in the applicable Pricing Supplement) before the applicable interest payment date (or, in the case of the final interest period, prior to the maturity date or if we elect to redeem in part or in full any
series of notes, the redemption date for such notes);
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for treasury rate notes, the interest determination date relating to a particular interest reset date, which we refer to as a treasury interest determination date, will be the day of the week in which the interest reset date falls on which
treasury bills – i.e., direct obligations of the U.S. government – would normally be auctioned. Treasury bills are usually sold at auction on the Monday of each week, unless that day is a legal holiday, in which case the auction is usually
held on the following Tuesday, except that the auction may be held on the preceding Friday. If as the result of a legal holiday an auction is held on the preceding Friday, that Friday will be the treasury interest determination date relating
to the interest reset date occurring in the next succeeding week; and
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for CD rate, CMT rate, CPI rate and CMS rate notes, the interest determination date relating to a particular interest reset date will be the second business day preceding the interest reset date.
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The interest determination date pertaining to a floating rate note the interest rate of which is determined with reference to two or more
interest rate bases (none of which is SOFR or the SOFR Index) will be the latest business day which is at least two business days before the related interest reset date for the applicable floating rate note on which each interest rate basis is
determinable.
Interest Calculation Dates. As described above, except for SOFR-linked notes, the interest rate that takes effect on a particular interest reset date will be determined by reference to the corresponding interest determination date. Except for
EURIBOR notes and SOFR notes, however, the determination of the rate will actually be made on a day no later than the corresponding interest calculation date. Unless otherwise specified in the applicable Pricing Supplement, the interest calculation
date will be the earlier of the following:
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the tenth calendar day after the interest determination date or, if that tenth calendar day is not a business day, the next succeeding business day; and
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the business day immediately preceding the interest payment date or the maturity, whichever is the day on which the next payment of interest will be due.
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The calculation agent need not wait until the relevant interest calculation date to determine the interest rate if the rate information it
needs to make the determination is available from the relevant sources sooner.
Interest Payment Dates. The interest payment dates for a floating rate note will depend on when the interest rate is reset and, unless we specify otherwise in the applicable Pricing Supplement, will be as follows:
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for floating rate notes that reset daily, weekly or monthly, the third Wednesday of each month;
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for floating rate notes that reset quarterly, the third Wednesday of the four months of each year specified in the applicable Pricing Supplement;
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for floating rate notes that reset semi-annually, the third Wednesday of the two months of each year specified in the applicable Pricing Supplement; or
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for floating rate notes that reset annually, the third Wednesday of the month specified in the applicable Pricing Supplement.
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Regardless of these rules, if a note is originally issued after the regular record date and before the date that would otherwise be the first interest
payment date, the first interest payment date will be the date that would otherwise be the second interest payment date.
In addition, unless otherwise specified in the applicable Pricing Supplement, the following special provision will apply to a floating rate note with regard
to any interest payment date other than one that falls on the maturity. If the interest payment date would otherwise fall on a day that is not a business day, then the interest payment date will be the next day that is a business day. However, if
the floating rate note is a EURIBOR note and the next business day falls in the next calendar month, then the interest payment date will be advanced to the next preceding day that is a business day. If the maturity date of a floating rate note
falls on a day that is not a business day, we will make the required payment of principal, premium, if any, and interest on the next succeeding business day, and no additional interest will accrue in respect of the payment made on that next
succeeding business day.
Commercial Paper Rate Notes
If you purchase a commercial paper rate note, your note will bear interest at an interest rate equal to the commercial paper rate and
adjusted by the spread or spread multiplier, if any, indicated in the applicable Pricing Supplement.
The commercial paper rate will be the money market yield of the rate, for the relevant interest determination date, for commercial paper
having the index maturity indicated in the applicable Pricing Supplement, as published in H.15(519) by 3:00 p.m., New York City time, on the interest calculation date corresponding to the relevant interest determination date, under the heading
“Commercial Paper – Nonfinancial.” If the commercial paper rate cannot be determined as described above, the following procedures will apply.
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If the rate described above does not appear in H.15(519) by 3:00 P.M., New York City time, on the relevant interest calculation date, unless the calculation is made earlier and the rate is available from that source at that time, then the
commercial paper rate will be the rate, for the relevant interest determination date, for commercial paper having the index maturity specified in the applicable Pricing Supplement, as published in H.15 daily update or any other recognized
electronic source used for displaying that rate, under the heading “Commercial Paper – Nonfinancial.”
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If the rate described above does not appear in H.15(519), H.15 daily update or another recognized electronic source by 3:00 P.M., New York City time, on the relevant interest calculation date, unless the calculation is made earlier and the
rate is available from one of those sources at that time, the commercial paper rate will be the money market yield of the arithmetic mean of the following offered rates for U.S. dollar commercial paper that has the relevant index maturity and
is placed for a non-financial issuer whose bond rating is “AA”, or the equivalent, from a nationally recognized rating agency: the rates offered as of 11:00 A.M., New York City time, on the relevant interest determination date, by three
leading U.S. dollar commercial paper dealers in New York City selected by the calculation agent.
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If fewer than three dealers selected by the calculation agent are quoting as described above, the commercial paper rate for the new interest period will be the commercial paper rate in effect for the prior interest period. If the initial
interest rate has been in effect for the prior interest period, however, it will remain in effect for the new interest period.
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U.S. Prime Rate Notes
If you purchase a U.S. prime rate note, your note will bear interest at an interest rate equal to the U.S. prime rate and adjusted by the
spread or spread multiplier, if any, indicated in the applicable Pricing Supplement.
The U.S. prime rate will be the rate, for the relevant interest determination date, published in H.15(519) by 3:00 p.m., New York City
time, on the interest calculation date corresponding to the relevant interest determination date, opposite the heading “Bank Prime Loan.” If the U.S. prime rate cannot be determined as described above, the following procedures will apply.
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If the rate described above does not appear in H.15(519) by 3:00 P.M., New York City time, on the relevant interest calculation date, unless
the calculation is made earlier and the rate is available from that source at that time, then the U.S. prime rate will be the rate, for the relevant interest determination date, as published in H.15 daily update or another recognized
electronic source used for the purpose of displaying that rate, under the heading “Bank Prime Loan.”
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If the rate described above does not appear in H.15(519), H.15 daily update or another recognized electronic source by 3:00 P.M., New York City time, on the relevant interest calculation date, unless the calculation is made earlier and
the rate is available from one of those sources at that time, then the U.S. prime rate will be the arithmetic mean of the following rates as they appear on the Reuters screen US PRIME 1 page: the rate of interest publicly announced by each
bank appearing on that page as that bank’s prime rate or base lending rate, as of 11:00 A.M., New York City time, on the relevant interest determination date.
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If fewer than four of these rates appear on the Reuters screen US PRIME 1 page, the U.S. prime rate will be the arithmetic mean of the prime rates or base lending rates, as of the close of business on the relevant interest determination
date, of three major banks in New York City selected by the calculation agent. For this purpose, the calculation agent will use rates quoted on the basis of the actual number of days in the year divided by a 360-day year.
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If fewer than three banks selected by the calculation agent are quoting as described above, the U.S. prime rate for the new interest period will be the U.S. prime rate in effect for the prior interest period. If the initial interest rate
has been in effect for the prior interest period, however, it will remain in effect for the new interest period.
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EURIBOR Notes
If you purchase a Euro interbank offered rate-linked note, your note will bear interest at an interest rate based on estimated euro
interbank term deposit rates for a specified term, designated as “EURIBOR” that is calculated and published by a designated distributor and administered by the European Money Markets Institute, or any entity that may assume responsibility for the
administration of the rate. In addition, when EURIBOR is the interest rate basis the EURIBOR base rate will be adjusted by the spread or spread multiplier, if any, specified in the applicable Pricing Supplement. EURIBOR will be determined in the
following manner:
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EURIBOR will be the offered rate for deposits in euros having the index maturity specified in the applicable Pricing Supplement, beginning on the second euro business day after the relevant EURIBOR interest determination date, as that rate
appears on Reuters page EURIBOR01 as of 11:00 A.M., Brussels time, on the relevant EURIBOR interest determination date.
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If the rate described above does not appear on Reuters page EURIBOR01, EURIBOR will be determined on the basis of the rates, at approximately 11:00 A.M., Brussels time, on the relevant EURIBOR interest determination date, at which deposits
of the following kind are offered to prime banks in the euro-zone interbank market by the principal euro-zone office of each of four major banks in that market selected by the calculation agent: euro deposits having the relevant index
maturity, beginning on the relevant interest reset date, and in a representative
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amount. The calculation agent will request the principal euro-zone office of each of these banks to provide a quotation of its rate. If at least two quotations are provided, EURIBOR for the relevant EURIBOR interest determination date
will be the arithmetic mean of the quotations.
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If fewer than two quotations are provided as described above, EURIBOR for the relevant EURIBOR interest determination date will be the arithmetic mean of the rates for loans of the following kind to leading euro-zone banks quoted, at
approximately 11:00 A.M., Brussels time on that EURIBOR interest determination date, by three major banks in the euro-zone selected by the calculation agent: loans of euros having the relevant index maturity, beginning on the relevant
interest reset date, and in a representative amount.
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If fewer than three banks selected by the calculation agent are quoting as described above, EURIBOR for the new interest period will be EURIBOR in effect for the prior interest period. If the initial interest rate has been in effect for
the prior interest period, however, it will remain in effect for the new interest period.
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If EURIBOR has been permanently discontinued or the applicable regulatory supervisor makes an announcement that EURIBOR is no longer representative or as of a certain date will no longer be representative, then the calculation
agent will use as a substitute for EURIBOR and for each future EURIBOR interest determination date, the alternative reference rate selected by the central bank, reserve bank, monetary authority or any similar institution (including
any committee or working group thereof) that is consistent with accepted market practice (the “Alternative Rate”). As part of such substitution, the calculation agent may make such adjustments to the Alternative Rate and the spread
thereon, as well as the business day convention, EURIBOR interest determination dates and related provisions and definitions (“Adjustments”), in each case that are consistent with accepted market practice for the use of such
Alternative Rate for debt obligations such as the notes; provided, however, that if there is no clear market consensus as to whether any rate has replaced EURIBOR in customary market usage, the Bank may appoint an IFA to determine an
appropriate Alternative Rate and any Adjustments, and the decision of the IFA will be binding on the Bank, the calculation agent and the holders of the notes.
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SOFR Notes
If you purchase a SOFR-linked note, your note will bear interest at an interest rate equal to SOFR, which is the secured overnight
financing rate that is published by the FRBNY and is intended to be a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. In addition, when SOFR is the interest rate basis the SOFR base rate will be
adjusted by the spread or spread multiplier, if any, specified in the applicable Pricing Supplement. SOFR, on any applicable date, will be determined in the following manner:
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SOFR as published by the FRBNY or any successor (the “SOFR administrator”) on the SOFR administrator’s website (or any successor page) at 3:00 p.m. (New York time) on such date (the “SOFR determination time”); provided that
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if SOFR does not appear as described in the preceding bullet by the specified time, then: (i) if a benchmark transition event and its related benchmark replacement date have not occurred with respect to SOFR, then SOFR shall be the rate
determined pursuant to the “SOFR Unavailability Provisions” described below; or (ii) if a benchmark transition event and its related benchmark replacement date have occurred with respect to SOFR, then SOFR shall be the rate determined
pursuant to the “Effect of a Benchmark Transition Event” provisions described below.
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Notwithstanding anything to the contrary in the applicable Supplements, if the calculation agent determines on or prior to the relevant
time that a benchmark transition event and its related benchmark replacement date (each as defined below) have occurred with respect to determining SOFR, then the benchmark replacement provisions set forth will thereafter apply to all
determinations of the rate of interest payable on such notes.
For the avoidance of doubt, in accordance with the benchmark replacement provisions, after a benchmark transition event and its related
benchmark replacement date have occurred, the interest payable for each interest period on the applicable notes will be an annual rate equal to the sum of the benchmark replacement (as defined below) and the applicable spread, if any.
The applicable Pricing Supplement may specify that the notes are linked to Compounded SOFR. Unless otherwise specified in the applicable
Pricing Supplement, Compounded SOFR will be determined by reference to the SOFR Index in the manner described herein. The SOFR Index is published by the FRBNY and measures the cumulative impact of compounding SOFR on a unit of investment over time,
with the initial value set to 1.00000000 on April 2, 2018, the first value date of SOFR. The SOFR Index value reflects the effect of compounding SOFR on each U.S. Government Securities Business Day and allows the calculation of compounded SOFR
averages over custom time periods. The FRBNY notes on its publication page for the SOFR Index that use of the SOFR Index is subject to important limitations, indemnification obligations and disclaimers, including that the FRBNY may alter the
methods of calculation, publication schedule, rate revision practices or availability of the SOFR Index at any time without notice.
Unless otherwise specified in the relevant Pricing Supplement, “Compounded SOFR” will be determined by the calculation agent in
accordance with the following formula:
where:
“SOFR IndexStart = For interest periods other than the initial interest period, the SOFR Index value on the preceding interest determination date, and, for the initial interest period, the SOFR Index value on the date that is
two U.S. government securities business days before the first day of such initial interest period;
“SOFR IndexEnd = The SOFR Index value on the interest determination date relating to the applicable interest payment date (or in the final interest period, relating to the maturity
date or the redemption date); and
“d” is the number of calendar days in the relevant observation period.
For purposes of determining Compounded SOFR in this manner, “SOFR Index” means, with respect to any U.S. Government Securities Business Day:
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the SOFR Index value as published by the SOFR administrator as such index appears on the SOFR administrator’s website at 3:00 p.m. (New York time) on such U.S. government securities business day (the “SOFR determination time”); provided
that:
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if a SOFR Index value does not so appear as specified in (1) above at the SOFR determination time, then: (i) if a benchmark transition event and its related benchmark replacement date have not occurred with respect to the SOFR Index,
then the Compounded SOFR shall be the rate determined pursuant to the “SOFR Index Unavailability Provisions” below; or (ii) if a benchmark transition event and its related benchmark replacement date have occurred with respect to the SOFR
Index, then Compounded SOFR shall be the rate determined pursuant to the “Effect of a Benchmark Transition Event” provisions described below.
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Notwithstanding anything to the contrary in the applicable Supplements, if the calculation agent determines on or prior to the relevant
time that a benchmark transition event and its related benchmark replacement date (each as defined below) have occurred with respect to determining the SOFR Index value, then the benchmark replacement provisions set forth below will thereafter
apply to all determinations of the rate of interest payable on such notes.
For these calculations, the daily SOFR in effect on any U.S. government securities business day will be the applicable SOFR or SOFR
Index value as reset on that date.
SOFR Unavailability Provisions
If SOFR is not published on an applicable date and a benchmark transition event and its related benchmark replacement date have not
occurred with respect to SOFR, SOFR means, for the applicable date for which SOFR is
not available, SOFR as published on the first preceding U.S. government securities business day for which SOFR was published on the SOFR administrator’s
website.
SOFR Index Unavailability Provisions.
If a SOFR IndexStart or SOFR IndexEnd is not published on the associated interest determination date and a
benchmark transition event and its related benchmark replacement date have not occurred with respect to SOFR, “Compounded SOFR” will mean, for the applicable interest period for which the SOFR Index is not available, the rate of return on a daily
compounded interest investment calculated in accordance with the formula for SOFR averages, and definitions required for such formula, published on the SOFR administrator’s website at newyorkfed.org/markets/treasury-repo-reference-rates-information
(or any successor page). For the purposes of this provision, references in the SOFR averages compounding formula and related definitions to “calculation period” shall be replaced with “observation period” and the words “that is, 30-, 90-, or 180-
calendar days” shall be removed. If the daily SOFR (“SOFRi”) does not so appear for any day “i” in the Observation Period, SOFRi for such day “i” shall be determined as described above under “SOFR Unavailability Provisions”.
Effect of a Benchmark Transition Event
(a) Benchmark Replacement. If the calculation agent determines that a benchmark transition
event and its related benchmark replacement date have occurred prior to the Reference Time (as defined herein) in respect of any determination of the benchmark (which would be SOFR or any successor rate) on any date, the benchmark replacement will
replace the then-current benchmark for all purposes relating to the applicable notes in respect of such determination on such date and all determinations on all subsequent dates relating to such notes.
(b) Benchmark Replacement Conforming Changes. In connection with the implementation of a
benchmark
replacement, the calculation agent will have the right to make benchmark replacement conforming changes from time to time.
(c) Decisions and Determinations. Any determination, decision or election that may be made
by the calculation agent or us pursuant to the benchmark replacement provisions described herein, including any determination with respect to tenor, rate or adjustment or of the occurrence or non- occurrence of an event, circumstance or date and
any decision to take or refrain from taking any action or any selection:
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will be conclusive and binding absent manifest error, may be made in the calculation agent’s sole discretion, and, notwithstanding anything to the contrary;
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if made by us, will be made in our sole discretion;
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if made by the calculation agent, will be made after consultation with us, and the calculation agent will not make any such determination, decision or election to which we object; and
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shall become effective without consent from any other party.
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Any determination, decision or election pursuant to the benchmark replacement provisions not made by the calculation agent will be made
by us on the basis as described above. The calculation agent shall have no liability for not making any such determination, decision or election. In addition, we may designate an entity (which may be our affiliate) to make any determination,
decision or election that we have the right to make in connection with the benchmark replacement provisions set forth herein.
Certain Defined Terms. As used herein:
“Benchmark” means, initially, SOFR (howsoever calculated), as such term is defined above;
provided that if a benchmark transition event and its related benchmark replacement date have occurred with respect to SOFR (or, if applicable, any published SOFR Index used in the calculation thereof) or the then-current benchmark, then
“benchmark” means the applicable benchmark replacement.
“Benchmark replacement” means the first alternative set forth in the order below that can be
determined by the calculation agent as of the benchmark replacement date:
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the sum of: (a) an alternate rate of interest that has been selected or recommended by the relevant governmental body as the replacement for the then-current benchmark for the applicable corresponding tenor and (b) the benchmark
replacement adjustment;
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the sum of: (a) the ISDA fallback rate and (b) the benchmark replacement adjustment; and
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provided that if (i) the benchmark replacement cannot be determined in accordance with clause (1) or (2) above as of the benchmark replacement date or (ii) the calculation agent shall have determined that the ISDA fallback rate
determined in accordance with clause (2) above is not an industry-accepted rate of interest as a replacement for the then-current benchmark for U.S. dollar-denominated floating rate notes at such time, then the benchmark replacement
shall be the sum of: (a) the alternate rate of interest that has been selected by the calculation agent as the replacement for the then-current benchmark for the applicable corresponding tenor giving due consideration to any
industry-accepted rate of interest as a replacement for the then-current benchmark for U.S. dollar denominated floating rate notes at such time and (b) the benchmark replacement adjustment.
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“Benchmark replacement
adjustment” means the first alternative set forth in the order below that can be determined by the calculation agent as of the benchmark replacement date:
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(1)
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the spread adjustment (which may be a positive or negative value or zero), or method for calculating or determining such spread adjustment that has been selected or recommended by the relevant governmental body for the applicable
unadjusted benchmark replacement;
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(2)
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if the applicable unadjusted benchmark replacement is equivalent to the ISDA fallback rate, then the ISDA fallback adjustment; and
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(3)
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the spread adjustment (which may be a positive or negative value or zero) that has been selected by the calculation agent giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining
such spread adjustment, for the replacement of the then-current benchmark with the applicable unadjusted benchmark replacement for U.S. dollar denominated floating rate notes at such time.
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“Benchmark replacement conforming changes” means, with respect to any benchmark
replacement, any technical, administrative or operational changes (including changes to the definitions or interpretations of interest period, the timing and frequency of determining rates and making payments of interest, the rounding of amounts or
tenors, and other administrative matters) that the calculation agent decides may be appropriate to reflect the adoption of such benchmark replacement in a manner substantially consistent with market practice (or, if the calculation agent decides
that adoption of any portion of such market practice is not administratively feasible or if the calculation agent determines that no market practice for use of the benchmark replacement exists, in such other manner as the calculation agent
determines is reasonably practicable).
“Benchmark replacement date” means the earliest to occur of the following events with respect to the then-current Benchmark:
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(1)
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in the case of clause (1) or (2) of the definition of “benchmark transition event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the
benchmark permanently or indefinitely ceases to provide the Benchmark; or
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(2)
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in the case of clause (3) of the definition of “benchmark transition event,” the date of the public statement or publication of information referenced therein.
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For the avoidance of doubt, if the event giving rise to the benchmark replacement date occurs on the same day as, but earlier than, the
reference time in respect of any determination, then the benchmark replacement date will be deemed to have occurred prior to the reference time for such determination.
For the avoidance of doubt, for purposes of the definitions of benchmark replacement date and benchmark transition event, references to
benchmark also include any reference rate underlying such benchmark.
“Benchmark transition event” means the occurrence of one or more of the following events with
respect to the then-current benchmark (including any daily published component used in the calculation thereof):
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(1)
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a public statement or publication of information by or on behalf of the administrator of the benchmark announcing that such administrator has ceased or will cease to provide the benchmark, permanently or indefinitely, provided that, at
the time of such statement or publication, there is no successor administrator that will continue to provide the benchmark;
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