As filed with the Securities and Exchange Commission on
May 4, 2011
Registration
No. 333-
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
Form F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANK OF MONTREAL
(Exact name of
Registrant as specified in its charter)
CANADA
(State or other
jurisdiction of incorporation or organization)
13-4941092
(I.R.S. Employer
Identification No.)
100 King Street West
1 First Canadian Place
Toronto, Ontario
Canada M5X 1A1
(416) 867-6785
(Address and
telephone number of Registrants principal executive
offices)
Colleen Hennessy
Bank of Montreal
111 West Monroe Street, P.O. Box 755
Chicago, Illinois 60690
(312) 461-7745
(Name, address and
telephone number of agent for service)
Please send copies of all
communications to:
|
|
|
Robert E. Buckholz, Jr., Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000
|
|
Jason R. Lehner, Esq.
Shearman & Sterling LLP
Commerce Court West
Suite 4405, P.O. Box 247
Toronto, Canada M5L 1E8
(416) 360-8484
|
Approximate date of commencement of proposed sale to the
public:
At such time or times on or after the
effective date of this Registration Statement as the Registrant
shall determine.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box.
o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, please check the
following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this Form is a registration statement pursuant to General
Instruction I.C. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box.
o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.C. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box.
o
CALCULATION
OF REGISTRATION FEE
|
|
|
|
|
|
|
|
|
|
|
|
Amount to be Registered/Proposed Maximum Offering
|
|
|
Amount of
|
Title of Each Class of
|
|
|
Price per Unit/Proposed Maximum
|
|
|
Registration
|
Securities to be Registered
|
|
|
Offering
Price
(1)(2)(3)(4)
|
|
|
Fee
(1)(2)
|
Common Shares, without par value
|
|
|
|
|
|
|
|
|
Class A Preferred Shares, without par value
|
|
|
|
|
|
|
|
|
Class B Preferred Shares, without par value
|
|
|
|
|
|
|
|
|
Senior Debt Securities
|
|
|
|
|
|
|
|
|
Subordinated Debt Securities
|
|
|
|
|
|
|
|
|
Total
|
|
|
US$15,000,000,000
|
|
|
US$
|
1,311,930
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Pursuant to Rule 415(a)(6) under the Securities Act, the
US$15,000,000,000 of securities covered by this Registration
Statement includes US$3,700,000,000 aggregate principal amount
or offering price of the Registrants Senior and
Subordinated Debt Securities (the Unsold Securities)
that were previously registered by the Registrant on the
Registration Statement on
Form F-3
under the Securities Act of 1933, as amended (the
Securities Act) (File No.
333-148054)
filed on December 13, 2007, as amended by Pre-Effective
Amendment No. 1 thereto filed on January 16, 2008 and
Pre-Effective Amendment No. 2 thereto filed on May 16,
2008. Pursuant to Rule 415(a)(6) under the Securities Act,
US$113,590 of filing fees previously paid in connection with the
Unsold Securities will continue to be applied to the Unsold
Securities that are being carried forward to this Registration
Statement. In accordance with SEC rules, the Registrant may
continue to offer and sell the Unsold Securities during the
grace period afforded by Rule 415(a)(5). If the Registrant
sells any Unsold Securities during the grace period, the
Registrant will identify in a pre-effective amendment to this
Registration Statement the new amount of Unsold Securities to be
carried forward to this Registration Statement in reliance upon
Rule 415(a)(6) and any filing fee paid in connection with
such Unsold Securities and the amount of any new securities to
be registered.
|
|
(2)
|
The proposed maximum offering price per security will be
determined from time to time in connection with the issuance of
the securities registered hereunder. The maximum aggregate
offering price will be such amount in U.S. dollars or the
equivalent thereof in foreign currencies as shall result in a
maximum offering price for all securities of US$15,000,000,000.
Or, if any debt securities are issued at an original issue
discount, such greater amount as shall result in aggregate net
proceeds of all securities not in excess of US$15,000,000,000 to
the registrant or, if any securities are issued with an offering
price payable in a foreign currency, such amount as shall result
in an aggregate initial offering price of all securities
equivalent to US$15,000,000,000 at the time of initial offering.
This Registration Statement also covers an undeterminable amount
of the registered securities that may be reoffered and resold on
an ongoing basis after their initial sale in market-making
transactions by affiliates of the registrant.
|
|
(3)
|
Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457(o) under the Securities Act
of 1933.
|
|
(4)
|
Separate consideration may or may not be received for registered
securities that are issuable on exercise, conversion or exchange
of other securities.
|
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a) of the Act, may
determine.
The
information in this preliminary prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any jurisdiction where the offer or
sale is not permitted.
Subject to Completion, Dated
May 4, 2011
Common Shares
Class A Preferred Shares
Class B Preferred Shares
Senior Debt Securities
Subordinated Debt Securities
up to an aggregate initial offering price of
US$15,000,000,000
or the equivalent thereof in other currencies.
We may offer from time to time common shares, class A
preferred shares, class B preferred shares, senior debt
securities or subordinated debt securities. We may offer the
securities separately or together, in separate series or classes
and in amounts, at prices and on terms described in one or more
supplements to this prospectus. In addition, this prospectus may
be used to offer securities for the account of persons other
than us.
This prospectus provides information about us and describes some
of the general terms that may apply to these securities. The
specific terms of any securities to be offered, and any other
information relating to a specific offering, will be set forth
in one or more supplements to this prospectus, which may be
filed separately or included in a post-effective amendment to
the Registration Statement, or may be set forth in one or more
documents incorporated by reference in this prospectus.
We may offer and sell these securities to or through one or more
underwriters, dealers or agents, or directly to purchasers, on a
continuous or delayed basis. The supplements to this prospectus
will provide the specific terms of the plan of distribution.
This prospectus may not be used to offer and sell securities
unless accompanied by a prospectus supplement.
Our common shares are listed on the New York Stock Exchange and
the Toronto Stock Exchange under the trading symbol
BMO
. On May 3, 2011, the last reported
sales price of our common shares on the New York Stock Exchange
was US$64.53 per share and the last reported sales price of our
common shares on the Toronto Stock Exchange was C$61.41 per
share.
You should read this prospectus and any applicable prospectus
supplement carefully before you invest in any of our securities.
Investing in these securities involves certain risks. To read
about certain factors you should consider before buying any of
the Securities, see the
Risk Factors
section
on page 7 of this prospectus and in our most recent annual
report on
Form 40-F,
which is incorporated by reference herein, as well as any other
reports on
Form 6-K
that are specifically incorporated by reference herein and, if
any, in an applicable prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
Prospective investors should be aware that the acquisition of
the securities described herein may have tax consequences both
in the United States and in Canada. Such consequences for
investors who are resident in, or citizens of, the United States
may not be described fully herein or in any applicable
prospectus supplement.
The enforcement by investors of civil liabilities under the
United States federal securities laws may be affected adversely
by the fact that Bank of Montreal is a Canadian bank, that many
of its officers and directors are residents of Canada, that some
or all of the underwriters or experts named in the Registration
Statement may be residents of Canada, and that all or a
substantial portion of the assets of Bank of Montreal and said
persons may be located outside the United States.
The senior debt securities and subordinated debt securities will
be our unsecured obligations and will not be savings accounts or
deposits that are insured by the Federal Deposit Insurance
Corporation, the Bank Insurance Fund or any other governmental
agency or under the Canada Deposit Insurance Corporation Act or
any other deposit insurance regime.
We may use this prospectus in the initial sale of any
securities. In addition, we or any of our affiliates, including
BMO Capital Markets Corp., may use this prospectus in a
market-making or other transaction in any security after its
initial sale.
Unless we or our agent informs the purchaser
otherwise in the confirmation of sale, this prospectus is being
used in a market-making transaction.
This prospectus is
dated ,
2011
ABOUT
THIS PROSPECTUS
General
This document is called a prospectus and is part of a
registration statement that we filed with the U.S. Securities
and Exchange Commission (the
SEC
) using a
shelf
registration or continuous offering
process. Under this shelf registration, we may from time to time
sell any combination of the common shares, class A
preferred shares, class B preferred shares (together with
the class A preferred shares, the
preferred
shares
), senior debt securities or subordinated debt
securities described in this prospectus in one or more
offerings, and which we collectively refer to herein as the
securities
. The registration statement
containing this prospectus, including exhibits to the
registration statement, provides additional information about us
and the securities offered under this prospectus. The
registration statement can be read at the SEC web site or at the
SEC office mentioned under the heading
Where You Can
Find More Information
.
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities under this
shelf registration statement we will provide one or more
supplements to this prospectus containing specific information
about the terms of the securities being offered. Any such
supplements, which we refer to in this prospectus as the
applicable supplements
, may include a
discussion of any additional risk factors or other special
considerations that apply to those securities and may also add
to, update or change the information in this prospectus. The
applicable supplements relating to each series of debt
securities will be attached to the front of this prospectus. If
there is any inconsistency between the information in this
prospectus and any applicable supplement, you should rely on the
information in the most recent applicable supplement. We urge
you to read carefully both this prospectus and any applicable
supplement accompanying this prospectus, together with the
information incorporated herein and in any applicable supplement
by reference under the heading
Where You Can Find More
Information
, before deciding whether to invest in any
of the securities being offered.
We are responsible for the information provided in this
prospectus and the applicable supplements, including the
information incorporated by reference. We have not authorized
anyone to give you any other information or to make any
representation different from or in addition to that contained
or incorporated by reference in this prospectus and any
applicable supplement and take no responsibility for any other
information that others may give you. If you are in a
jurisdiction where offers to sell, or solicitations of offers to
purchase, the securities offered by this prospectus are
unlawful, or if you are a person to whom it is unlawful to
direct these types of activities, then the offer presented in
this prospectus does not extend to you. The information
contained in this prospectus speaks only as of the date of this
prospectus unless the information specifically indicates that
another date applies. Therefore, you should not assume that the
information contained in this prospectus or applicable
supplement is accurate on any date subsequent to the date set
forth on the front of the document or that any information we
have incorporated by reference is correct on any date subsequent
to the date of the document incorporated by reference, even
though this prospectus and any applicable supplement is
delivered or securities are sold on a later date.
We may sell securities to underwriters who will sell the
securities to the public on terms fixed at the time of sale. In
addition, the securities may be sold by us directly or through
dealers or agents designated from time to time, which may be our
affiliates. If we, directly or through dealers or agents,
solicit offers to purchase the securities, we reserve the sole
right to accept and, together with the applicable dealers or
agents, to reject, in whole or in part, any of those offers. An
applicable supplement will contain the names of the
underwriters, dealers or agents, if any, together with the terms
of offering, the compensation of those persons and the net
proceeds to us. Any underwriters, dealers or agents
participating in the offering may be deemed to be
underwriters
within the meaning of the
Securities Act of 1933, as amended (the
Securities
Act
). In addition, one or more of our subsidiaries,
including BMO Capital Markets Corp., may buy and sell any of the
securities after the securities are issued as part of their
business as a broker-dealer. Those subsidiaries may use this
prospectus and the applicable supplements in those transactions.
Any sale by a subsidiary will be made at the prevailing market
price at the time of sale. Unless otherwise mentioned or unless
the context requires otherwise, all references in this
prospectus to the
Bank
,
we
,
us
,
our
or similar references mean Bank of
Montreal and its consolidated subsidiaries.
3
PRESENTATION
OF FINANCIAL INFORMATION
We prepare our consolidated financial statements in accordance
with Canadian GAAP, which differs in certain respects from U.S.
GAAP. For a discussion of significant differences between
Canadian and U.S. GAAP and a reconciliation of the consolidated
balance sheet, statement of income, statement of comprehensive
income and statement of accumulated other comprehensive loss,
you should read the section titled
Note 30:
Reconciliation of Canadian and United States Generally Accepted
Accounting Principles
in our Annual Report on
Form 40-F
for the fiscal year ended October 31, 2010.
For fiscal years beginning on or after January 1, 2011,
Canadian public companies will be required to prepare their
financial statements in accordance with International Financial
Reporting Standards (
IFRS
), as issued by the
International Accounting Standards Board. Effective
November 1, 2011, we will adopt IFRS as the basis for
preparing our consolidated financial statements. We will report
our financial results for the quarter ended January 31,
2012, prepared on an IFRS basis. We will also provide
comparative data on an IFRS basis, including an opening balance
sheet as at November 1, 2010 (transition date). For further
information on our transition to IFRS, see our Annual Report on
Form 40-F
for the fiscal year ended October 31, 2010.
Additionally, we publish our consolidated financial statements
in Canadian dollars. In this prospectus and any applicable
supplement, currency amounts are stated in Canadian dollars
(
$
), unless specified otherwise. As indicated
in the table below, the Canadian dollar has fluctuated in value
compared to the U.S. dollar over time.
The tables below set forth the high and low daily noon exchange
rates, the average yearly rate and the rate at period end
between Canadian dollars and U.S. dollars (in U.S. dollars per
Canadian dollar) for the five-year period ended October 31,
2010 and the high and low daily noon exchange rates for the
three months ended January 31, 2011, the three months ended
April 30, 2011 and for the period May 1 through May 3,
2011. On May 3, 2011, the noon exchange rate was US$1.0537 =
$1.00. Our reference to the
noon exchange
rate
is the noon exchange rate as reported by the Bank
of Canada.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Year Ended October 31
|
|
High
|
|
Low
|
|
Rate
(1)
|
|
At Period End
|
|
2006
|
|
|
0.9099
|
|
|
|
0.8361
|
|
|
|
0.8826
|
|
|
|
0.8907
|
|
2007
|
|
|
1.0527
|
|
|
|
0.8437
|
|
|
|
0.9148
|
|
|
|
1.0527
|
|
2008
|
|
|
1.0905
|
|
|
|
0.7726
|
|
|
|
0.9689
|
|
|
|
0.8220
|
|
2009
|
|
|
0.9716
|
|
|
|
0.7692
|
|
|
|
0.8567
|
|
|
|
0.9282
|
|
2010
|
|
|
1.0039
|
|
|
|
0.9278
|
|
|
|
0.9602
|
|
|
|
0.9815
|
|
|
|
|
|
|
|
|
|
|
Additional Periods
|
|
High
|
|
Low
|
|
Three Months Ended January 31, 2011
|
|
|
1.0140
|
|
|
|
0.9743
|
|
Three Months Ended April 30, 2011
|
|
|
1.0542
|
|
|
|
1.0045
|
|
May 1, 2011 through May 3, 2011
|
|
|
1.0537
|
|
|
|
1.0535
|
|
|
|
(1)
|
The average of the noon exchange rates on the last business day
of each full month during the relevant period.
|
CAUTION
REGARDING FORWARD-LOOKING STATEMENTS
Our public communications often include written or oral
forward-looking statements. Statements of this type are included
in this document, and may be included in other filings with
Canadian securities regulators or the SEC, or in other
communications. All such statements are made pursuant to the
safe harbor
provisions of, and are intended
to be forward-looking statements under, the United States
Private Securities Litigation Reform Act of 1995 and any
applicable Canadian securities legislation. Forward-looking
statements may involve, but are not limited to, comments with
respect to our objectives and priorities for 2011 and beyond,
our strategies or future actions, our targets, expectations for
our financial condition or share price, and the results of or
outlook for our operations or for the Canadian and U.S.
economies.
By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties.
There is significant risk that predictions, forecasts,
conclusions or projections will not prove to be accurate, that
our assumptions may not be correct and that actual results may
differ materially from such predictions, forecasts, conclusions
or projections. We caution readers of this document not to place
undue reliance on our forward-looking statements as a number of
factors could cause actual future results, conditions, actions
or events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking
statements.
4
The future outcomes that relate to forward-looking statements
may be influenced by many factors, including but not limited to:
general economic and market conditions in the countries in which
we operate; interest rate and currency value fluctuations;
changes in monetary policy; the degree of competition in the
geographic and business areas in which we operate; changes in
laws; judicial or regulatory proceedings; the accuracy and
completeness of the information we obtain with respect to our
customers and counterparties; our ability to execute our
strategic plans and to complete and integrate acquisitions;
critical accounting estimates; operational and infrastructure
risks; general political conditions; global capital market
activities; the possible effects on our business of war or
terrorist activities; disease or illness that impacts on local,
national or international economies; disruptions to public
infrastructure, such as transportation, communications, power or
water supply; and technological changes.
With respect to our proposed acquisition of Marshall &
Ilsley Corporation (
M&I
), such factors
include, but are not limited to: the possibility that the
proposed transaction does not close when expected or at all
because required regulatory, shareholder or other approvals and
other conditions to closing are not received or satisfied on a
timely basis or at all; the terms of the proposed transaction
may need to be modified to satisfy such approvals or conditions;
the anticipated benefits from the proposed transaction such as
it being accretive to earnings, expanding our North American
presence and synergies are not realized in the time frame
anticipated or at all as a result of changes in general economic
and market conditions, interest and exchange rates, monetary
policy, laws and regulations (including changes to capital
requirements) and their enforcement, and the degree of
competition in the geographic and business areas in which
M&I operates; the ability to promptly and effectively
integrate the businesses of M&I and the Bank; reputational
risks and the reaction of M&Is customers to the
transaction; diversion of management time on merger-related
issues; and increased exposure to exchange rate fluctuations. A
significant amount of M&Is business involves making
loans or otherwise committing resources to specific companies,
industries or geographic areas. Unforeseen events affecting such
borrowers, industries or geographic areas could have a material
adverse effect on the performance of our integrated U.S.
operations.
We caution that the foregoing list is not exhaustive of all
possible factors. Other factors could adversely affect our
results. For more information, please see the discussion in our
Annual Report on
Form 40-F,
which is incorporated by reference herein and which outlines in
detail certain key factors that may affect our future results.
When relying on forward-looking statements to make decisions
with respect to Bank of Montreal, investors and others should
carefully consider these factors, as well as other uncertainties
and potential events, and the inherent uncertainty of
forward-looking statements. We do not undertake to update any
forward-looking statement, whether written or oral, that may be
made, from time to time, by the organization or on its behalf,
except as required by law.
The forward-looking information contained or incorporated by
reference into this prospectus is presented for the purpose of
assisting investors in understanding our operations, prospects,
risks and other extreme factors that impact us specifically as
of and for the periods ended on the dates presented, as well as
certain strategic priorities and objectives, and may not be
appropriate for other purposes.
WHERE YOU
CAN FIND MORE INFORMATION
In addition to our continuous disclosure obligations under the
securities laws of the Provinces and Territories of Canada, we
are subject to the information reporting requirements of the
United States Securities Exchange Act of 1934, as amended (the
Exchange Act
), and in accordance therewith
file or furnish reports and other information with the SEC.
Under the multijurisdictional disclosure system adopted by the
United States, such reports and other information may be
prepared in accordance with the disclosure requirements of
Canada, which requirements are different from those of the
United States. These reports and other information, when filed
or furnished by us in accordance with such requirements, can be
inspected and copied by you at the SECs Public Reference
Room located at 100 F Street, N.E., Washington, D.C. 20549. You
can get further information about the SECs Public
Reference Room by calling
1-800-SEC-0330.
Our filings with the SEC are also available to the public
through the SECs website at
www.sec.gov
. Our common
shares are listed on the New York Stock Exchange, and reports
and other information concerning us can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005. Information about us can be located at
our website at
www.bmo.com
. All Internet references in
this prospectus are inactive textual references and we do not
incorporate website contents into this prospectus.
We have filed with the SEC a registration statement on
Form F-3
relating to the securities covered by this prospectus. This
prospectus is a part of the registration statement and does not
contain all the information in the registration statement.
Whenever a reference is made in this prospectus to a contract or
other document of the Bank, the reference is only a summary and
you should refer to the exhibits that are a part of the
registration statement for a copy of the contract or other
5
document. You may review a copy of the registration statement at
the SECs public reference room in Washington, D.C., as
well as through the SECs website.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to
incorporate by reference
into this prospectus the information in documents we file with
it. This means that we can disclose important information to you
by referring you to those documents. The information
incorporated by reference is considered to be a part of this
prospectus and should be read with the same care. When we update
the information contained in documents that have been
incorporated by reference by making future filings with the SEC
the information incorporated by reference in this prospectus is
considered to be automatically updated and superseded. The
modifying or superseding statement need not state that it has
modified or superseded a prior statement or include any other
information set forth in the document that it modifies or
supersedes. In other words, in the case of a conflict or
inconsistency between information contained in this prospectus
and information incorporated by reference into this prospectus,
you should rely on the information contained in the document
that was filed later. The making of a modifying or superseding
statement shall not be deemed an admission for any purposes that
the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so
modified or superseded shall not be deemed, except as so
modified or superseded to constitute a part of this prospectus.
We incorporate by reference the documents listed below and all
documents which we subsequently file with the SEC (other than,
in each case, documents or information deemed to have been
furnished and not filed in accordance with the SEC rules)
pursuant to Section 13(a), 13(c), 14, or 15(d) Exchange Act
until the termination of the offering of the securities under
this prospectus:
|
|
|
|
|
Annual Report on
Form 40-F
for the fiscal year ended October 31, 2010;
|
|
|
|
Report on
Form 6-K
filed on December 13, 2010;
|
|
|
|
Reports on
Form 6-K
filed on December 17, 2010 (two filings);
|
|
|
|
Report on
Form 6-K
filed on February 25, 2011;
|
|
|
|
Report on
Form 6-K
filed on March 1, 2011
(Acc-no:
0001193125-11-052258);
|
|
|
|
Reports on
Form 6-K
filed on March 2, 2011 (two filings) (Acc-nos:
0001193125-11-053234
and
0001193125-11-053437);
|
|
|
|
Report on
Form 6-K/A
filed on March 15, 2011;
|
|
|
|
Report on
Form 6-K
filed on March 22, 2011;
|
|
|
|
Report on
Form 6-K
filed on March 28, 2011;
|
|
|
|
Report on
Form 6-K
filed on April 26, 2011; and
|
|
|
|
Registration Statement on
Form 8-A
filed on September 26, 1994
|
We may also incorporate any other
Form 6-K
that we submit to the SEC on or after the date of this
prospectus and prior to the termination of this offering if the
Form 6-K
filing specifically states that it is incorporated by reference
into the registration statement of which this prospectus forms a
part.
You may request a copy of these filings, other than an exhibit
to a filing unless that exhibit is specifically incorporated by
reference into that filing, at no cost, by writing to or
telephoning us at the following address:
Bank of Montreal
Corporate Secretarys Department
100 King Street West
1 First Canadian Place
Toronto, Ontario
Canada M5X 1A1
(416) 867-6785
6
RISK
FACTORS
Investment in these securities is subject to various risks,
including those risks inherent in conducting the business of a
diversified financial institution. Before deciding whether to
invest in any securities, you should consider carefully the
risks described in the documents incorporated by reference in
this prospectus (including subsequently filed documents
incorporated by reference) and, if applicable, those described
in the applicable supplements relating to a specific offering of
securities. You should consider the categories of risks
identified and discussed in the managements discussion and
analysis of financial condition and results of operations
included in our Annual Report on
Form 40-F
for the fiscal year ended October 31, 2010, including those
summarized under
Caution Regarding Forward-Looking
Statements
above.
BANK OF
MONTREAL
Bank of Montreal (
Bank of Montreal
or the
Bank
) commenced business in Montreal in 1817
and was incorporated in 1821 by an Act of Lower Canada as the
first Canadian chartered bank. Since 1871, the Bank has been a
chartered bank under the Bank Act, and is named in
Schedule I of the Bank Act (Canada) (the
Bank
Act
). The Bank Act is the charter of the Bank and
governs its operations. The Bank is a registered holding company
under the Bank Holding Company Act of 1956 and is certified as a
financial holding company under the Gramm-Leach-Bliley Act.
The Banks head office is located at 129 rue Saint Jacques,
Montreal, Quebec, H2Y 1L6, and its executive offices are located
at 100 King Street West, 1 First Canadian Place, Toronto,
Ontario, M5X 1A1. The Banks telephone number is
(416) 867-6785.
Bank of Montreal provides a broad range of credit and non-credit
products and services directly and through Canadian and
non-Canadian subsidiaries, offices and branches. As at
January 31, 2011, the Bank had approximately 37,947
full-time equivalent employees, maintained 1,234 bank branches
in Canada and operated internationally in major financial
markets and trading areas through offices in Canada and eight
other countries, including the United States. Harris Financial
Corp.
(Harris
), based in Chicago and
wholly-owned by Bank of Montreal, operates, through its indirect
subsidiary Harris N.A., which provides banking, financing,
investing and cash management services in select markets in the
U.S. Midwest. Bank of Montreal provides a full range of
investment dealer services through the BMO Nesbitt Burns group
of companies, which include BMO Nesbitt Burns Inc., a major
fully-integrated Canadian investment dealer in which Bank of
Montreal owns 100% of the voting shares, and BMO Capital Markets
Corp., Bank of Montreals wholly-owned registered
securities dealer in the United States.
Bank of Montreal is comprised of three operating groups:
|
|
|
|
|
Personal and Commercial (P&C) Banking which is
comprised of P&C Canada and P&C U.S. P&C Canada
operates across Canada, offering banking, financing, and
investing solutions as well as card and payment services.
Operating predominately in the greater Chicago area under the
Harris brand, P&C U.S. provides personal and business
clients with banking, lending, investing and financial planning
services;
|
|
|
|
Private Client Group, which offers wealth management products
and solutions across North America, including full-service
investing, private banking, online brokerage and investment
management services through BMO Bank of Montreal, BMO Nesbitt
Burns
®
,
BMO
InvestorLine
®
,
BMO Guardian, Jones Heward Investment Counsel, HIM
Monegy
®
,
BMO Harris Private Banking, Harris Private Bank, Harris
Investment Management, and Pyrford International, based in the
United Kingdom, as well as insurance products and solutions
through BMO Life Insurance and BMO Life Assurance in Canada; and
|
|
|
|
BMO Capital Markets, the investment and corporate banking group,
which provides a broad range of capital markets solutions to
corporate, institutional, and government clients in Canada, the
United States, Europe, Asia and Australia.
|
The Banks Corporate Services and Technology and Operations
groups provide risk management, information technology and other
corporate services to the three operating groups.
Certain
Matters Relating to the Banks Board of Directors
Under the Bank Act, the Banks board of directors must have
at least seven members and the Banks board of directors
may establish by by-law a minimum and maximum number of
directors. The Bank Act also requires that no more than
two-thirds of the directors may be affiliated with the Bank, as
specified by the Bank Act, and no more than 15% of the directors
may be employees of the Bank or a subsidiary of the Bank, except
that up to four of these employees may be directors if they
constitute not more than 50% of the directors. Subject to the
foregoing residency requirements, a
7
majority of directors shall constitute a quorum at any meeting
of the board of directors. Under the Bank Act, a majority of the
directors of the Bank must be resident Canadians and, except in
limited circumstances, directors may not transact business at a
meeting of directors or a committee of directors at which a
majority of the directors present are not resident Canadians.
The Bank Act also requires the directors of a bank to appoint
from their members a chief executive officer who must ordinarily
be resident in Canada. Under the Banks by-laws, the
minimum number of directors is seven and the maximum number of
directors is 40. The Banks by-laws provide that the number
of directors to be elected at any annual meeting of shareholders
of the Bank will be fixed by the board of directors before the
meeting. Directors are elected to terms of one, two or three
years. The Bank currently has 16 directors.
Under the Bank Act, any director or the entire board of
directors may be removed, with or without cause, with the
approval of a majority of the votes cast at a special meeting of
shareholders. A vacancy created by such removal may be filled at
the meeting or by a quorum of the directors. Bank policies
stipulate that a director shall not stand for re-election at the
first annual meeting after reaching the age of 70, and, in
addition, directors are subject to maximum term limits of
15 years for new directors (elected after January 1,
2010), except a director serving as chairman, who is subject to
a maximum term limit of 20 years.
Conflicts
of Interest
The Bank Act contains detailed provisions with regard to a
directors power to vote on a material proposal,
arrangement or contract in which the director is interested.
These provisions include procedures for: disclosure of the
conflict of interest and the timing for such disclosure; the
presence of directors at board meetings where the proposal,
arrangement or contract giving rise to the conflict of interest
is being considered, and voting with respect to the proposal,
arrangement or contract giving rise to the conflict of interest;
and other provisions for dealing with such conflicts of
interest. The Bank Act also contains detailed provisions
regarding transactions with persons who are related parties of
the Bank, including directors of the Bank. See
Borrowing Powers.
Compensation
The by-laws of the Bank have provisions with regard to
remuneration of directors. The board of directors may, from time
to time, by resolution determine their remuneration that may be
paid, but such remuneration may not exceed in each year an
aggregate cap set out in the by-laws, and individually may be in
such amounts as the board may determine by resolution. The
directors may also be paid their reasonable
out-of-pocket
expenses incurred in attending meetings of the board,
shareholders or committees of the board or otherwise in the
performance of their duties.
Directors are required to hold at least six times their annual
retainer in common shares and/or deferred share units
(Deferred Share Units)
under the Banks
Deferred Share Unit Plan for Non-Employee Directors and until
this level is obtained, directors must take 100% of their annual
retainer in the form of either common shares (which are
purchased on the open market) or Deferred Share Units. Once this
threshold has been reached, directors must take 50% of their
annual retainer in common shares (which are purchased on the
open market) or in Deferred Share Units. A Deferred Share Unit
is an amount owed by the Bank to directors having the same value
as one common share, but is not paid out (in cash or in common
shares purchased on the open market) until such time as the
director leaves the board, thereby providing an ongoing equity
stake in the Bank throughout the directors period of board
service. Directors have the option to receive up to 100% of
their annual retainer and meeting fees in this manner. Only
non-employee directors can receive Deferred Share Units.
Borrowing
Powers
The directors of the Bank may, without authorization of the
shareholders, authorize the Bank to borrow money. The Bank Act,
however, prohibits the Bank from entering into transactions with
persons who are deemed to be related parties of the Bank,
subject to certain exceptions. Related party transactions may
include loans made on the credit of the Bank. In addition, the
by-laws of the Bank may be amended, as described in
Description of Common Shares and Preferred
Shares Amendments to the Rights, Privileges,
Restrictions and Conditions of the Banks Share
Capital
, to vary the borrowing authority of directors
in this regard.
8
CONSOLIDATED
CAPITALIZATION OF THE BANK
The following table sets forth the consolidated capitalization
of the Bank at January 31, 2011.
|
|
|
|
|
|
|
As at
|
|
|
|
January
|
|
|
|
31, 2011
|
|
|
|
(In millions of
|
|
|
|
Canadian
|
|
|
|
dollars)
|
|
|
Non-Controlling Interest in
Subsidiaries
(1)
|
|
|
|
|
BMO BOaTS
Series D
(2)
|
|
$
|
598
|
|
BMO BOaTS
Series E
(2)
|
|
|
448
|
|
Non-Controlling Interest in Other Subsidiaries
|
|
|
273
|
|
|
|
|
|
|
Total Non-Controlling Interest in Subsidiaries
|
|
|
1,319
|
|
|
|
|
|
|
Subordinated
Debt
(3)
|
|
|
3,713
|
|
|
|
|
|
|
Capital
Trust Securities
(1)
|
|
|
|
|
BMO BOaTS Series C
|
|
|
400
|
|
|
|
|
|
|
Shareholders Equity
|
|
|
|
|
Preferred
Shares
(4)
|
|
|
2,571
|
|
Common Shares
|
|
|
7,001
|
|
Contributed Surplus
|
|
|
102
|
|
Retained Earnings
|
|
|
13,192
|
|
Accumulated Other Comprehensive Loss
|
|
|
(873
|
)
|
|
|
|
|
|
Total Shareholders Equity
|
|
|
21,993
|
|
|
|
|
|
|
Total Capitalization
|
|
$
|
27,425
|
|
|
|
|
|
|
|
|
(1)
|
For more information on the classification of Capital
Trust Securities, please refer to Note 18 of the
audited consolidated financial statements of the Bank for the
year ended October 31, 2010 incorporated by reference in
this prospectus.
|
|
(2)
|
Amounts shown for BMO BOaTS Series D and BMO
BOaTS Series E are net of external issuance
costs of $5 million and $3 million, respectively, and
include accrued distribution liability of $3 million and
$2 million, respectively.
|
|
(3)
|
On March 9, 2011, the Bank issued $1,500 million of
Series G medium term notes. If this offering had been
included in the table above, total subordinated debt outstanding
would have been $5,213 million.
|
|
(4)
|
Preferred Shares classified under Shareholders Equity
consist of Class B Preferred Shares Series 5, 10,
13, 14, 15, 16, 18, 21, and 23. For more information on the
classification of Preferred Shares, please refer to Note 20
of the audited consolidated financial statements of the Bank for
the year ended October 31, 2010 incorporated by reference
in this prospectus. On March 11, 2011, the Bank completed
an offering of 11.6 million Class B Preferred Shares
Series 25 for gross proceeds of $290 million. If this
offering had been included in the table above, total preferred
shares would have been $2,861 million.
|
9
CONSOLIDATED
EARNINGS RATIOS
The following table provides the Banks consolidated ratios
of earnings to fixed charges and ratios of earnings to combined
fixed charges and preferred share dividends, calculated in
accordance with Canadian GAAP and U.S. GAAP, for the five year
period ended October 31, 2010 and the three month period
ended January 31, 2011:
Canadian
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
|
|
|
|
Years Ended October 31,
|
|
|
Ended
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
January 31, 2011
|
|
|
Consolidated Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding interest on deposits
|
|
|
4.56
|
|
|
|
2.90
|
|
|
|
1.79
|
|
|
|
1.73
|
|
|
|
2.35
|
|
|
|
4.32
|
|
Including interest on deposits
|
|
|
2.06
|
|
|
|
1.40
|
|
|
|
1.20
|
|
|
|
1.21
|
|
|
|
1.42
|
|
|
|
2.05
|
|
Consolidated Ratios of Earnings to Combined Fixed Charges and
Preferred Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding interest on deposits
|
|
|
3.90
|
|
|
|
2.58
|
|
|
|
1.74
|
|
|
|
1.71
|
|
|
|
2.31
|
|
|
|
3.78
|
|
Including interest on deposits
|
|
|
1.96
|
|
|
|
1.37
|
|
|
|
1.19
|
|
|
|
1.21
|
|
|
|
1.41
|
|
|
|
1.96
|
|
U.S.
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
|
|
|
|
Years Ended October 31,
|
|
|
Ended
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
January 31, 2011
|
|
|
Consolidated Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding interest on deposits
|
|
|
5.13
|
|
|
|
3.29
|
|
|
|
1.79
|
|
|
|
1.77
|
|
|
|
2.40
|
|
|
|
3.67
|
|
Including interest on deposits
|
|
|
2.17
|
|
|
|
1.46
|
|
|
|
1.19
|
|
|
|
1.22
|
|
|
|
1.42
|
|
|
|
1.82
|
|
Consolidated Ratios of Earnings to Combined Fixed Charges and
Preferred Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding interest on deposits
|
|
|
4.35
|
|
|
|
2.90
|
|
|
|
1.74
|
|
|
|
1.74
|
|
|
|
2.36
|
|
|
|
3.20
|
|
Including interest on deposits
|
|
|
2.07
|
|
|
|
1.42
|
|
|
|
1.18
|
|
|
|
1.21
|
|
|
|
1.41
|
|
|
|
1.75
|
|
For purposes of computing these ratios:
|
|
|
|
|
earnings represent income from continuing operations plus income
taxes and fixed charges (excluding capitalized interest);
|
|
|
|
fixed charges, excluding interest on deposits, represent
interest (including capitalized interest), estimated interest
within rent, and amortization of debt issuance costs; and
|
|
|
|
fixed charges, including interest on deposits, represent all
interest (including capitalized interest), estimated interest
within rent, and amortization of debt issuance costs.
|
10
COMPARATIVE
PER SHARE MARKET PRICE
The Banks common shares are listed on the Toronto Stock
Exchange (the
TSX
) and the New York Stock
Exchange (the
NYSE
) under the trading symbol
BMO
.
The table below sets forth, for the periods indicated, the per
share high and low closing sales prices for the Banks
common shares as reported on the NYSE and the TSX. TSX closing
prices of the Banks common shares are presented in
Canadian dollars, and the NYSE closing prices of the Banks
common shares are presented in U.S. dollars.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BMO shares TSX
|
|
|
BMO shares NYSE
|
|
|
|
(in C$)
|
|
|
(in US$)
|
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
Annual information for the past fiscal years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
70.24
|
|
|
|
56.90
|
|
|
|
62.00
|
|
|
|
48.08
|
|
2007
|
|
|
72.75
|
|
|
|
60.21
|
|
|
|
67.32
|
|
|
|
56.80
|
|
2008
|
|
|
63.44
|
|
|
|
37.25
|
|
|
|
66.97
|
|
|
|
32.06
|
|
2009
|
|
|
54.55
|
|
|
|
24.51
|
|
|
|
51.25
|
|
|
|
19.51
|
|
2010
|
|
|
65.41
|
|
|
|
49.95
|
|
|
|
65.30
|
|
|
|
46.52
|
|
Quarterly information for the past two fiscal years and
subsequent quarters:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009, quarter ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31
|
|
|
44.92
|
|
|
|
29.51
|
|
|
|
39.11
|
|
|
|
23.92
|
|
April 30
|
|
|
40.41
|
|
|
|
24.51
|
|
|
|
33.35
|
|
|
|
19.51
|
|
July 31
|
|
|
54.02
|
|
|
|
39.20
|
|
|
|
50.11
|
|
|
|
32.99
|
|
October 31
|
|
|
54.55
|
|
|
|
49.01
|
|
|
|
51.25
|
|
|
|
44.96
|
|
2010, quarter ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31
|
|
|
55.98
|
|
|
|
49.45
|
|
|
|
53.67
|
|
|
|
46.52
|
|
April 30
|
|
|
65.41
|
|
|
|
51.80
|
|
|
|
65.30
|
|
|
|
48.10
|
|
July 31
|
|
|
63.62
|
|
|
|
57.35
|
|
|
|
62.80
|
|
|
|
54.05
|
|
October 31
|
|
|
62.71
|
|
|
|
55.50
|
|
|
|
61.88
|
|
|
|
52.48
|
|
2011, quarter ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31
|
|
|
62.18
|
|
|
|
56.60
|
|
|
|
61.92
|
|
|
|
55.88
|
|
April 30
|
|
|
63.67
|
|
|
|
58.13
|
|
|
|
66.29
|
|
|
|
58.60
|
|
Monthly information for the most recent six months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2010
|
|
|
60.74
|
|
|
|
58.20
|
|
|
|
60.62
|
|
|
|
56.88
|
|
December 2010
|
|
|
62.18
|
|
|
|
56.60
|
|
|
|
61.92
|
|
|
|
55.58
|
|
January 2011
|
|
|
59.68
|
|
|
|
57.66
|
|
|
|
60.22
|
|
|
|
57.66
|
|
February 2011
|
|
|
61.96
|
|
|
|
58.13
|
|
|
|
63.83
|
|
|
|
58.60
|
|
March 2011
|
|
|
62.98
|
|
|
|
61.36
|
|
|
|
64.98
|
|
|
|
61.89
|
|
April 2011
|
|
|
63.67
|
|
|
|
61.79
|
|
|
|
66.29
|
|
|
|
64.26
|
|
Fluctuations in the exchange rate between the Canadian dollar
and the U.S. dollar will affect any comparisons of the
Banks common shares traded on the TSX and the Banks
common shares traded on the NYSE.
USE OF
PROCEEDS
Unless otherwise specified in an applicable supplement, the net
proceeds to the Bank from the sale of the securities will be
added to the general funds of the Bank and used for general
banking purposes. The application of proceeds will depend upon
the funding requirements of the Bank at the time.
11
DESCRIPTION
OF COMMON SHARES AND PREFERRED SHARES
Set forth below is a summary of the material terms of the
Banks share capital and certain provisions of the Bank Act
and the Banks amended and restated by-laws as they relate
to the Banks share capital. The following summary is not
complete and is qualified in its entirety by the Bank Act, the
Banks amended and restated by-laws and the actual terms
and conditions of such shares.
Capital
Stock
The authorized capital of the Bank consists of an unlimited
number of common shares, without nominal or par value, an
unlimited number of Class A Preferred Shares, without
nominal or par value, issuable in series, and an unlimited
number of Class B Preferred Shares, without nominal or par
value, issuable in series, in each case the aggregate
consideration for which is also unlimited.
As of October 31, 2010, there were issued and outstanding
the following shares of capital stock: 566,468,440 common
shares; 8,000,000 Class B Preferred
Shares Series 5; 12,000,000 Class B Preferred
Shares Series 10; 14,000,000 Class B Preferred
Shares Series 13; 10,000,000 Class B Preferred
Shares Series 14; 10,000,000 Class B Preferred
Shares Series 15; 12,000,000 Class B Preferred
Shares Series 16; 6,000,000 Class B Preferred
Shares Series 18; 11,000,000 Class B Preferred
Shares Series 21; and 16,000,000 Class B
Preferred Shares Series 23. On March 11, 2011,
BMO issued 11,600,000 Class B Preferred
Shares Series 25.
BMO Capital Trust, a subsidiary of the Bank, currently has three
series of Trust Capital Securities, or
BMO
BOaTS
, issued and outstanding, being the BMO
BOaTS Series C, BMO BOaTS
Series D and BMO BOaTS Series E. Each unit
of these series of BMO BOaTS may in certain circumstances be
exchanged for 40 Class B Preferred Shares (Series 9,
11 and 12 Class B Preferred Shares, respectively). Such
exchange will occur automatically upon the occurrence of certain
events relating to the solvency of the Bank and the adequacy of
its capital. In addition, each BMO BOaTS
Series C may be exchanged for 40 Class B Preferred
Shares Series 9 at the option of the holder after
June 30, 2012. The issuance of these Class B Preferred
Shares upon the occurrence of these events has been approved by
the board of directors.
BMO Capital Trust II, a subsidiary of the Bank, currently
has one series of BMO Tier 1 Notes issued and outstanding,
being the 10.221% BMO Tier 1 Notes
Series A (the
BMO Tier 1 Notes
).
Each unit of the BMO Tier 1 Notes may in certain
circumstances be exchanged for 40 Class B Preferred Shares,
Series 20. Such exchange will occur automatically upon the
occurrence of certain events relating to the solvency of the
Bank and the adequacy of its capital. In addition, in certain
circumstances holders of BMO Tier 1 Notes may receive
preferred shares of a new series of Class B Preferred
Shares (
Class B Deferral Shares
) rather
than the cash amount that is payable as interest thereon.
Common
Shares
Voting.
Holders of common shares are entitled
to one vote per share on all matters to be voted on by holders
of common shares. Unless otherwise required by the Bank Act, any
matter to be voted on by holders of common shares shall be
decided by a majority of the votes cast on the matter.
Size of Board of Directors.
The Bank Act
requires that the number of directors on the Banks board
of directors be at least seven. All directors of the Bank are
elected annually. The Bank Act also requires that at least a
majority of the directors must be, at the time of each
directors election or appointment, resident Canadians.
Liquidation Rights.
Upon the liquidation,
dissolution or winding up of the Bank, whether voluntary or
involuntary, the holders of common shares are entitled to
receive the remaining property of the Bank available after the
payment of all debts and other liabilities and subject to the
prior rights of holders of any outstanding preferred shares.
Preemptive, Subscription, Redemption and Conversion
Rights
. Holders of common shares, as such, have
no preemptive, subscription, redemption or conversion rights.
Dividends.
The holders of common shares are
entitled to receive dividends as and when declared by the board
of directors of the Bank, subject to the preference of the
holders of the preferred shares of the Bank. The Banks
dividends have historically been declared on a quarterly basis
in Canadian dollars. As a matter of practice, the Bank pays
dividends to U.S. holders of common shares, if and when a
dividend is declared, in U.S. dollars. The declaration and
payment of dividends and the amount of the dividends is subject
to the discretion of the board of directors, and will be
dependent upon the results of operations, financial condition,
cash requirements and future regulatory restrictions on the
payment of dividends by, the Bank and other factors deemed
relevant by the board of directors.
12
Preferred
Shares
This section describes the general terms and provisions of our
preferred shares and provides a description of the rights and
privileges of each of our outstanding series of preferred
shares. The applicable prospectus supplement will describe the
specific terms of the preferred shares offered through that
prospectus supplement, as well as any general terms described in
this section that will not apply to those preferred shares.
General.
The Bank has two classes of
authorized preferred shares, Class A Preferred Shares and
Class B Preferred Shares, each of which is without nominal
or par value and issuable in series. The Class B Preferred
Shares rank on parity with the Class A Preferred Shares.
There were no Class A Preferred Shares outstanding as of
October 31, 2010. Nine series of Class B Preferred
Shares were outstanding as of October 31, 2010, namely,
8,000,000 Class B Preferred Shares Series 5;
12,000,000 Class B Preferred Shares Series 10;
14,000,000 Class B Preferred Shares Series 13;
10,000,000 Class B Preferred Shares Series 14;
10,000,000 Class B Preferred Shares Series 15;
12,000,000 Class B Preferred Shares Series 16;
6,000,000 Class B Preferred Shares Series 18;
11,000,000 Class B Preferred Shares Series 21;
and 16,000,000 Class B Preferred
Shares Series 23. On March 11, 2011, the Bank
issued 11,600,000 Class B Preferred
Shares Series 25.
The board of directors is authorized, subject to the provisions
of the Bank Act, without shareholder approval, to divide the
unissued preferred shares into series and to fix the number of
shares in each series and the rights, privileges, restrictions
and conditions of such series, and to change the rights,
privileges, restrictions or conditions attached to the unissued
shares of any series, provided that no rights, privileges,
restrictions or conditions attached to a series confer on a
series a priority in respect of dividends or return of capital
over any series of preferred shares of the same class then
outstanding.
Priority.
The preferred shares shall be
entitled to preference over common shares and to any other
shares of ranking junior to the preferred shares with respect to
the payment of dividends and return of capital. Each series of
preferred shares of a class ranks on a parity with every other
series of preferred shares in the same class with respect to the
payment of dividends and return of capital.
Restriction.
Under the terms of the Bank Act,
the approval of the holders of the preferred shares is required
for the creation of any class of shares ranking prior to or on a
parity with the preferred shares.
Voting.
Except as required under the Bank Act
or in the rights, privileges, restrictions or conditions
attached to any series before the issue thereof, the holders of
preferred shares are not entitled to receive notice, to attend
or to vote at any meeting of the shareholders of the Bank.
Retirement of Preferred Shares.
Subject to the
prior approval of Superintendent of Financial Institutions of
(Canada) (the
OSFI
) and to the provisions
governing restrictions on dividends and retirement of shares,
the Bank may at any time purchase any outstanding series of
preferred shares for cancellation, provided that no such shares
may be redeemed or purchased for cancellation at prices
exceeding the redemption price stated in or calculated according
to a formula stated in the terms of issue thereto.
Rights
and privileges of each outstanding series:
|
|
|
|
|
Class B Series 5 shares are
redeemable at the Banks option starting February 25,
2013 for $25.00 cash per share, and are not convertible. The
shares carry a non-cumulative quarterly dividend of $0.33125 per
share. The Bank may not amend any rights, privileges,
restrictions and conditions attaching to the
Series 5 shares without approval given by two-thirds
of the holders of the Series 5 shares. In the event of
the liquidation, dissolution or
winding-up
of the Bank, Series 5 holders are entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 5 shares.
|
|
|
|
Class B Series 10 shares are
redeemable at the Banks option starting February 25,
2012 for US$25.00 cash per share, and are convertible at the
Banks option starting February 25, 2012 into its
common shares. The shares carry a non-cumulative quarterly
dividend of US$0.371875 per share. The Bank may not amend any
rights, privileges, restrictions and conditions attaching to the
Series 10 shares without approval given by two-thirds
of the holders of the Series 10 shares. In the event
of the liquidation, dissolution or
winding-up
of the Bank, Series 10 holders are entitled to receive
US$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 10 shares.
|
13
|
|
|
|
|
Class B Series 13 shares are
redeemable at the Banks option starting February 25,
2012 for $25.00 cash per share, plus a premium if it redeems the
shares before February 25, 2016. The shares carry a
non-cumulative quarterly dividend of $0.28125 per share. The
Bank may not amend any rights, privileges, restrictions and
conditions attaching to the Series 13 shares without
approval given by two-thirds of the holders of the
Series 13 shares. In the event of the liquidation,
dissolution or
winding-up
of the Bank, Series 13 holders are entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 13 shares.
|
|
|
|
Class B Series 14 shares are
redeemable at the Banks option starting November 25,
2012 for $25.00 cash per share, plus a premium if it redeems the
shares before November 25, 2016. The shares carry a
non-cumulative quarterly dividend of $0.328125 per share. The
Bank may not amend any rights, privileges, restrictions and
conditions attaching to the Series 14 shares without
approval given by two-thirds of the holders of the
Series 14 shares. In the event of the liquidation,
dissolution or
winding-up
of the Bank, Series 14 holders are entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 14 shares.
|
|
|
|
Class B Series 15 shares are
redeemable at the Banks option starting May 25, 2013
for $25.00 cash per share, plus a premium if it redeems the
shares before May 25, 2017. The shares carry a
non-cumulative quarterly dividend of $0.3625 per share. The Bank
may not amend any rights, privileges, restrictions and
conditions attaching to the Series 15 shares without
approval given by two-thirds of the holders of the
Series 15 shares. In the event of the liquidation,
dissolution or
winding-up
of the Bank, Series 15 holders are entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 15 shares.
|
|
|
|
Class B Series 16 shares are
redeemable at the Banks option on August 25, 2013 and
every five years thereafter for $25.00 cash per share. If the
shares are not redeemed on the redemption dates, investors have
the option to convert the shares into Class B
Series 17 Preferred shares and, if converted, have the
option to convert back to Series 16 Preferred shares on
subsequent redemption dates. The Series 16 shares
carry a non-cumulative quarterly dividend of $0.325 per share
until August 25, 2013. Dividends payable after
August 25, 2013 on the Series 16 and Series 17
Preferred shares will be set based on prevailing market rates
plus a predetermined spread. The Bank may not amend any rights,
privileges, restrictions and conditions attaching to the
Series 16 or Series 17 shares without approval
given by two-thirds of the holders of either the Series 16
or Series 17 shares, as applicable. In the event of
the liquidation, dissolution or
winding-up
of the Bank, Series 16 and Series 17 holders are
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Series 16 or Series 17 shares, respectively.
|
|
|
|
Class B Series 18 shares are
redeemable at the Banks option on February 25, 2014
and every five years thereafter for $25.00 cash per share. If
the shares are not redeemed on the redemption dates, investors
have the option to convert the shares into
Class B Series 19 Preferred shares and, if
converted, have the option to convert back to Series 18
Preferred shares on subsequent redemption dates. The
Series 18 shares carry a non-cumulative quarterly
dividend of $0.40625 per share until February 25, 2014.
Dividends payable after February 25, 2014 on the
Series 18 and Series 19 Preferred shares will be set
based on prevailing market rates plus a predetermined spread.
The Bank may not amend any rights, privileges, restrictions and
conditions attaching to the Series 18 or
Series 19 shares without approval given by two-thirds
of the holders of either the Series 18 or
Series 19 shares, as applicable. In the event of the
liquidation, dissolution or
winding-up
of the Bank, Series 18 and Series 19 holders are
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Series 18 or Series 19 shares, respectively.
|
|
|
|
Class B Series 21 shares are
redeemable at the Banks option on May 25, 2014 and
every five years thereafter for $25.00 cash per share. If the
shares are not redeemed on the redemption dates, investors have
the option to convert the shares into Class B
Series 22 Preferred shares and, if converted, have the
option to convert back to Series 21 Preferred shares on
subsequent redemption dates. The Series 21 shares
carry a non-cumulative quarterly dividend of $0.40625 per share
until May 25, 2014. Dividends payable after May 25,
2014 on the Series 21 and Series 22 Preferred shares
will be set based on prevailing market rates plus a
predetermined spread. The Bank may not amend any rights,
privileges, restrictions and conditions attaching to the
Series 21 or
|
14
|
|
|
|
|
Series 22 shares without approval given by two-thirds
of the holders of either the Series 21 or
Series 22 shares, as applicable. In the event of the
liquidation, dissolution or
winding-up
of the Bank, Series 21 and Series 22 holders are
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Series 21 or Series 22 shares, respectively.
|
|
|
|
|
|
Class B Series 23 shares are
redeemable at the Banks option on February 25, 2015
and every five years thereafter for $25.00 cash per share. If
the shares are not redeemed on the redemption dates, investors
have the option to convert the shares into
Class B Series 24 Preferred shares and, if
converted, have the option to convert back to Series 23
Preferred shares on subsequent redemption dates. The
Series 23 shares carry a non-cumulative quarterly
dividend of $0.3375 per share until February 25, 2015.
Dividends payable after February 25, 2015 on the
Series 23 and Series 24 Preferred shares will be set
based on prevailing market rates plus a predetermined spread.
The Bank may not amend any rights, privileges, restrictions and
conditions attaching to the Series 23 or
Series 24 shares without approval given by two-thirds
of the holders of either the Series 23 or
Series 24 shares, as applicable. In the event of the
liquidation, dissolution or
winding-up
of the Bank, Series 23 and Series 24 holders are
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Series 23 or Series 24 shares, respectively.
|
|
|
|
Class B Series 25 shares are
redeemable at the Banks option on August 25, 2016 and
every five years thereafter for $25.00 cash per share. If the
shares are not redeemed on the redemption dates, investors have
the option to convert the shares into Class B
Series 26 Preferred shares and, if converted, have the
option to convert back to Series 25 Preferred shares on
subsequent redemption dates. The Series 25 shares
carry a non-cumulative quarterly dividend of $0.24375 per share
until August 25, 2016. Dividends payable after
August 25, 2016 on the Series 25 and Series 26
preferred shares will be set based on prevailing market rates
plus a predetermined spread. The Bank may not amend any rights,
privileges, restrictions and conditions attaching to the
Series 25 or Series 26 shares without approval
given by two-thirds of the holders of either the Series 25
or Series 26 shares, as applicable. In the event of
the liquidation, dissolution or
winding-up
of the Bank, Series 25 and Series 26 holders are
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Series 25 or Series 26 shares, respectively.
|
Rights and privileges of each series issuable in connection
with an exchange of BMO BOaTS or BMO Tier 1 Notes:
|
|
|
|
|
Class B Series 9 shares, if issued,
are redeemable at the Banks option for $25.00 cash per
share, at any time after December 31, 2011. The shares
carry a non-cumulative semi-annual dividend of $0.836 per share.
The Bank may not amend any rights, privileges, restrictions and
conditions attaching to the Series 9 shares without
approval given by two-thirds of the holders of the
Series 9 shares. In the event of the liquidation,
dissolution or
winding-up
of the Bank, Series 9 holders shall be entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the Series
9 shares. After December 31, 2011, the
Series 9 shares may be converted into common shares,
at the option of the Bank but subject to regulatory approval,
based on a specified formula. In addition, after June 30,
2012, the Series 9 shares may in certain circumstances
be converted into common shares, at the option of the holder. A
specified formula will be used for determining that number of
common shares to be issued upon any such conversion.
|
|
|
|
Class B Series 11 shares, if issued,
are redeemable at the Banks option for $25.00 cash per
share, plus a premium if it redeems the shares before
December 31, 2013. The shares carry a non-cumulative
semi-annual dividend of $0.625 per share. The Bank may not amend
any rights, privileges, restrictions and conditions attaching to
the Series 11 shares without approval given by
two-thirds of the holders of the Series 11 shares. In
the event of the liquidation, dissolution or
winding-up
of the Bank, Series 11 holders shall be entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 11 shares.
|
|
|
|
Class B Series 12 shares, if issued,
are redeemable at the Banks option for $25.00 cash per
share, plus a premium if it redeems the shares before
December 31, 2014. The shares carry a non-cumulative
semi-annual dividend of $0.575 per share. The Bank may not amend
any rights, privileges, restrictions and conditions
|
15
|
|
|
|
|
attaching to the Series 12 shares without approval
given by two-thirds of the holders of the
Series 12 shares. In the event of the liquidation,
dissolution or
winding-up
of the Bank, Series 12 holders shall be entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 12 shares.
|
|
|
|
|
|
Class B Series 20 shares, if issued,
are redeemable at the Banks option for $25.00 cash per
share, plus a premium if it redeems the shares before
December 31, 2017. The shares carry a non-cumulative
quarterly dividend based on then prevailing market rates plus a
predetermined spread. The Bank may not amend any rights,
privileges, restrictions and conditions attached to the
Series 20 shares without approval given by two-thirds
of the holders of the Series 20 shares. In the event
of the liquidation, dissolution or
winding-up
of the Bank, Series 20 holders shall be entitled to receive
$25.00 cash per share together with all dividends declared and
unpaid to the date of payment before any amount is paid to the
holders of any shares ranking junior to the
Series 20 shares.
|
|
|
|
Class B Deferral Shares, if issued, are redeemable at the
Banks option for $25.00 cash per share, plus a premium if
it redeems the shares before the ninth anniversary of the date
of issuance thereof. The Class B Deferral shares will carry
a non-cumulative quarterly dividend based on then prevailing
market rates plus a predetermined spread. The Bank may not amend
any rights, privileges, restrictions and conditions attached to
the Class B Deferral Shares without approval given by
two-thirds of the holders of such shares. In the event of the
liquidation, dissolution or
winding-up
of the Bank, holders of Class B Deferral Shares shall be
entitled to receive $25.00 cash per share together with all
dividends declared and unpaid to the date of payment before any
amount is paid to the holders of any shares ranking junior to
the Class B Deferral Shares.
|
Limitations
Affecting Holders of Common and Preferred Shares
Restraints
on Bank Shares Under the Bank Act
The Bank Act contains restrictions on the issue, transfer,
acquisition, beneficial ownership and voting of all shares of a
Canadian chartered bank. For example, no person may be a
major shareholder of a bank if the bank has equity
of $8 billion or more (which would include the Bank). A
person is a major shareholder of a bank where: (i) the
aggregate number of shares of any class of voting shares owned
by that person, by entities controlled by that person and by any
person associated or acting jointly or in concert with that
person is more than 20% of that class of voting shares; or
(ii) the aggregate number of shares of any class of
non-voting shares beneficially owned by that person, by entities
controlled by that person and by any person associated or acting
jointly or in concert with that person is more than 30% of that
class of non-voting shares. The Minister of Finance (Canada) may
only approve the acquisition of up to 30% of the shares of any
class of non-voting shares and up to 20% of the shares of a
class of voting shares of the Bank, provided, in each case, that
the person acquiring those shares does not have direct or
indirect influence over the Bank that, if exercised, would
result in that person having control in fact of the Bank. No
person may have a significant interest in any class
of shares of a bank, including the Bank, unless the person first
receives the approval of the Minister of Finance. In addition,
the Bank is not permitted to record any transfer or issue of any
shares of the Bank if the transfer or issue would cause the
person to have a significant interest in a class of shares,
unless the prior approval of the Minister of Finance is
obtained. No person who has a significant interest in the Bank
may exercise any voting rights attached to the shares held by
that person, unless the prior approval of the Minister of
Finance for the acquisition of the significant interest is
obtained. For purposes of the Bank Act, a person has a
significant interest in a class of shares of a bank where the
aggregate of any shares of the class beneficially owned by that
person, by entities controlled by that person and by any person
associated or acting jointly or in concert with that person
exceeds 10% of all of the outstanding shares of that class of
shares of such bank. If a person contravenes any of these
restrictions, the Minister of Finance may, by order, direct that
person to dispose of all or any portion of those shares. Holders
of securities of the Bank may be required to furnish
declarations relating to ownership in a form prescribed by the
Bank.
Furthermore, the Bank Act prohibits banks, including the Bank,
from recording a transfer or issuing shares of any class to the
Government of Canada, or of any province thereof, to any foreign
government or the government of any state, province or other
political subdivision of a foreign country or to any agent or
agency of any of the foregoing.
Bank
Act and Government Restrictions and Approvals
Under the Bank Act, the Bank cannot redeem or purchase any of
its shares, including its common shares, unless the consent of
the OSFI has been obtained. In addition, the Bank Act prohibits
a payment to purchase or redeem any shares or the declaration
and payment of a dividend if there are reasonable grounds for
believing that the Bank is, or the payment would cause the Bank
to be, in contravention of the capital adequacy and liquidity
regulations of the Bank Act or any
16
capital or liquidity directions of OSFI. The Bank is prohibited
from declaring dividends on its preferred or common shares when
it would be, as a result of paying such a dividend, in
contravention of the capital adequacy, liquidity or other
regulatory directives issued under the Bank Act. In addition,
common share dividends cannot be paid unless all dividends
declared and payable on the Banks preferred shares have
been paid or sufficient funds have been set aside to do so. The
declaration, amount and payment of future dividends is subject
to the discretion of the board of directors, and will be
dependent upon the Banks results of operations, financial
condition, cash requirements and future regulatory restrictions
on the payment of dividends and other factors deemed relevant by
the board of directors.
The government of Canada placed a moratorium on mergers among
Canadas largest financial institutions in 2003, including
the Bank and its peers, pending a further review of
Canadas bank merger policy. The current Minister of
Finance has previously stated that a review of the
governments bank merger policy is not currently a
priority, and as a result, it is unlikely that the Minister of
Finance would grant an approval for a merger between any large
Canadian financial institutions at this time.
The restrictions contained in the Bank Act and the Canadian
governments policies may deter, delay or prevent a future
amalgamation involving the Bank and will prevent the acquisition
of control of the Bank, including transactions that could be
perceived as advantageous to the Banks shareholders.
Additional
Restrictions on Declaration of Dividends
In addition to the restrictions on dividends described above,
the Bank has agreed that if either BMO Capital Trust or BMO
Capital Trust II (collectively, the
Trusts
) fail to pay any required distribution
on their capital trust securities, the Bank will not declare
dividends of any kind on any of its preferred or common shares
for a period of time following the Trusts failure to pay
the required distribution unless the Trusts first pay such
distribution to the holders of their capital trust securities.
For further information regarding the Capitalization of the
Bank, see
Consolidated Capitalization of the
Bank
.
Amendments
to the Rights, Privileges, Restrictions and Conditions of the
Banks Share Capital
Under the Bank Act, the rights of holders of the Banks
shares can be changed by the board of directors of the Bank by
making, amending or repealing the by-laws of the Bank. The board
of directors of the Bank must submit such a by-law, or amendment
to or repeal of a by-law, to the shareholders of the Bank in
accordance with the procedures of the Bank Act and the
Banks by-laws, and the shareholders must approve the
by-law, amendment to or repeal of the by-law by special
resolution to be effective. Under the Bank Act, a special
resolution is a resolution passed by not less than two-thirds of
the votes cast by or on behalf of the shareholders who voted in
respect of that resolution or signed by all the shareholders
entitled to vote on that resolution. In some circumstances, the
Bank Act mandates that holders of shares of a class or a series
are entitled to vote separately as a class or series on a
proposal to amend the by-laws of the Bank.
Meetings
of the Shareholders
Quorum
The Bank Act permits a bank to establish by by-law the quorum
requirement for meetings of shareholders. The Banks
by-laws provide that a quorum at any meeting of shareholders
will be any two or more shareholders entitled to vote at the
meeting present in person or represented by proxy and
representing either in person or by proxy at least 25% of the
issued and outstanding shares of the Bank entitled to vote.
Annual
Meetings; Shareholder Proposals
The Bank is required to hold an annual meeting of shareholders
not later than six months after the end of each financial year
on such day and at such time as its directors shall determine.
Proposals by shareholders of a bank may be made by certain
registered or beneficial holders of shares that are entitled to
vote at an annual meeting of shareholders. To be eligible to
submit any shareholder proposal, a shareholder must satisfy
certain eligibility criteria set forth in the Bank Act. Under
the Bank Act, shareholder proposals may only be submitted at
annual meetings of shareholders. A shareholder eligible to
submit a proposal and entitled to vote at an annual meeting of
shareholders may submit to the Bank notice of any matter that
the shareholder proposes to raise at the meeting provided that,
among other things, the proposal is submitted to the Bank at
least 90 days before the anniversary date of the notice of
meeting that was sent to shareholders in respect of the
Banks previous annual meeting of shareholders.
If the Bank solicits proxies for such annual meeting, it is
required to set out in the management proxy a proposal submitted
by a shareholder for consideration at such meeting. If so
requested by a shareholder who submits a proposal to
17
the Bank, the Bank is required to include in the management
proxy circular, or attach thereto, a statement by the
shareholder in support of the proposal and the name and address
of the shareholder. The proposal and the statement together are
not to exceed the prescribed maximum number of words. Under the
Bank Act, a proposal may include nominations for the election of
directors if it is signed by one or more shareholders of shares
representing in the aggregate not less than 5% of the issued and
outstanding shares of the Bank or 5% of the issued and
outstanding shares of a class of shares of the Bank entitled to
vote at the meeting at which the proposal is to be presented.
The Bank is not required to comply with the obligations to
include the proposal, or a statement of the shareholder
submitting a proposal, in its management proxy circular, if
|
|
|
|
|
the proposal is not submitted to the Bank at least the
prescribed number of days before the anniversary date of the
notice of meeting that was sent to shareholders in respect of
the previous annual meeting of shareholders;
|
|
|
|
it clearly appears that the primary purpose of the proposal is
to enforce a personal claim or redress a personal grievance
against the Bank or its directors, officers or security holders;
|
|
|
|
it clearly appears that the proposal does not relate in a
significant way to the business or affairs of the Bank;
|
|
|
|
the person submitting the proposal failed within the prescribed
period before the Bank receives their proposal to present, in
person or by proxy, at a meeting of shareholders a proposal that
at their request had been set out in or attached to a management
proxy circular;
|
|
|
|
substantially the same proposal was set out in or attached to a
management proxy circular or dissidents proxy circular
relating to, and presented to shareholders at, a meeting of
shareholders of the Bank held within the prescribed period
before the receipt of the proposal and did not receive the
prescribed minimum amount of support at the meeting; or
|
|
|
|
the rights to submit a proposal as described above are being
abused to secure publicity.
|
If the Bank refuses to include a proposal in a management proxy
circular, it is obligated to notify the shareholder in writing
of such refusal and its reasons for such refusal. The
shareholder may apply to a court if such shareholder claims it
has been aggrieved by such refusal, and the court may restrain
the holding of the meeting at which the proposal is sought to be
presented and may make such further order it thinks fit. In
addition, if the Bank claims to be aggrieved by the proposal, it
may apply to a court for an order permitting the Bank to omit
the proposal from the management proxy circular.
Special
Meetings
Under the Bank Act, special meetings of shareholders may be
called at any time by the board of directors. In addition,
subject to certain provisions of the Bank Act, the holders of
not less than 5% of the issued and outstanding shares of the
Bank that carry the right to vote at a meeting may request that
the directors call a meeting of shareholders for the purpose
stated in the request and may call the special meeting if the
directors do not do so within 21 days after receiving the
request.
Anti-Takeover
Provisions and Ownership Provisions
Rules and policies of certain Canadian securities regulatory
authorities, including Multilateral Instrument
61-101
Protection of Minority Security Holders in Special Transactions,
contain requirements in connection with related party
transactions. A related party transaction means, among
other things, any transaction in which an issuer directly or
indirectly engages in the following with a related party:
acquires, sells, leases or transfers an asset, acquires the
related party, acquires or issues securities, amends the terms
of a security if the security is owned by the related party or
assumes or becomes subject to a liability or takes certain other
actions with respect to debt.
Related party includes directors, senior officers
and holders of more than 10% of the voting rights attached to
all outstanding voting securities of the issuer or holders of a
sufficient number of any securities of the issuer to materially
affect control of the issuer.
If a transaction is determined to be a related party
transaction, Multilateral Instrument
61-101
requires, subject to certain exceptions, the preparation of a
formal valuation relating to certain aspects of the transaction
and more detailed disclosure in the proxy material sent to
security holders in connection with the related party
transaction, including disclosure related to the valuation.
18
Multilateral Instrument
61-101
also
requires, subject to certain exceptions, that an issuer not
engage in a related party transaction unless the shareholders of
the issuer, other than the related parties, approve the
transaction by a simple majority of the votes cast.
In addition, under the Bank Act, a sale of all or substantially
all of the Banks assets to another financial institution
or an amalgamation must also be approved by the shareholders by
special resolution passed by a vote of not less than two-thirds
of the votes cast by shareholders who voted in respect of the
resolution, with each share carrying the right to vote whether
or not it otherwise carries the right to vote. The holders of
each class or series of shares which is affected differently by
the sale from the shares of any other class or series are
entitled to vote separately as a class or series. The Minister
of Finance must also approve any such sale or amalgamation
involving the Bank.
These restrictions, in addition to those imposed by the Bank Act
relating to the purchase or other acquisition, issue, transfer
and voting of shares of the Banks common shares may deter,
delay or prevent a future amalgamation involving the Bank and
will prevent the acquisition of control of the Bank, including
transactions that could be perceived as advantageous to the
Banks shareholders. See
Description of Common
Shares and Preferred Shares Limitations Affecting
Holders of Common and Preferred Shares
.
Rights of
Inspection
Any person is entitled to a basic list of the Banks
shareholders and may request the Bank to furnish such list
within 10 days after receipt by the Bank of an affidavit,
swearing that the list will not be used except in accordance
with a permitted purpose, and payment of a reasonable fee.
Further, shareholders and creditors of the Bank and their
personal representatives may examine certain limited records of
the Bank during its usual business hours and may take extracts
therefrom, free of charge, or have copies made thereof on
payment of a reasonable fee.
Transfer
Agent and Registrar
The registrar and transfer agent for the Banks common and
preferred shares is Computershare Trust Company of Canada
with transfer facilities in the cities of Halifax, Montreal,
Toronto, Winnipeg, Calgary and Vancouver. In addition,
Computershare Investor Services PLC and Computershare
Trust Company, N.A. serve as transfer agents and registrars
for common shares in London, England and Golden, Colorado,
respectively.
19
DESCRIPTION
OF DEBT SECURITIES WE MAY OFFER
References to the Bank,
us
,
we
or
our
in this section
mean Bank of Montreal, and do not include the subsidiaries of
Bank of Montreal. Also, in this section, references to
holders
mean those who own debt securities
registered in their own names, on the books that we or the
applicable trustee maintain for this purpose, and not those who
own beneficial interests in debt securities registered in street
name or in debt securities issued in book-entry form through one
or more depositaries. When we refer to
you
in
this section, we mean all purchasers of the debt securities
being offered by this prospectus, whether they are the holders
or only indirect owners of those debt securities. Owners of
beneficial interests in the debt securities should read the
section below entitled
Legal Ownership and
Book-Entry Issuance
.
Debt
Securities May Be Senior or Subordinated
We may issue debt securities which may be senior or subordinated
in right of payment. Neither the senior debt securities nor the
subordinated debt securities will be secured by any of our
property or assets or the property or assets of our
subsidiaries. Thus, by owning a debt security, you are one of
our unsecured creditors.
The senior debt securities will be issued under our senior debt
indenture described below and will be unsubordinated obligations
that rank equally with all of our other unsecured and
unsubordinated debt, including deposit liabilities, other than
certain governmental claims in accordance with applicable law.
The subordinated debt securities will be issued under our
subordinated debt indenture described below and will be
subordinate in right of payment to all of our
senior
indebtedness
, as defined in the subordinated debt
indenture. Neither indenture limits our ability to incur
additional indebtedness.
In the event we become insolvent, our governing legislation
provides that priorities among payments of our deposit
liabilities (including payments in respect of the senior debt
securities) and payments of all of our other liabilities
(including payments in respect of the subordinated debt
securities) are to be determined in accordance with the laws
governing priorities and, where applicable, by the terms of the
indebtedness and liabilities. Because we have subsidiaries, our
right to participate in any distribution of the assets of our
banking or non-banking subsidiaries, upon a subsidiarys
dissolution,
winding-up,
liquidation or reorganization or otherwise, and thus your
ability to benefit indirectly from such distribution, is subject
to the prior claims of creditors of that subsidiary, except to
the extent that we may be a creditor of that subsidiary and our
claims are recognized. There are legal limitations on the extent
to which some of our subsidiaries may extend credit, pay
dividends or otherwise supply funds to, or engage in
transactions with, us or some of our other subsidiaries.
Accordingly, the debt securities will be structurally
subordinated to all existing and future liabilities of our
subsidiaries, and holders of debt securities should look only to
our assets for payments on the debt securities.
Neither the senior debt securities nor the subordinated debt
securities will constitute deposits insured under the Canada
Deposit Insurance Corporation Act or by the United States
Federal Deposit Insurance Corporation or any other Canadian or
United States governmental agency or instrumentality.
When we refer to
debt securities
in this
prospectus, we mean both the senior debt securities and the
subordinated debt securities.
The
Senior and Subordinated Debt Indentures
The senior debt securities and the subordinated debt securities
are each governed by an indenture the senior debt
indenture, in the case of the senior debt securities, and the
subordinated debt indenture, in the case of the subordinated
debt securities. When we refer to the
indentures
, we mean both the senior debt
indenture and the subordinated debt indenture, and when we refer
to the
indenture
, we mean either the senior
debt indenture or the subordinated debt indenture, as
applicable. Each indenture is a contract between us and Wells
Fargo Bank, National Association, which acts as trustee. The
indentures are substantially identical, except for the
provisions relating to:
|
|
|
|
|
the events of default, which are more limited in the
subordinated debt indenture;
|
|
|
|
subordination, which are included only in the subordinated debt
indenture;
|
|
|
|
possible conversions or exchanges.
|
Reference to the indenture or the trustee, with respect to any
debt securities, means the indenture under which those debt
securities are issued and the trustee under that indenture.
20
The trustee has two main roles:
|
|
|
|
|
The trustee can enforce the rights of holders against us if we
default on our obligations under the terms of the indenture or
the debt securities. There are some limitations on the extent to
which the trustee acts on behalf of holders, described below
under
Events of Default
Remedies If an Event of Default Occurs
.
|
|
|
|
The trustee performs administrative duties for us, such as
sending interest payments and notices to holders and
transferring a holders debt securities to a new buyer if a
holder sells.
|
The indentures and their associated documents contain the full
legal text of the matters described in this section. The
indentures and the debt securities will be governed by New York
law, except that the subordination provisions in the
subordinated debt indenture and certain provisions relating to
the status of the senior debt securities under Canadian law in
the senior debt indenture will be governed by the laws of the
Province of Ontario and the laws of Canada applicable therein. A
copy of each of the senior debt indenture and the subordinated
debt indenture is an exhibit to the registration statement of
which this prospectus forms a part. See
Where You Can
Find More Information
above for information on how to
obtain a copy.
General
We may issue as many distinct series of debt securities under
either indenture as we wish. The provisions of the senior debt
indenture and the subordinated debt indenture allow us not only
to issue debt securities with terms different from those
previously issued under the applicable indenture, but also to
re-open a previous issue of a series of debt
securities and issue additional debt securities of that series.
We may issue debt securities in amounts that exceed the total
amount specified on the cover of your applicable supplement at
any time without your consent and without notifying you. In
addition, we may issue additional debt securities of any series
at any time without your consent and without notifying you. We
may also issue other debt securities at any time without your
consent and without notifying you. The indentures do not limit
our ability to incur other indebtedness or to issue other debt
securities, and we are not subject to financial or similar
restrictions under the indentures.
This section summarizes the material terms of the debt
securities that are common to all series, subject to any
modifications contained in an applicable supplement. Most of the
specific terms of your series will be described in the
applicable supplements accompanying this prospectus. As you read
this section, please remember that the specific terms of your
debt security as described in the applicable supplements will
supplement and, if applicable, may modify or replace the general
terms described in this section. If there are any differences
between the information in the applicable supplements and this
prospectus, the information in the most recent applicable
supplement will control. Accordingly, the statements we make in
this section may not apply to your debt securities. Because this
section is a summary, it does not describe every aspect of the
debt securities. This summary is subject to and qualified in its
entirety by reference to all the provisions of the indentures
and the applicable series of debt securities, including
definitions of certain terms used in the indentures and the
applicable series of debt securities. In this summary, we
describe the meaning of only some of the more important terms.
You must look to the indentures or the applicable series of debt
securities for the most complete description of what we describe
in summary form in this prospectus.
We may issue the debt securities as original issue discount debt
securities, which will be offered and sold at a substantial
discount below their stated principal amount. An applicable
supplement relating to the original issue discount securities
will describe U.S. federal income tax consequences and
other special considerations applicable to them. The debt
securities may also be issued as indexed debt securities or debt
securities denominated in foreign currencies or currency units,
as described in more detail in an applicable supplement relating
to any of the particular debt securities. An applicable
supplement relating to specific debt securities will also
describe any special considerations and any material additional
tax considerations applicable to such debt securities.
When we refer to a series of debt securities, we mean a series
issued under the indenture pursuant to which the debt securities
will be issued. Each series is a single distinct series under
the indenture pursuant to which they will be issued and we may
issue debt securities of each series in such amounts, at such
times and on such terms as we wish. The debt securities of each
series will differ from one another, and from any other series,
in their terms, but all debt securities of a series together
will constitute a single series for all purposes under the
indenture pursuant to which they will be issued.
21
We may issue debt securities up to an aggregate principal amount
as we may authorize from time to time. The applicable
supplements will describe the terms of any debt securities being
offered, including:
|
|
|
|
|
the title of the series of debt securities;
|
|
|
|
whether it is a series of senior debt securities or a series of
subordinated debt securities;
|
|
|
|
any limit on the aggregate principal amount of the series of
debt securities;
|
|
|
|
the person to whom interest on a debt security is payable, if
other than the holder on the regular record date;
|
|
|
|
the date or dates on which the series of debt securities will
mature;
|
|
|
|
the rate or rates (which may be fixed or variable) per annum, at
which the series of debt securities will bear interest, if any,
and the date or dates from which that interest, if any, will
accrue;
|
|
|
|
the dates on which such interest, if any, will be payable and
the regular record dates for such interest payment dates;
|
|
|
|
the place or places where the principal of, premium, if any, and
interest on the debt securities is payable;
|
|
|
|
any mandatory or optional sinking funds or similar provisions or
provisions for redemption at our option or the option of the
holder;
|
|
|
|
if applicable, the date after which, the price at which, the
periods within which and the terms and conditions upon which the
debt securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed and other detailed terms and
provisions of those optional or mandatory redemption provisions,
if any;
|
|
|
|
if applicable, the terms and conditions upon which the debt
securities may be repayable prior to final maturity at the
option of the holder thereof (which option may be conditional);
|
|
|
|
the portion of the principal amount of the debt securities, if
other than the entire principal amount thereof, payable upon
acceleration of maturity thereof;
|
|
|
|
if the debt securities may be converted into or exercised or
exchanged for other of our debt securities or the debt or equity
securities of third parties, the terms on which conversion,
exercise or exchange may occur, including whether conversion,
exercise or exchange is mandatory, at the option of the holder
or at our option, the period during which conversion, exercise
or exchange may occur, the initial conversion, exercise or
exchange price or rate and the circumstances or manner in which
the amount of our debt securities or the debt or equity
securities of third parties issuable upon conversion, exercise
or exchange may be adjusted;
|
|
|
|
if other than denominations of $1,000 and any integral multiples
thereof, the denominations in which the series of debt
securities will be issuable;
|
|
|
|
the currency of payment of principal, premium, if any, and
interest on the series of debt securities;
|
|
|
|
if the currency of payment for principal, premium, if any, and
interest on the series of debt securities is subject to our
election or that of a holder, the currency or currencies in
which payment can be made and the period within which, and the
terms and conditions upon which, the election can be made;
|
|
|
|
any index, formula or other method used to determine the amount
of payment of principal or premium, if any,
and/or
interest on the series of debt securities;
|
|
|
|
the applicability of the provisions described under
Defeasance
below;
|
|
|
|
any event of default under the series of debt securities if
different from those described under
Events
of Default
below;
|
|
|
|
if the series of debt securities will be issuable only in the
form of a global security, the depositary or its nominee with
respect to the series of debt securities and the circumstances
under which the global security may be registered for transfer
or exchange in the name of a person other than the depositary or
the nominee; and
|
|
|
|
any other special feature of the series of debt securities.
|
An investment in debt securities may involve special risks,
including risks associated with indexed securities and
currency-related risks if the debt security is linked to an
index or is payable in or otherwise linked to a
non-U.S. dollar
currency. Risks specific to these types of debt securities will
be included in the applicable supplements.
22
Market-Making
Transactions
One or more of our affiliates may purchase and resell debt
securities in market-making transactions after their initial
issuance. We may also, subject to applicable law and any
required regulatory approval, purchase debt securities in the
open market or in private transactions to be held by us or
cancelled.
Covenants
Except as described in this
sub-section
or as otherwise provided in an applicable supplement with
respect to any series of debt securities, we are not restricted
by the indentures from incurring, assuming or becoming liable
for any type of debt or other obligations, from paying dividends
or making distributions on our capital stock or purchasing or
redeeming our capital stock. The indentures do not require the
maintenance of any financial ratios or specified levels of net
worth or liquidity, nor do they contain any covenants or other
provisions that would limit our or our subsidiaries right
to incur additional indebtedness, enter into any sale and
leaseback transaction or grant liens on our or our
subsidiaries assets. The indentures do not contain any
provisions that would require us to repurchase or redeem or
otherwise modify the terms of any of the debt securities upon a
change in control or other events that may adversely affect the
creditworthiness of the debt securities, for example, a highly
leveraged transaction, except as otherwise specified in this
prospectus or any applicable supplement.
Mergers
and Similar Events
Each of the indentures provide that we are permitted to merge,
amalgamate, consolidate or otherwise combine with another
entity, or to sell or lease substantially all of our assets to
another entity, as long as the following conditions are met:
|
|
|
|
|
When we merge, amalgamate, consolidate or otherwise are combined
with or acquired by, another entity, or sell or lease
substantially all of our assets, the surviving, resulting or
acquiring entity is a duly organized entity and is legally
responsible for and assumes, either by agreement, operation of
law or otherwise, our obligations under such indenture and the
debt securities issued thereunder.
|
|
|
|
The merger, amalgamation, consolidation, other combination, or
sale or lease of assets, must not result in an event of default
under such indenture. A default for this purpose would include
any event that would be an event of default if the requirements
for giving us default notice or our default having to exist for
a specified period of time were disregarded.
|
If the conditions described above are satisfied, we will not
need to obtain the consent of the holders of the debt securities
in order to merge, amalgamate, consolidate or otherwise combine
with another entity or to sell substantially all of our assets.
We will not need to satisfy the conditions described above if we
enter into other types of transactions, including:
|
|
|
|
|
any transaction in which we acquire the stock or assets of
another entity but in which we do not merge, amalgamate,
consolidate or otherwise combine;
|
|
|
|
any transaction that involves a change of control but in which
we do not merge, amalgamate, consolidate or otherwise
combine; and
|
|
|
|
any transaction in which we sell less than substantially all of
our assets.
|
It is possible that this type of transaction may result in a
reduction in our credit rating, may reduce our operating results
or may impair our financial condition. Holders of debt
securities, however, will have no approval right with respect to
any transaction of this type.
Modification
and Waiver of the Debt Securities
There are four types of changes we can make to the indenture and
the debt securities issued under that indenture.
|
|
|
|
|
Changes Requiring Consent of All
Holders.
First, there are changes that cannot be
made to the indenture or the debt securities without the consent
of each holder of a series of debt securities affected in any
material respect by the change under a particular debt
indenture. Following is a list of those types of changes:
|
|
|
|
|
|
change the stated maturity of the principal or reduce the
interest on a debt security;
|
|
|
|
reduce any amounts due on a debt security;
|
|
|
|
reduce the amount of principal payable upon acceleration of the
maturity of a debt security (including the amount payable on an
original issue discount security) following a default;
|
23
|
|
|
|
|
change the currency of payment on a debt security;
|
|
|
|
change the place of payment for a debt security;
|
|
|
|
impair a holders right to sue for payment;
|
|
|
|
impair a holders right to require repurchase on the
original terms of those debt securities that provide a right of
repurchase;
|
|
|
|
reduce the percentage of holders of debt securities whose
consent is needed to modify or amend the indenture;
|
|
|
|
reduce the percentage of holders of debt securities whose
consent is needed to waive compliance with certain provisions of
the indenture or to waive certain defaults; or
|
|
|
|
modify any other aspect of the provisions dealing with
modification and waiver of the indenture.
|
|
|
|
|
|
Changes Requiring a Majority Consent.
The
second type of change to the indenture and the debt securities
is the kind that requires the consent of holders of debt
securities owning not less than a majority of the principal
amount of the particular series affected. Most changes fall into
this category, except for clarifying changes and certain other
changes that would not adversely affect in any material respect
holders of the debt securities. We may also obtain a waiver of a
past default from the holders of debt securities owning a
majority of the principal amount of the particular series
affected. However, we cannot obtain a waiver of a payment
default or any other aspect of the indenture or the debt
securities listed in the first category described above under
Changes Requiring Consent of All
Holders
unless we obtain the individual consent of
each holder to the waiver.
|
|
|
|
Changes Not Requiring Consent.
The third type
of change to the indenture and the debt securities does not
require the consent by holders of debt securities. This type is
limited to the issuance of new series of debt securities under
the indenture, clarifications and certain other changes that
would not adversely affect in any material respect the interests
of the holders of the debt securities of any series.
|
We may also make changes or obtain waivers that do not adversely
affect in any material respect a particular debt security, even
if they affect other debt securities. In those cases, we do not
need to obtain the consent of the holder of that debt security;
we need only obtain any required approvals from the holders of
the affected debt securities.
|
|
|
|
|
Modification of Subordination Provisions.
The
fourth type of change to the indenture and the debt securities
is the kind that requires the consent of the holders of a
majority of the principal amount of all affected series of
subordinated debt securities, voting together as one class. We
may not modify the subordination provisions of the subordinated
debt indenture in a manner that would adversely affect in any
material respect the outstanding subordinated debt securities of
any one or more series without the consent of the holders of a
majority of the principal amount of all affected series of
subordinated debt securities, voting together as one class.
|
Further Details Concerning Voting.
When
seeking consent, we will use the following rules to decide how
much principal amount to attribute to a debt security:
|
|
|
|
|
For original issue debt discount securities, we will use the
principal amount that would be due and payable on the voting
date if the maturity of the debt securities were accelerated to
that date because of a default.
|
|
|
|
For debt securities whose principal amount is not known (for
example, because it is based on an index), we will use a special
rule for that debt security described in the applicable
supplement.
|
|
|
|
For debt securities denominated in one or more
non-U.S. currencies
or currency units, we will use the U.S. dollar equivalent.
|
Debt securities will not be considered outstanding, and
therefore not eligible to vote or take other action under the
applicable indenture, if we have given a notice of redemption
and deposited or set aside in trust for the holders money
for the payment or redemption of the debt securities. Debt
securities will also not be considered outstanding, and
therefore not eligible to vote or take other action under the
applicable indenture, if they have been fully defeased as
described below under
Defeasance Full
Defeasance
or if we or one of our affiliates is the
beneficial owner of the debt securities.
We will generally be entitled to set any day as a record date
for the purpose of determining the holders of outstanding debt
securities that are entitled to vote or take other action under
the applicable indenture. In certain limited circumstances, the
trustee will be entitled to set a record date for action by
holders. If the trustee or we set a record date for a vote or
other action to be taken by holders of a particular series, that
vote or action may be taken only by persons who are holders of
outstanding debt securities of that series on the record date.
We or the trustee, as applicable, may
24
shorten or lengthen this period from time to time. This period,
however, may not extend beyond the 180th day after the
record date for the action.
Book-entry and other indirect holders should consult their
banks, brokers or other financial institutions for information
on how approval may be granted or denied if we seek to change
the indenture or the debt securities or request a waiver.
Special
Provisions Related to the Subordinated Debt
Securities
The subordinated debt securities issued under the subordinated
debt indenture will be our direct unsecured obligations
constituting subordinated indebtedness for the purpose of the
Bank Act and will therefore rank subordinate to our deposits.
Holders of subordinated debt securities should recognize that
contractual provisions in the subordinated debt indenture may
prohibit us from making payments on these debt securities.
If we become insolvent or are
wound-up,
the subordinated debt securities issued and outstanding under
the subordinated debt indenture will rank equally with, but not
prior to, all other subordinated indebtedness and subordinate in
right of payment to the prior payment in full of all other
indebtedness of the Bank then outstanding, other than
liabilities which, by their terms, rank in right of payment
equally with or subordinate to the subordinated indebtedness,
and in accordance with the terms of such liabilities or such
other indebtedness.
For these purposes,
indebtedness
at any time
means:
|
|
|
|
(i)
|
the deposit liabilities of the Bank at such time; and
|
|
|
(ii)
|
all other liabilities and obligations of the Bank to third
parties (other than fines or penalties that, pursuant to the
Bank Act, are a last charge on the assets of a Bank in the case
of insolvency of the Bank and obligations to shareholders of the
Bank, as such) which would entitle such third parties to
participate in a distribution of the Banks assets in the
event of the insolvency or
winding-up
of the Bank.
|
subordinated indebtedness at any time means:
|
|
|
|
(i)
|
the liability of the Bank in respect of the principal of and
premium, if any, and interest on its outstanding subordinated
indebtedness outlined above;
|
|
|
(ii)
|
any indebtedness which ranks equally with and not prior to the
outstanding subordinated indebtedness, in right of payment in
the event of the insolvency or
winding-up
of the Bank and which, pursuant to the terms of the instrument
evidencing or creating the same, is expressed to be subordinate
in right of payment to all indebtedness to which the outstanding
subordinated indebtedness is subordinate in right of payment to
at least the same extent as the outstanding subordinated
indebtedness is subordinated thereto pursuant to the terms of
the instrument evidencing or creating the same;
|
|
|
(iii)
|
any indebtedness which ranks subordinate to and not equally with
or prior to the outstanding subordinated indebtedness, in right
of payment in the event of the insolvency or
winding-up
of the Bank and which, pursuant to the terms of the instrument
evidencing or creating the same, is expressed to be subordinate
in right of payment to all indebtedness to which the outstanding
subordinated indebtedness is subordinate in right of payment to
at least the same extent as the outstanding subordinated
indebtedness is subordinate pursuant to the terms of the
instrument evidencing or creating the same; and
|
|
|
(iv)
|
the subordinated debt securities, which will rank equally to the
Banks outstanding subordinated indebtedness.
|
The subordination provisions of the subordinated debt indenture
are governed by the laws of the Province of Ontario and the
federal laws of Canada applicable therein.
Conversion
or Exchange of Debt Securities
If and to the extent mentioned in the applicable supplements,
any debt securities may be optionally or mandatorily convertible
or exchangeable for other debt securities of the Bank or another
entity or entities, into the cash value therefor or into any
combination of the above. The specific terms on which any debt
securities may be so converted or exchanged will be described in
the applicable supplements. These terms may include provisions
for conversion or exchange, either mandatory, at the
holders option or at our option, in which case the amount
or number of debt securities the holders of the debt securities
would receive would be calculated at the time and manner
described in the applicable supplements.
25
Defeasance
The following discussion of full defeasance and covenant
defeasance will be applicable to each series of debt securities
that is denominated in U.S. dollars and has a fixed rate of
interest and will apply to other series of debt securities if we
so specify in the applicable supplements.
Full Defeasance.
If there is a change in
U.S. federal tax law, as described below, we can legally
release ourselves from any payment or other obligations on the
debt securities, called full defeasance, if we put in place the
following other arrangements for holders to be repaid:
|
|
|
|
|
We must deposit in trust for the benefit of all holders of the
debt securities a combination of money and notes or bonds of the
U.S. government or a U.S. government agency or
U.S. government-sponsored entity (the obligations of which
are backed by the full faith and credit of the
U.S. government) that will generate enough cash to make
interest, principal and any other payments on the debt
securities on their various due dates.
|
|
|
|
There must be a change in current U.S. federal tax law or a
ruling of the Internal Revenue Service that lets us make the
above deposit without causing the holders to be taxed on the
debt securities any differently than if we did not make the
deposit and just repaid the debt securities ourselves. (Under
current U.S. federal tax law, the deposit and our legal
release from the obligations pursuant to the debt securities
would be treated as though we took back your debt securities and
gave you your share of the cash and notes or bonds deposited in
trust. In that event, you could recognize gain or loss on the
debt securities you give back to us.)
|
|
|
|
We must deliver to the trustee a legal opinion of our counsel
confirming the tax-law change described above and that the
holders of the debt securities will not recognize income, gain
or loss for U.S. federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to
U.S. federal income tax on the same amounts and in the same
manner and at the same times as would be the case if such
deposit, defeasance and discharge had not occurred.
|
|
|
|
In the case of the subordinated debt securities, the following
requirement must also be met:
|
|
|
|
|
|
No event or condition may exist that, under the provisions
described under
Subordination
Provisions
above, would prevent us from making
payments of principal, premium or interest on those subordinated
debt securities on the date of the deposit referred to above or
during the 90 days after that date.
|
If we ever did accomplish full defeasance, as described above,
you would have to rely solely on the trust deposit for repayment
on the debt securities. You could not look to us for repayment
in the event of any shortfall.
Covenant Defeasance.
Even without a change in
current U.S. federal tax law, we can make the same type of
deposit as described above, and we will be released from the
restrictive covenants under the debt securities that may be
described in the applicable supplements. This is called covenant
defeasance. In that event, you would lose the protection of
these covenants but would gain the protection of having money
and U.S. government or U.S. government agency notes or
bonds set aside in trust to repay the debt securities. In order
to achieve covenant defeasance, we must do the following:
|
|
|
|
|
Deposit in trust for the benefit of all holders of the debt
securities a combination of money and notes or bonds of the
U.S. government or a U.S. government agency or
U.S. government sponsored entity (the obligations of which
are backed by the full faith and credit of the
U.S. government) that will generate enough cash to make
interest, principal and any other payments on the debt
securities on their various due dates.
|
|
|
|
Deliver to the trustee a legal opinion of our counsel confirming
that the holders of the debt securities will not recognize
income, gain or loss for U.S. federal income tax purposes
as a result of such deposit and covenant defeasance and will be
subject to U.S. federal income tax on the same amounts and
in the same manner and at the same times as would be the case if
such deposit and covenant defeasance had not occurred.
|
If we accomplish covenant defeasance, certain provisions of the
indentures and the debt securities would no longer apply:
|
|
|
|
|
Covenants applicable to the series of debt securities and
described in the applicable supplements.
|
|
|
|
Any events of default relating to breach of those covenants.
|
If we accomplish covenant defeasance, you can still look to us
for repayment of the debt securities if there were a shortfall
in the trust deposit. In fact, if one of the remaining events of
default occurs (such as a bankruptcy) and the debt securities
become immediately due and payable, there may be such a
shortfall.
26
Events
of Default
You will have special rights if an
event of
default
occurs and is not cured, as described later in
this subsection.
What is an Event of Default?
Under the senior debt indenture, the term
event of
default
means any of the following:
|
|
|
|
|
We do not pay the principal of or any premium on a debt security
within five days of its due date.
|
|
|
|
We do not pay interest on a debt security for more than
30 days after its due date.
|
|
|
|
We file for bankruptcy or certain other events of bankruptcy,
insolvency or reorganization occur.
|
|
|
|
Any other event of default described in an applicable supplement
occurs.
|
Under the subordinated debt indenture, the term
event
of default
means any of the following:
|
|
|
|
|
We file for bankruptcy or certain other events of bankruptcy,
insolvency or reorganization occur.
|
|
|
|
Any other event of default described in an applicable supplement
occurs.
|
Remedies If an Event of Default Occurs.
If an
event of default occurs, the trustee will have special duties.
In that situation, the trustee will be obligated to use those of
its rights and powers under the applicable indenture, and to use
the same degree of care and skill in doing so, that a prudent
person would use in that situation in conducting his or her own
affairs. If an event of default has occurred and has not been
cured, the trustee or the holders of at least 25% in principal
amount of the debt securities of the affected series may declare
the entire principal amount of (or, in the case of original
issue discount securities, the portion of the principal amount
that is specified in the terms of the affected debt security)
and interest on all of the debt securities of that series to be
due and immediately payable. This is called a declaration of
acceleration of maturity. The declaration of acceleration of
maturity is not, however, an automatic right upon the occurrence
of an event of default, and for such acceleration to be
effective, the trustee must take the aforementioned action or
the holders must direct the trustee to act as described in this
section below. Furthermore, a declaration of acceleration of
maturity may be cancelled, but only before a judgment or decree
based on the acceleration has been obtained, by the holders of
at least a majority in principal amount of the debt securities
of the affected series. If you are the holder of a subordinated
debt security, the principal amount of the subordinated debt
security will not be paid and may not be required to be paid at
any time prior to the relevant maturity date, except in the
event of our insolvency or
winding-up.
If any provisions of applicable U.S. or Canadian banking
law prohibit the payment of any amounts due under the debt
securities before a specified time, then the obligation to make
such payment shall be subject to such prohibition.
You should read carefully the applicable supplements relating to
any series of debt securities which are original issue discount
debt securities for the particular provisions relating to
acceleration of the maturity of a portion of the principal
amount of original issue discount debt securities upon the
occurrence of an event of default and its continuation.
Except in cases of default in which the trustee has the special
duties described above, the trustee is not required to take any
action under the indenture at the request of any holders unless
the holders offer the trustee reasonable protection from
expenses and liability called an indemnity. If reasonable
indemnity is provided, the holders of a majority in principal
amount of the outstanding debt securities of the relevant series
may direct the time, method and place of conducting any lawsuit
or other formal legal action seeking any remedy available to the
trustee. These majority holders may also direct the trustee in
performing any other action under the applicable indenture with
respect to the debt securities of that series.
Before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your
rights or protect your interests relating to the debt securities
the following must occur:
|
|
|
|
|
the holder of the debt security must give the trustee written
notice that a default has occurred and remains uncured;
|
|
|
|
the holders of not less than 25% in principal amount of all
outstanding debt securities of the relevant series must make a
written request that the trustee take action because of the
default;
|
|
|
|
such holder or holders must offer reasonable indemnity to the
trustee against the cost and other liabilities of taking that
action;
|
|
|
|
the trustee must have not taken action for 90 days after
receipt of the above notice and offer of indemnity; and
|
|
|
|
the trustee has not received any direction from a majority in
principal amount of all outstanding securities that is
inconsistent with such written request during such
90-day
period.
|
27
However, you are entitled at any time to bring a lawsuit for the
payment of money due on your debt security on or after its due
date.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR
BANKS, BROKERS OR OTHER FINANCIAL INSTITUTIONS FOR INFORMATION
ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE
TRUSTEE AND TO MAKE OR CANCEL A DECLARATION OF ACCELERATION.
We will give to the trustee every year a written statement of
certain of our officers certifying that to their knowledge we
are in compliance with the applicable indenture and the debt
securities issued under it, or else specifying any default.
Form,
Exchange and Transfer
Unless we specify otherwise in an applicable supplement, the
debt securities will be issued:
|
|
|
|
|
only in fully-registered form;
|
|
|
|
without interest coupons; and
|
|
|
|
in denominations that are even multiples of $1,000.
|
If a debt security is issued as a registered global security,
only the depositary such as DTC, Euroclear and
Clearstream, each as defined below under
Legal Ownership and Book-Entry
Issuance
will be entitled to transfer and
exchange the debt security as described in this subsection
because the depositary will be the sole registered holder of the
debt security and is referred to below as the
holder
. Those who own beneficial interests in
a global security do so through participants in the
depositarys securities clearance system, and the rights of
these indirect owners will be governed by the applicable
procedures of the depositary and its participants. We describe
book-entry procedures below under
Legal
Ownership and Book-Entry Issuance
.
Holders of debt securities issued in fully-registered form may
have their debt securities broken into more debt securities of
smaller denominations of not less than $1,000, or combined into
fewer debt securities of larger denominations, as long as the
total principal amount is not changed. This is called an
exchange.
Holders may exchange or register the transfer of debt securities
at the office of the trustee. Debt securities may be transferred
by endorsement. Holders may also replace lost, stolen or
mutilated debt securities at that office. The trustee acts as
our agent for registering debt securities in the names of
holders and registering the transfer of debt securities. We may
change this appointment to another entity or perform it
ourselves. The entity performing the role of maintaining the
list of registered holders is called the security registrar. It
will also record transfers. The trustee may require an indemnity
before replacing any debt securities.
Holders will not be required to pay a service charge to register
the transfer or exchange of debt securities, but holders may be
required to pay for any tax or other governmental charge
associated with the exchange or transfer. The registration of a
transfer or exchange will only be made if the security registrar
is satisfied with your proof of ownership.
If we designate additional agents, they will be named in the
applicable supplements. We may cancel the designation of any
particular agent. We may also approve a change in the office
through which any agent acts.
If the debt securities are redeemable and we redeem less than
all of the debt securities of a particular series, we may block
the registration of transfer or exchange of debt securities
during the period beginning 15 days before the day we mail
the notice of redemption and ending on the day of that mailing,
in order to freeze the list of holders entitled to receive the
mailing. We may also refuse to register transfers or exchanges
of debt securities selected for redemption, except that we will
continue to permit registration of transfers and exchanges of
the unredeemed portion of any debt security being partially
redeemed.
The
Trustee
Wells Fargo Bank, National Association serves as the trustee for
our senior debt securities. Wells Fargo Bank, National
Association also serves as the trustee for the subordinated debt
securities. Consequently, if an actual or potential event of
default occurs with respect to any of these debt securities, the
trustee may be considered to have a conflicting interest for
purposes of the Trust Indenture Act of 1939. In that case,
the trustee may be required to resign under one or both of the
indentures, and we would be required to appoint a successor
trustee. For this purpose, a
potential
event
of default means an event that would be an event of default if
the requirements for giving us default notice or for the default
having to exist for a specific period of time were disregarded.
From time to time, we and our affiliates have conducted
28
commercial banking, financial and other transactions with Wells
Fargo Bank, National Association and its respective affiliates
for which fees have been paid in the ordinary course of
business. We may conduct these types of transactions with each
other in the future and receive fees for services performed.
Payment
and Paying Agents
We will pay interest to the person listed in the trustees
records at the close of business on a particular day in advance
of each due date for interest, even if that person no longer
owns the debt security on the interest due date. That particular
day, usually about two weeks in advance of the interest due
date, is called the regular record date and will be stated in an
applicable supplement. Holders buying and selling debt
securities must work out between them how to compensate for the
fact that we will pay all the interest for an interest period to
the one who is the registered holder on the regular record date.
The most common manner is to adjust the sale price of the debt
securities to prorate interest fairly between buyer and seller.
This prorated interest amount is called accrued interest.
We will pay interest, principal and any other money due on the
debt securities at the corporate trust office of the trustee in
The City of New York or such other office as may be agreed upon.
That office is currently located at 45 Broadway
14th Floor, New York, New York 10006. Holders must make
arrangements to have their payments picked up at or wired from
that office or such other office as may be agreed upon. We may
also choose to pay interest by mailing checks.
BOOK-ENTRY AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR
BANKS, BROKERS OR OTHER FINANCIAL INSTITUTIONS FOR INFORMATION
ON HOW THEY WILL RECEIVE PAYMENTS.
We may also arrange for additional payment offices and may
cancel or change these offices, including our use of the
trustees corporate trust office. These offices are called
paying agents. We may also choose to act as our own paying agent
or choose one of our subsidiaries to do so. We must notify
holders of changes in the paying agents for any particular
series of debt securities.
Notices
We and the trustee will send notices regarding the debt
securities only to registered holders, using their addresses as
listed in the trustees records. With respect to who is a
registered
holder
for this purpose, see
Legal Ownership and Book-Entry
Issuance
.
Regardless of who acts as paying agent, all money paid by us to
a paying agent that remains unclaimed at the end of two years
after the amount is due to holders will be repaid to us. After
that two-year period, holders may look to us for payment and not
to the trustee or any other paying agent.
Legal
Ownership and Book-Entry Issuance
In this section, we describe special considerations that will
apply to registered debt securities issued in global
i.e.
, book-entry, form. First we describe the difference
between registered ownership and indirect ownership of
registered securities. Then we describe special provisions that
apply to global securities.
Who is
the Legal Owner of a Registered Debt Security?
Each debt security will be represented either by a certificate
issued in definitive form to a particular investor or by one or
more global securities representing debt securities. We refer to
those who have debt securities registered in their own names, on
the books that we or the trustee maintain for this purpose, as
the
registered holders
of those debt
securities. Subject to limited exceptions, we and the trustee
are entitled to treat the registered holder of a debt security
as the person exclusively entitled to vote, to receive notices,
to receive any interest or other payment in respect of the debt
security and to exercise all the rights and power as an owner of
the debt security. We refer to those who own beneficial
interests in debt securities that are not registered in their
own names as indirect owners of those debt securities. As we
discuss below, indirect owners are not registered holders, and
investors in debt securities issued in book-entry form or in
street name will be indirect owners.
Book-Entry Owners.
Unless otherwise noted in
an applicable supplement, we will issue each debt security in
book-entry form only. This means debt securities will be
represented by one or more global securities registered in the
name of a financial institution that holds them as depositary on
behalf of other financial institutions that participate in the
29
depositarys book-entry system. These participating
institutions, in turn, hold beneficial interests in the debt
securities on behalf of themselves or their customers.
Under each indenture (and the Bank Act in the case of
subordinated indebtedness), subject to limited exceptions and
applicable law, only the person in whose name a debt security is
registered is recognized as the holder of that debt security.
Consequently, for debt securities issued in global form, we will
recognize only the depositary as the holder of the debt
securities and we will make all payments on the debt securities,
including deliveries of any property other than cash, to the
depositary. The depositary passes along the payments it receives
to its participants, which in turn pass the payments along to
their customers who are the beneficial owners. The depositary
and its participants do so under agreements they have made with
one another or with their customers; they are not obligated to
do so under the terms of the debt securities.
As a result, investors will not own debt securities directly.
Instead, they will own beneficial interests in a global
security, through a bank, broker or other financial institution
that participates in the depositarys book-entry system or
holds an interest through a participant. As long as the debt
securities are issued in global form, investors will be indirect
owners, and not registered holders, of the debt securities.
Street Name Owners.
We may terminate an
existing global security or issue debt securities initially in
non-global form. In these cases, investors may choose to hold
their debt securities in their own names or in street name. Debt
securities held by an investor in street name would be
registered in the name of a bank, broker or other financial
institution that the investor chooses, and the investor would
hold only a beneficial interest in those debt securities through
an account he or she maintains at that institution.
For debt securities held in street name, we will, subject to
limited exceptions and applicable law, recognize only the
intermediary banks, brokers and other financial institutions in
whose names the debt securities are registered as the holders of
those debt securities, and we will make all payments on those
debt securities, including deliveries of any property other than
cash, to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but
only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold
debt securities in street name will be indirect owners, not
registered holders, of those debt securities.
Registered Holders.
Subject to limited
exceptions, our obligations, as well as the obligations of the
trustee under any indenture and the obligations, if any, of any
other third parties employed by us, run only to the registered
holders of the debt securities. We do not have obligations to
investors who hold beneficial interests in global securities, in
street name or by any other indirect means. This will be the
case whether an investor chooses to be an indirect owner of a
debt security or has no choice because we are issuing the debt
securities only in global form.
For example, once we make a payment or give a notice to the
registered holder, we have no further responsibility for that
payment or notice even if that holder is required, under
agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so.
Similarly, if we want to obtain the approval of the holders for
any purpose for example, to amend the indenture for
a series of debt securities or to relieve us of the consequences
of a default or of our obligation to comply with a particular
provision of an indenture we would seek the approval
only from the registered holders, and not the indirect owners,
of the relevant debt securities. Whether and how the registered
holders contact the indirect owners is up to the registered
holders.
When we refer to
you
in this prospectus, we
mean all purchasers of the debt securities being offered by this
prospectus and the applicable supplements, whether they are the
registered holders or only indirect owners of those debt
securities. When we refer to
your debt
securities
in this prospectus, we mean the debt
securities in which you will hold a direct or indirect interest.
Special Considerations for Indirect Owners.
If
you hold debt securities through a bank, broker or other
financial institution, either in book-entry form or in street
name, you should check with your own institution to find out:
|
|
|
|
|
how it handles debt securities payments and notices;
|
|
|
|
whether it imposes fees or charges;
|
|
|
|
how it would handle a request for the holders consent, if
ever required;
|
|
|
|
how it would exercise rights under the debt securities if there
were a default or other event triggering the need for holders to
act to protect their interests; and
|
|
|
|
if the debt securities are in book-entry form, how the
depositarys rules and procedures will affect these matters.
|
30
What is a
Global Security?
Unless otherwise noted in the applicable supplement, we will
issue each debt security in book-entry form only. Each debt
security issued in book-entry form will be represented by a
global security that we deposit with and register in the name of
one or more financial institutions or clearing systems, or their
nominees, which we select. A financial institution or clearing
system that we select for any debt security for this purpose is
called the
depositary
for that debt security.
A debt security will usually have only one depositary but it may
have more. Each series of debt securities will have one or more
of the following as the depositaries:
|
|
|
|
|
The Depository Trust Company, New York, New York, which is
known as
DTC
;
|
|
|
|
Euroclear Bank S.A./N.V., as operator of the Euroclear System,
which is known as
Euroclear
;
|
|
|
|
Clearstream Banking, société anonyme, which is known
as
Clearstream
; and
|
|
|
|
any other clearing system or financial institution named in the
applicable supplements.
|
The depositaries named above may also be participants in one
anothers systems. Thus, for example, if DTC is the
depositary for a global security, investors may hold beneficial
interests in that debt security through Euroclear or
Clearstream, as DTC participants. The depositary or depositaries
for your debt securities will be named in the applicable
supplements; if none is named, the depositary will be DTC.
A global security may represent one or any other number of
individual debt securities. Generally, all debt securities
represented by the same global security will have the same
terms. We may, however, issue a global security that represents
multiple securities of the same kind, such as debt securities,
that have different terms and are issued at different times. We
call this kind of global security a master global security. The
applicable supplements will not indicate whether your debt
securities are represented by a master global security.
A global security may not be transferred to or registered in the
name of anyone other than the depositary or its nominee, unless
special termination situations arise. We describe those
situations below under
Holders Option
to Obtain a Non-Global Security; Special Situations When a
Global Security Will Be Terminated
. As a result of
these arrangements, the depositary, or its nominee, will be the
sole registered owner and holder of all debt securities
represented by a global security, and investors will be
permitted to own only indirect interests in a global security.
Indirect interests must be held by means of an account with a
broker, bank or other financial institution that in turn has an
account with the depositary or with another institution that
does. Thus, an investor whose debt security is represented by a
global security will not be a holder of the debt security, but
only an indirect owner of an interest in the global security.
If an applicable supplement for a particular debt security
indicates that the debt security will be issued in global form
only, then the debt security will be represented by a global
security at all times unless and until the global security is
terminated. We describe the situations in which this can occur
below under
Holders Option to Obtain
a Non-Global Security; Special Situations When a Global Security
Will Be Terminated
. If termination occurs, we may
issue the debt securities through another book-entry clearing
system or decide that the debt securities may no longer be held
through any book-entry clearing system.
Special Considerations for Global
Securities.
As an indirect owner, an
investors rights relating to a global security will be
governed by the account rules of the depositary and those of the
investors bank, broker, financial institution or other
intermediary through which it holds its interest (such as
Euroclear or Clearstream, if DTC is the depositary), as well as
general laws relating to debt securities transfers. We do not
recognize this type of investor or any intermediary as a holder
of debt securities and instead deal only with the depositary
that holds the global security.
If debt securities are issued only in the form of a global
security, an investor should be aware of the following:
|
|
|
|
|
an investor cannot cause the debt securities to be registered in
his or her own name, and cannot obtain non-global certificates
for his or her interest in the debt securities, except in the
special situations we describe below;
|
|
|
|
an investor will be an indirect holder and must look to his or
her own bank, broker or other financial institution for payments
on the debt securities and protection of his or her legal rights
relating to the debt securities, as we describe above under
Who Is the Legal Owner of a Registered Debt
Security?
;
|
|
|
|
an investor may not be able to sell interests in the debt
securities to some insurance companies and other institutions
that are required by law to own their debt securities in
non-book-entry form;
|
31
|
|
|
|
|
an investor may not be able to pledge his or her interest in a
global security in circumstances in which certificates
representing the debt securities must be delivered to the lender
or other beneficiary of the pledge in order for the pledge to be
effective;
|
|
|
|
the depositarys policies will govern payments, deliveries,
transfers, exchanges, notices and other matters relating to an
investors interest in a global security, and those
policies may change from time to time. We and the trustee will
have no responsibility for any aspect of the depositarys
policies, actions or records of ownership interests in a global
security. We and the trustee also do not supervise the
depositary in any way;
|
|
|
|
the depositary may require that those who purchase and sell
interests in a global security within its book-entry system use
immediately available funds and your bank, broker or other
financial institution may require you to do so as well; and
|
|
|
|
financial institutions that participate in the depositarys
book-entry system and through which an investor holds its
interest in the global securities, directly or indirectly, may
also have their own policies affecting payments, deliveries,
transfers, exchanges, notices and other matters relating to the
debt securities, and those policies may change from time to
time. For example, if you hold an interest in a global security
through Euroclear or Clearstream, when DTC is the depositary,
Euroclear or Clearstream, as applicable, may require those who
purchase and sell interests in that debt security through them
to use immediately available funds and comply with other
policies and procedures, including deadlines for giving
instructions as to transactions that are to be effected on a
particular day. There may be more than one financial
intermediary in the chain of ownership for an investor. We do
not monitor and are not responsible for the policies or actions
or records of ownership interests of any of those intermediaries.
|
Holders Option to Obtain a Non-Global Security; Special
Situations When a Global Security Will Be
Terminated.
If we issue any series of debt
securities in book-entry form but we choose to give the
beneficial owners of that series the right to obtain non-global
securities, any beneficial owner entitled to obtain non-global
securities may do so by following the applicable procedures of
the depositary, any transfer agent or registrar for that series
and that owners bank, broker or other financial
institution through which that owner holds its beneficial
interest in the debt securities. If you are entitled to request
a non-global certificate and wish to do so, you will need to
allow sufficient lead time to enable us or our agent to prepare
the requested certificate.
In addition, in a few special situations described below, a
global security will be terminated and interests in it will be
exchanged for certificates in non-global form representing the
debt securities it represented. After that exchange, the choice
of whether to hold the debt securities directly or in street
name will be up to the investor. Investors must consult their
own banks, brokers or other financial institutions, to find out
how to have their interests in a global security transferred on
termination to their own names, so that they will be holders. We
have described the rights of holders and street name investors
above under
Who Is the Legal Owner of a
Registered Debt Security?
The special situations for termination of a global security are
as follows:
|
|
|
|
|
if the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global
security and we do not appoint another institution to act as
depositary within 60 days;
|
|
|
|
if we notify the trustee, warrant agent or unit agent, as
applicable, that we wish to terminate that global
security; or
|
|
|
|
if an event of default has occurred with regard to these debt
securities and has not been cured or waived.
|
If a global security is terminated, only the depositary, and
neither we nor the trustee for any debt securities is
responsible for deciding the names of the institutions in whose
names the debt securities represented by the global security
will be registered and, therefore, who will be the registered
holders of those debt securities.
Considerations
Relating to DTC
DTC has informed us that it is a limited-purpose trust company
organized under the New York Banking Law, a
banking
organization
within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a
clearing corporation
within the meaning of
the New York Uniform Commercial Code, and a
clearing
agency
registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds debt securities
that DTC participants deposit with DTC. DTC also facilitates the
settlement among DTC participants of securities transactions,
such as transfers and pledges, in deposited debt securities
through electronic computerized book-entry changes in DTC
participants accounts, thereby eliminating the need for
physical movement of certificates. DTC participants include
securities brokers
32
and dealers, banks, trust companies and clearing corporations,
and may include other organizations. DTC is a wholly owned
subsidiary of the Depository Trust & Clearing
Corporation, which in turn is owned by a number of participants
of DTC and members of the National Securities Clearing
Corporation and Emerging Markets Clearing Corporation, as well
as by the New York Stock Exchange, Inc. and the Financial
Industry Regulatory Authority. Indirect access to the DTC system
also is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
The rules applicable to DTC and DTC participants are on file
with the SEC.
Purchases of debt securities within the DTC system must be made
by or through DTC participants, who will receive a credit for
the debt securities on DTCs records. Transfers of
ownership interests in the debt securities are to be
accomplished by entries made on the books of participants acting
on behalf of beneficial owners.
Redemption notices will be sent to DTCs nominee,
Cede & Co., as the registered holder of the debt
securities. If less than all of the debt securities are being
redeemed, DTC will determine the amount of the interest of each
direct participant to be redeemed in accordance with its
then-current procedures.
In instances in which a vote is required, neither DTC nor
Cede & Co. will itself consent or vote with respect to
the debt securities. Under its usual procedures, DTC would mail
an omnibus proxy to the relevant trustee as soon as possible
after the record date. The omnibus proxy assigns
Cede & Co.s consenting or voting rights to those
direct participants to whose accounts such debt securities are
credited on the record date (identified in a listing attached to
the omnibus proxy).
Distribution payments on the debt securities will be made by the
relevant trustee to DTC. DTCs usual practice is to credit
direct participants accounts on the relevant payment date
in accordance with their respective holdings shown on DTCs
records unless DTC has reason to believe that it will not
receive payments on such payment date. Payments by participants
to beneficial owners will be governed by standing instructions
and customary practices and will be the responsibility of such
participants and not of DTC, the relevant trustee or us, subject
to any statutory or regulatory requirements as may be in effect
from time to time. Payment of distributions to DTC is the
responsibility of the relevant trustee, and disbursements of
such payments to the beneficial owners are the responsibility of
direct and indirect participants.
The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that we believe
to be accurate, but we assume no responsibility for the accuracy
thereof. We do not have any responsibility for the performance
by DTC or its participants of their respective obligations as
described herein or under the rules and procedures governing
their respective operations.
Considerations
Relating to Clearstream and Euroclear
Clearstream and Euroclear are securities clearance systems in
Europe. Clearstream and Euroclear have respectively informed us
that Clearstream and Euroclear each hold securities for their
customers and facilitate the clearance and settlement of
securities transactions by electronic book-entry transfer
between their respective account holders. Clearstream and
Euroclear provide various services including safekeeping,
administration, clearance and settlement of internationally
traded securities and securities lending and borrowing.
Clearstream and Euroclear also deal with domestic securities
markets in several countries through established depositary and
custodial relationships. Clearstream and Euroclear have
established an electronic bridge between their two systems
across which their respective participants may settle trades
with each other. Clearstream and Euroclear customers are
world-wide financial institutions including underwriters,
securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to Clearstream and
Euroclear is available to other institutions that clear through
or maintain a custodial relationship with an account holder of
either system.
Euroclear and Clearstream may be depositaries for a global
security. In addition, if DTC is the depositary for a global
security, Euroclear and Clearstream may hold interests in the
global security as participants in DTC.
As long as any global security is held by Euroclear or
Clearstream, as depositary, you may hold an interest in the
global security only through an organization that participates,
directly or indirectly, in Euroclear or Clearstream. If
Euroclear or Clearstream is the depositary for a global security
and there is no depositary in the United States, you will not be
able to hold interests in that global security through any
securities clearance system in the United States.
Payments, deliveries, transfers, exchanges, notices and other
matters relating to the debt securities made through Euroclear
or Clearstream must comply with the rules and procedures of
those systems. Those systems could change their rules and
procedures at any time. We have no control over those systems or
their participants and we take no responsibility
33
for their activities. Transactions between participants in
Euroclear or Clearstream, on one hand, and participants in DTC,
on the other hand, when DTC is the depositary, would also be
subject to DTCs rules and procedures.
Special Timing Considerations Relating to Transactions in
Euroclear and Clearstream.
Investors will be able
to make and receive through Euroclear and Clearstream payments,
deliveries, transfers, exchanges, notices and other transactions
involving any debt securities held through those systems only on
days when those systems are open for business. Those systems may
not be open for business on days when banks, brokers and other
financial institutions are open for business in the United
States.
In addition, because of time-zone differences,
U.S. investors who hold their interests in the debt
securities through these systems and wish to transfer their
interests, or to receive or make a payment or delivery or
exercise any other right with respect to their interests, on a
particular day may find that the transaction will not be
effected until the next business day in Luxembourg or Brussels,
as applicable. Thus, investors who wish to exercise rights that
expire on a particular day may need to act before the expiration
date. In addition, investors who hold their interests through
both DTC and Euroclear or Clearstream may need to make special
arrangements to finance any purchases or sales of their
interests between the U.S. and European clearing systems,
and those transactions may settle later than would be the case
for transactions within one clearing system.
34
UNITED
STATES FEDERAL INCOME TAXATION
This section describes the material United States federal income
tax consequences to a United States holder (as defined below) of
owning the securities we are offering. It is the opinion of
Sullivan & Cromwell LLP, counsel to the Bank. It
applies to you only if you hold your securities as capital
assets for United States federal income tax purposes. This
section does not apply to you if you are a member of a class of
holders subject to special rules, such as:
|
|
|
|
|
a dealer in securities or currencies,
|
|
|
|
a trader in securities that elects to use a
mark-to-market
method of accounting for your securities holdings,
|
|
|
|
a bank,
|
|
|
|
a life insurance company,
|
|
|
|
a tax-exempt organization,
|
|
|
|
a person that actually or constructively owns 10% or more of our
voting stock,
|
|
|
|
a person that holds securities as part of a straddle or a
hedging or conversion transaction
|
|
|
|
a person liable for alternative minimum tax, or
|
|
|
|
a person whose functional currency for tax purposes is not the
U.S. dollar.
|
This section is based on the Internal Revenue Code of 1986, as
amended (the
Code
), its legislative history,
existing and proposed regulations under the Code, published
rulings and court decisions, all as currently in effect. These
laws are subject to change, possibly on a retroactive basis.
If a partnership holds the securities, the United States federal
income tax treatment of a partner will generally depend on the
status of the partner and the tax treatment of the partnership.
A partner in a partnership holding the securities should consult
its tax advisor with regard to the United States federal income
tax treatment of an investment in the securities.
Please consult your own tax advisor concerning the
consequences of owning these securities in your particular
circumstances under the Code and the laws of any other taxing
jurisdiction.
You are a United States holder if you are a beneficial owner of
a security and you are:
|
|
|
|
|
a citizen or individual resident of the United States,
|
|
|
|
a domestic corporation,
|
|
|
|
an estate whose income is subject to United States federal
income tax regardless of its source, or
|
|
|
|
a trust if a United States court can exercise primary
supervision over the trusts administration and one or more
United States persons are authorized to control all substantial
decisions of the trust.
|
Tax
consequences to holders of our shares
This subsection discusses tax consequences relevant to the
purchase, ownership and disposition of our shares. Additional
United States federal income tax consequences relevant to
certain preferred shares are not described in this prospectus
and will be discussed in an applicable supplement.
Taxation
of Dividends
The gross amount of any dividend we pay out of our current or
accumulated earnings and profits (as determined for United
States federal income tax purposes) is subject to United States
federal income taxation. If you are a noncorporate United States
holder, dividends paid to you in taxable years beginning before
January 1, 2013 that constitute qualified dividend income
will be taxable to you at a maximum tax rate of 15% provided
that you hold the shares for more than 60 days during the
121 day period beginning 60 days before the
ex-dividend date (or, in the case of preferred stock, if the
dividend is attributable to a period or periods aggregating over
366 days, provided that you hold the shares for more than
90 days during the 181 day period beginning
90 days before the ex-dividend date) and meet other holding
period requirements. Dividends we pay with respect to the shares
generally will be qualified dividend income.
The dividend is taxable to you when you receive the dividend,
actually or constructively. The dividend will not be eligible
for the dividends-received deduction generally allowed to United
States corporations in respect of dividends received from other
United States corporations. The amount of the dividend
distribution that you must include in your income as a United
States holder will be the U.S. dollar value of the Canadian
payments made, determined at the spot Canadian
dollar/U.S. dollar rate on the date the dividend
distribution is includible in your income, regardless of whether
35
the payment is in fact converted into U.S. dollars.
Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date you include the
dividend payment in income to the date you convert the payment
into U.S. dollars will be treated as ordinary income or
loss and will not be eligible for the special tax rate
applicable to qualified dividend income. The gain or loss
generally will be income or loss from sources within the United
States for foreign tax credit limitation purposes. Distributions
in excess of current and accumulated earnings and profits (as
determined for United States federal income tax purposes) will
be treated as a non-taxable return of capital to the extent of
your basis in the shares and thereafter as capital gain.
For foreign tax credit limitation purposes, dividends will be
income from sources outside the United States and will,
depending on your circumstances, be either passive
or general income for foreign tax credit limitation
purposes.
Sale
or Exchange of Shares
If you are a United States holder and you sell or otherwise
dispose of your shares, you will recognize capital gain or loss
for United States federal income tax purposes equal to the
difference between the U.S. dollar value of the amount that
you realize and your tax basis, determined in U.S. dollars,
in your shares. Capital gain of a noncorporate United States
holder is generally taxed at preferential rates where the
property is held for more than one year. The deductibility of
capital losses is subject to limitations. The gain or loss will
generally be income or loss from sources within the United
States for foreign tax credit limitation purposes.
PFIC
Rules
We believe that shares should not be treated as stock of a
Passive Foreign Investment Company (a
PFIC
)
for United States federal income tax purposes, but this
conclusion is a factual determination that is made annually and
thus may be subject to change. Any subsequent determinations
that we make with respect to our PFIC status will be discussed
in an applicable supplement.
In general, if you are a United States holder, we will be a PFIC
with respect to you if for any taxable year in which you held
our shares:
|
|
|
|
|
at least 75% of our gross income for the taxable year is passive
income or
|
|
|
|
at least 50% of the value, determined on the basis of a
quarterly average, of our assets is attributable to assets that
produce or are held for the production of passive income.
|
Passive income generally includes dividends, interest,
royalties, rents (other than certain rents and royalties derived
in the active conduct of a trade or business), annuities and
gains from assets that produce passive income. If a foreign
corporation owns at least 25% by value of the stock of another
corporation, the foreign corporation is treated for purposes of
the PFIC tests as owning its proportionate share of the of the
assets of the other corporation, and as receiving directly its
proportionate share of the other corporations income. For
this purpose, income derived in the active conduct of our
banking business should not be treated as passive income.
Tax
consequences to holders of our debt securities
This subsection deals only with debt securities that are due to
mature 30 years or less from the date on which they are
issued and whose terms are described in this prospectus. The
United States federal income tax consequences of owning debt
securities that are due to mature more than 30 years from
their date of issue and debt securities whose terms are not
described in this prospectus will be discussed in an applicable
supplement.
Payments
of Interest
Except as described below in the case of interest on a discount
debt security that is not qualified stated interest, each as
defined below under
Original Issue
Discount General
, you will be taxed on any
interest on your debt security, whether payable in
U.S. dollars or a foreign currency, including a composite
currency or basket of currencies other than U.S. dollars,
as ordinary income at the time you receive the interest or when
it accrues, depending on your method of accounting for tax
purposes.
Interest that we pay on the debt securities and original issue
discount, if any, accrued with respect to the debt securities
(as described below under
Original Issue
Discount
) is income from sources outside the United
States subject to the rules regarding the foreign tax credit
allowable to a United States holder. Under the foreign tax
credit rules, interest and original issue discount and
additional amounts will, depending on your circumstances, be
either
passive
or
general
income for purposes of computing the foreign tax credit.
36
Cash Basis Taxpayers.
If you are a taxpayer
that uses the cash receipts and disbursements method of
accounting for tax purposes and you receive an interest payment
that is denominated in, or determined by reference to, a foreign
currency, you must recognize income equal to the
U.S. dollar value of the interest payment, based on the
exchange rate in effect on the date of receipt, regardless of
whether you actually convert the payment into U.S. dollars.
Accrual Basis Taxpayers.
If you are a taxpayer
that uses an accrual method of accounting for tax purposes, you
may determine the amount of income that you recognize with
respect to an interest payment denominated in, or determined by
reference to, a foreign currency by using one of two methods.
Under the first method, you will determine the amount of income
accrued based on the average exchange rate in effect during the
interest accrual period or, with respect to an accrual period
that spans two taxable years, that part of the period within the
taxable year.
If you elect the second method, you would determine the amount
of income accrued on the basis of the exchange rate in effect on
the last day of the accrual period, or, in the case of an
accrual period that spans two taxable years, the exchange rate
in effect on the last day of the part of the period within the
taxable year. Additionally, under this second method, if you
receive a payment of interest within five business days of the
last day of your accrual period or taxable year, you may instead
translate the interest accrued into U.S. dollars at the
exchange rate in effect on the day that you actually receive the
interest payment. If you elect the second method it will apply
to all debt instruments that you hold at the beginning of the
first taxable year to which the election applies and to all debt
instruments that you subsequently acquire. You may not revoke
this election without the consent of the Internal Revenue
Service.
When you actually receive an interest payment, including a
payment attributable to accrued but unpaid interest upon the
sale or retirement of your debt security, denominated in, or
determined by reference to, a foreign currency for which you
accrued an amount of income, you will recognize ordinary income
or loss measured by the difference, if any, between the exchange
rate that you used to accrue interest income and the exchange
rate in effect on the date of receipt, regardless of whether you
actually convert the payment into U.S. dollars.
Original
Issue Discount
General.
If you own a debt security, other
than a short-term debt security with a term of one year or less,
it will be treated as a discount debt security issued at an
original issue discount if the amount by which the debt
securitys stated redemption price at maturity exceeds its
issue price is more than a de minimis amount. Generally, a debt
securitys issue price will be the first price at which a
substantial amount of debt securities included in the issue of
which the debt security is a part is sold to persons other than
bond houses, brokers, or similar persons or organizations acting
in the capacity of underwriters, placement agents, or
wholesalers. A debt securitys stated redemption price at
maturity is the total of all payments provided by the debt
security that are not payments of qualified stated interest.
Generally, an interest payment on a debt security is qualified
stated interest if it is one of a series of stated interest
payments on a debt security that are unconditionally payable at
least annually at a single fixed rate, with certain exceptions
for lower rates paid during some periods, applied to the
outstanding principal amount of the debt security. There are
special rules for variable rate debt securities that are
discussed under
Variable Rate Debt
Securities
.
In general, your debt security is not a discount debt security
if the amount by which its stated redemption price at maturity
exceeds its issue price is less than the de minimis amount of
1/4 of 1 percent of its stated redemption price at maturity
multiplied by the number of complete years to its maturity. Your
debt security will have de minimis original issue discount if
the amount of the excess is less than the de minimis amount. If
your debt security has de minimis original issue discount, you
must include the de minimis amount in income as stated principal
payments are made on the debt security, unless you make the
election described below under
Election to
Treat All Interest as Original Issue Discount
. You can
determine the includible amount with respect to each such
payment by multiplying the total amount of your debt
securitys de minimis original issue discount by a fraction
equal to:
|
|
|
|
|
the amount of the principal payment made
|
divided by:
|
|
|
|
|
the stated principal amount of the debt security.
|
Generally, if your discount debt security matures more than one
year from its date of issue, you must include original issue
discount, or OID, in income before you receive cash attributable
to that income. The amount of OID that you must include in
income is calculated using a constant-yield method, and
generally you will include increasingly greater amounts of OID
in income over the life of your debt security. More
specifically, you can calculate the amount of OID that you must
include in income by adding the daily portions of OID with
respect to your discount debt security for each day
37
during the taxable year or portion of the taxable year that you
hold your discount debt security. You can determine the daily
portion by allocating to each day in any accrual period a pro
rata portion of the OID allocable to that accrual period. You
may select an accrual period of any length with respect to your
discount debt security and you may vary the length of each
accrual period over the term of your discount debt security.
However, no accrual period may be longer than one year and each
scheduled payment of interest or principal on the discount debt
security must occur on either the first or final day of an
accrual period.
You can determine the amount of OID allocable to an accrual
period by:
|
|
|
|
|
multiplying your discount debt securitys adjusted issue
price at the beginning of the accrual period by your debt
securitys yield to maturity, and then
|
|
|
|
subtracting from this figure the sum of the payments of
qualified stated interest on your debt security allocable to the
accrual period.
|
You must determine the discount debt securitys yield to
maturity on the basis of compounding at the close of each
accrual period and adjusting for the length of each accrual
period. Further, you determine your discount debt
securitys adjusted issue price at the beginning of any
accrual period by:
|
|
|
|
|
adding your discount debt securitys issue price and any
accrued OID for each prior accrual period, and then
|
|
|
|
subtracting any payments previously made on your discount debt
security that were not qualified stated interest payments.
|
If an interval between payments of qualified stated interest on
your discount debt security contains more than one accrual
period, then, when you determine the amount of OID allocable to
an accrual period, you must allocate the amount of qualified
stated interest payable at the end of the interval, including
any qualified stated interest that is payable on the first day
of the accrual period immediately following the interval, pro
rata to each accrual period in the interval based on their
relative lengths. In addition, you must increase the adjusted
issue price at the beginning of each accrual period in the
interval by the amount of any qualified stated interest that has
accrued prior to the first day of the accrual period but that is
not payable until the end of the interval. You may compute the
amount of OID allocable to an initial short accrual period by
using any reasonable method if all other accrual periods, other
than a final short accrual period, are of equal length.
The amount of OID allocable to the final accrual period is equal
to the difference between:
|
|
|
|
|
the amount payable at the maturity of your debt security, other
than any payment of qualified stated interest, and
|
|
|
|
your debt securitys adjusted issue price as of the
beginning of the final accrual period.
|
Acquisition Premium.
If you purchase your debt
security for an amount that is less than or equal to the sum of
all amounts, other than qualified stated interest, payable on
your debt security after the purchase date but is greater than
the amount of your debt securitys adjusted issue price, as
determined above under
General
,
the excess is acquisition premium. If you do not make the
election described below under
Election to
Treat All Interest as Original Issue Discount
, then
you must reduce the daily portions of OID by a fraction equal to:
|
|
|
|
|
the excess of your adjusted basis in the debt security
immediately after purchase over the adjusted issue price of the
debt security
|
divided by:
|
|
|
|
|
the excess of the sum of all amounts payable, other than
qualified stated interest, on the debt security after the
purchase date over the debt securitys adjusted issue price.
|
Pre-Issuance Accrued Interest.
An election may
be made to decrease the issue price of your debt security by the
amount of pre-issuance accrued interest if:
|
|
|
|
|
a portion of the initial purchase price of your debt security is
attributable to pre-issuance accrued interest,
|
|
|
|
the first stated interest payment on your debt security is to be
made within one year of your debt securitys issue
date, and
|
|
|
|
the payment will equal or exceed the amount of pre-issuance
accrued interest.
|
If this election is made, a portion of the first stated interest
payment will be treated as a return of the excluded pre-issuance
accrued interest and not as an amount payable on your debt
security.
38
Debt Securities Subject to Contingencies Including Optional
Redemption.
Your debt security is subject to a
contingency if it provides for an alternative payment schedule
or schedules applicable upon the occurrence of a contingency or
contingencies, other than a remote or incidental contingency,
whether such contingency relates to payments of interest or of
principal. In such a case, you must determine the yield and
maturity of your debt security by assuming that the payments
will be made according to the payment schedule most likely to
occur if:
|
|
|
|
|
the timing and amounts of the payments that comprise each
payment schedule are known as of the issue date and
|
|
|
|
one of such schedules is significantly more likely than not to
occur.
|
If there is no single payment schedule that is significantly
more likely than not to occur, other than because of a mandatory
sinking fund, you must include income on your debt security in
accordance with the general rules that govern contingent payment
obligations. These rules will be discussed in an applicable
supplement.
Notwithstanding the general rules for determining yield and
maturity, if your debt security is subject to contingencies, and
either you or we have an unconditional option or options that,
if exercised, would require payments to be made on the debt
security under an alternative payment schedule or schedules,
then:
|
|
|
|
|
in the case of an option or options that we may exercise, we
will be deemed to exercise or not exercise an option or
combination of options in the manner that minimizes the yield on
your debt security and
|
|
|
|
in the case of an option or options that you may exercise, you
will be deemed to exercise or not exercise an option or
combination of options in the manner that maximizes the yield on
your debt security.
|
If both you and we hold options described in the preceding
sentence, those rules will apply to each option in the order in
which they may be exercised. You may determine the yield on your
debt security for the purposes of those calculations by using
any date on which your debt security may be redeemed or
repurchased as the maturity date and the amount payable on the
date that you chose in accordance with the terms of your debt
security as the principal amount payable at maturity.
If a contingency, including the exercise of an option, actually
occurs or does not occur contrary to an assumption made
according to the above rules then, except to the extent that a
portion of your debt security is repaid as a result of this
change in circumstances and solely to determine the amount and
accrual of OID, you must redetermine the yield and maturity of
your debt security by treating your debt security as having been
retired and reissued on the date of the change in circumstances
for an amount equal to your debt securitys adjusted issue
price on that date.
Election to Treat All Interest as Original Issue
Discount.
You may elect to include in gross
income all interest that accrues on your debt security using the
constant-yield method described above under
General
, with the modifications
described below. For purposes of this election, interest will
include stated interest, OID, de minimis original issue
discount, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium,
described below under
Debt Securities
Purchased at a Premium
, or acquisition premium.
If you make this election for your debt security, then, when you
apply the constant-yield method:
|
|
|
|
|
the issue price of your debt security will equal your cost,
|
|
|
|
the issue date of your debt security will be the date you
acquired it, and
|
|
|
|
no payments on your debt security will be treated as payments of
qualified stated interest.
|
Generally, this election will apply only to the debt security
for which you make it; however, if the debt security has
amortizable bond premium, you will be deemed to have made an
election to apply amortizable bond premium against interest for
all debt instruments with amortizable bond premium, other than
debt instruments the interest on which is excludible from gross
income, that you hold as of the beginning of the taxable year to
which the election applies or any taxable year thereafter.
Additionally, if you make this election for a market discount
debt security, you will be treated as having made the election
discussed below under
Debt Securities
Purchased with Market Discount
to include market
discount in income currently over the life of all debt
instruments having market discount that you acquire on or after
the first day of the first taxable year to which the election
applies. You may not revoke any election to apply the
constant-yield method to all interest on a debt security or the
deemed elections with respect to amortizable bond premium or
market discount debt securities without the consent of the
Internal Revenue Service.
39
Variable Rate Debt Securities.
Your debt
security will be a variable rate debt security if:
|
|
|
|
|
your debt securitys issue price does not exceed the total
noncontingent principal payments by more than the lesser of:
|
|
|
|
|
1.
|
0.015 multiplied by the product of the total noncontingent
principal payments and the number of complete years to maturity
from the issue date, or
|
|
|
2.
|
15 percent of the total noncontingent principal
payments; and
|
|
|
|
|
|
your debt security provides for stated interest, compounded or
paid at least annually, only at:
|
|
|
|
|
1.
|
one or more qualified floating rates,
|
|
|
2.
|
a single fixed rate and one or more qualified floating rates,
|
|
|
3.
|
a single objective rate, or
|
|
|
4.
|
a single fixed rate and a single objective rate that is a
qualified inverse floating rate; and
|
|
|
|
|
|
your debt security satisfies certain other conditions.
|
Your debt security will have a variable rate that is a qualified
floating rate if:
|
|
|
|
|
variations in the value of the rate can reasonably be expected
to measure contemporaneous variations in the cost of newly
borrowed funds in the currency in which your debt security is
denominated; or
|
|
|
|
the rate is equal to such a rate multiplied by either:
|
|
|
|
|
1.
|
a fixed multiple that is greater than 0.65 but not more than
1.35, or
|
|
|
2.
|
a fixed multiple greater than 0.65 but not more than 1.35,
increased or decreased by a fixed rate; and
|
|
|
|
|
|
the value of the rate on any date during the term of your debt
security is set no earlier than three months prior to the first
day on which that value is in effect and no later than one year
following that first day.
|
If your debt security provides for two or more qualified
floating rates that are within 0.25 percentage points of
each other on the issue date or can reasonably be expected to
have approximately the same values throughout the term of the
debt security, the qualified floating rates together constitute
a single qualified floating rate.
Your debt security will not have a qualified floating rate,
however, if the rate is subject to certain restrictions
(including caps, floors, governors, or other similar
restrictions) unless such restrictions are fixed throughout the
term of the debt security or are not reasonably expected to
significantly affect the yield on the debt security.
Your debt security will have a variable rate that is a single
objective rate if:
|
|
|
|
|
the rate is not a qualified floating rate,
|
|
|
|
the rate is determined using a single, fixed formula that is
based on objective financial or economic information that is not
within the control of or unique to the circumstances of the
issuer or a related party, and
|
|
|
|
the value of the rate on any date during the term of your debt
security is set no earlier than three months prior to the first
day on which that value is in effect and no later than one year
following that first day.
|
Your debt security will not have a variable rate that is an
objective rate, however, if it is reasonably expected that the
average value of the rate during the first half of your debt
securitys term will be either significantly less than or
significantly greater than the average value of the rate during
the final half of your debt securitys term.
An objective rate as described above is a qualified inverse
floating rate if:
|
|
|
|
|
the rate is equal to a fixed rate minus a qualified floating
rate, and
|
|
|
|
the variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of
newly borrowed funds.
|
Your debt security will also have a single qualified floating
rate or an objective rate if interest on your debt security is
stated at a fixed rate for an initial period of one year or less
followed by either a qualified floating rate or an objective
rate for a subsequent period, and either:
|
|
|
|
|
the fixed rate and the qualified floating rate or objective rate
have values on the issue date of the debt security that do not
differ by more than 0.25 percentage points, or
|
|
|
|
the value of the qualified floating rate or objective rate is
intended to approximate the fixed rate.
|
40
In general, if your variable rate debt security provides for
stated interest at a single qualified floating rate or objective
rate, or one of those rates after a single fixed rate for an
initial period, all stated interest on your debt security is
qualified stated interest. In this case, the amount of OID, if
any, is determined by using, in the case of a qualified floating
rate or qualified inverse floating rate, the value as of the
issue date of the qualified floating rate or qualified inverse
floating rate, or, for any other objective rate, a fixed rate
that reflects the yield reasonably expected for your debt
security.
If your variable rate debt security does not provide for stated
interest at a single qualified floating rate or a single
objective rate, and also does not provide for interest payable
at a fixed rate other than a single fixed rate for an initial
period, you generally must determine the interest and OID
accruals on your debt security by:
|
|
|
|
|
determining a fixed rate substitute for each variable rate
provided under your variable rate debt security,
|
|
|
|
constructing the equivalent fixed rate debt instrument, using
the fixed rate substitute described above,
|
|
|
|
determining the amount of qualified stated interest and OID with
respect to the equivalent fixed rate debt instrument, and
|
|
|
|
adjusting for actual variable rates during the applicable
accrual period.
|
When you determine the fixed rate substitute for each variable
rate provided under the variable rate debt security, you
generally will use the value of each variable rate as of the
issue date or, for an objective rate that is not a qualified
inverse floating rate, a rate that reflects the reasonably
expected yield on your debt security.
If your variable rate debt security provides for stated interest
either at one or more qualified floating rates or at a qualified
inverse floating rate, and also provides for stated interest at
a single fixed rate other than at a single fixed rate for an
initial period, you generally must determine interest and OID
accruals by using the method described in the previous
paragraph. However, your variable rate debt security will be
treated, for purposes of the first three steps of the
determination, as if your debt security had provided for a
qualified floating rate, or a qualified inverse floating rate,
rather than the fixed rate. The qualified floating rate, or
qualified inverse floating rate, that replaces the fixed rate
must be such that the fair market value of your variable rate
debt security as of the issue date approximates the fair market
value of an otherwise identical debt instrument that provides
for the qualified floating rate, or qualified inverse floating
rate, rather than the fixed rate.
Short-Term Debt Securities.
In general, if you
are an individual or other cash basis United States holder of a
short-term debt security, you are not required to accrue OID, as
specially defined below for the purposes of this paragraph, for
United States federal income tax purposes unless you elect to do
so (although it is possible that you may be required to include
any stated interest in income as you receive it). If you are an
accrual basis taxpayer, a taxpayer in a special class,
including, but not limited to, a regulated investment company,
common trust fund, or a certain type of pass-through entity, or
a cash basis taxpayer who so elects, you will be required to
accrue OID on short-term debt securities on either a
straight-line basis or under the constant-yield method, based on
daily compounding. If you are not required and do not elect to
include OID in income currently, any gain you realize on the
sale or retirement of your short-term debt security will be
ordinary income to the extent of the accrued OID, which will be
determined on a straight-line basis unless you make an election
to accrue the OID under the constant-yield method, through the
date of sale or retirement. However, if you are not required and
do not elect to accrue OID on your short-term debt securities,
you will be required to defer deductions for interest on
borrowings allocable to your short-term debt securities in an
amount not exceeding the deferred income until the deferred
income is realized.
When you determine the amount of OID subject to these rules, you
must include all interest payments on your short-term debt
security, including stated interest, in your short-term debt
securitys stated redemption price at maturity.
Foreign Currency Discount Debt Securities.
If
your discount debt security is denominated in, or determined by
reference to, a foreign currency, you must determine OID for any
accrual period on your discount debt security in the foreign
currency and then translate the amount of OID into
U.S. dollars in the same manner as stated interest accrued
by an accrual basis United States holder, as described under
Tax consequences to holders of our
debt securities Payments of Interest
. You
may recognize ordinary income or loss when you receive an amount
attributable to OID in connection with a payment of interest or
the sale or retirement of your debt security.
Debt
Securities Purchased at a Premium
If you purchase your debt security for an amount in excess of
its principal amount, you may elect to treat the excess as
amortizable bond premium. If you make this election, you will
reduce the amount required to be included in your income each
year with respect to interest on your debt security by the
amount of amortizable bond premium allocable to that year,
41
based on your debt securitys yield to maturity. If your
debt security is denominated in, or determined by reference to,
a foreign currency, you will compute your amortizable bond
premium in units of the foreign currency and your amortizable
bond premium will reduce your interest income in units of the
foreign currency. Gain or loss recognized that is attributable
to changes in exchange rates between the time your amortized
bond premium offsets interest income and the time of the
acquisition of your debt security is generally taxable as
ordinary income or loss. If you make an election to amortize
bond premium, it will apply to all debt instruments, other than
debt instruments the interest on which is excludible from gross
income, that you hold at the beginning of the first taxable year
to which the election applies or that you thereafter acquire,
and you may not revoke it without the consent of the Internal
Revenue Service. See also
Original Issue
Discount Election to Treat All Interest as Original
Issue Discount
.
Debt
Securities Purchased with Market Discount
You will be treated as if you purchased your debt security,
other than a short-term debt security, at a market discount, and
your debt security will be a market discount debt security if:
|
|
|
|
|
In the case of an initial purchaser, you purchase your debt
security for less than its issue price as determined above under
Original Issue Discount
General
, and
|
|
|
|
the difference between the debt securitys stated
redemption price at maturity or, in the case of a discount debt
security, the debt securitys revised issue price, and the
price you paid for your debt security is equal to or greater
than 1/4 of 1 percent of your debt securitys stated
redemption price at maturity or revised issue price,
respectively, multiplied by the number of complete years to the
debt securitys maturity. To determine the revised issue
price of a discount debt security for these purposes, you
generally add any OID that has accrued on the notes prior to
your acquisition of the notes to its issue price.
|
If your debt securitys stated redemption price at maturity
or, in the case of a discount debt security, its revised issue
price, exceeds the price you paid for the debt security by less
than 1/4 of 1 percent multiplied by the number of complete
years to the debt securitys maturity, the excess
constitutes de minimis market discount, and the rules discussed
below are not applicable to you.
You must treat any gain you recognize on the maturity or
disposition of your market discount debt security as ordinary
income to the extent of the accrued market discount on your debt
security. Alternatively, you may elect to include market
discount in income currently over the life of your debt
security. If you make this election, it will apply to all debt
instruments with market discount that you acquire on or after
the first day of the first taxable year to which the election
applies. You may not revoke this election without the consent of
the Internal Revenue Service. If you own a market discount debt
security and do not make this election, you will generally be
required to defer deductions for interest on borrowings
allocable to your debt security in an amount not exceeding the
accrued market discount on your debt security until the maturity
or disposition of your debt security.
You will accrue market discount on your market discount debt
security on a straight-line basis unless you elect to accrue
market discount using a constant-yield method. If you make this
election, it will apply only to the debt security with respect
to which it is made and you may not revoke it.
Purchase,
Sale and Retirement of the Debt Securities
Your tax basis in your debt security will generally be the
U.S. dollar cost, as defined below, of your debt security,
adjusted by:
|
|
|
|
|
adding any OID or market discount previously included in income
with respect to your debt security, and then
|
|
|
|
subtracting any payments on your debt security that are not
qualified stated interest payments and any amortizable bond
premium applied to reduce interest on your debt security.
|
If you purchase your debt security with foreign currency, the
U.S. dollar cost of your debt security will generally be
the U.S. dollar value of the purchase price on the date of
purchase. However, if you are a cash basis taxpayer, or an
accrual basis taxpayer if you so elect, and your debt security
is traded on an established securities market, as defined in the
applicable Treasury regulations, the U.S. dollar cost of
your debt security will be the U.S. dollar value of the
purchase price on the settlement date of your purchase.
You will generally recognize gain or loss on the sale or
retirement of your debt security equal to the difference between
the amount you realize on the sale or retirement and your tax
basis in your debt security. If your debt security is sold or
retired for an amount in foreign currency, the amount you
realize will be the U.S. dollar value of such amount on
42
the date the debt security is disposed of or retired, except
that in the case of a debt security that is traded on an
established securities market, as defined in the applicable
Treasury regulations, a cash basis taxpayer, or an accrual basis
taxpayer that so elects, will determine the amount realized
based on the U.S. dollar value of the foreign currency on
the settlement date of the sale.
You will recognize capital gain or loss when you sell or retire
your debt security, except to the extent:
|
|
|
|
|
described above under
Original Issue
Discount Short-Term Debt Securities
or
Debt Securities Purchased with Market
Discount
,
|
|
|
|
attributable to accrued but unpaid interest,
|
|
|
|
the rules governing contingent payment obligations apply, or
|
|
|
|
attributable to changes in exchange rates as described below.
|
Capital gain of a noncorporate United States holder is generally
taxed at preferential rates where the property is held for more
than one year.
You must treat any portion of the gain or loss that you
recognize on the sale or retirement of a debt security as United
States source ordinary income or loss to the extent attributable
to changes in exchange rates. However, you take exchange gain or
loss into account only to the extent of the total gain or loss
you realize on the transaction.
Exchange
of Amounts in Other Than U.S. Dollars
If you receive foreign currency as interest on your debt
security or on the sale or retirement of your debt security,
your tax basis in the foreign currency will equal its
U.S. dollar value when the interest is received or at the
time of the sale or retirement. If you purchase foreign
currency, you generally will have a tax basis equal to the
U.S. dollar value of the foreign currency on the date of
your purchase. If you sell or dispose of a foreign currency,
including if you use it to purchase debt securities or exchange
it for U.S. dollars, any gain or loss recognized generally
will be ordinary income or loss.
Indexed
Debt Securities, Exchangeable Debt Securities and Contingent
Payment Debt Securities
An applicable supplement will discuss any special United States
federal income tax rules with respect to debt securities the
payments on which are determined by reference to any index, debt
securities that are exchangeable at our option or the option of
the holder into debt securities of an issuer other than the Bank
or into other property and debt securities that are subject to
the rules governing contingent payment obligations which are not
subject to the rules governing variable rate debt securities.
Treasury
Regulations Requiring Disclosure of Reportable
Transactions
Treasury regulations require United States taxpayers to report
certain transactions that give rise to a loss in excess of
certain thresholds (a
Reportable
Transaction
). Under these regulations, if the debt
securities are denominated in a foreign currency, a United
States holder that recognizes a loss with respect to the debt
securities that is characterized as an ordinary loss due to
changes in currency exchange rates (under any of the rules
discussed above) would be required to report the loss on
Internal Revenue Service Form 8886 (Reportable Transaction
Statement) if the loss exceeds the thresholds set forth in the
regulations. For individuals and trusts, this loss threshold is
$50,000 in any single taxable year. For other types of taxpayers
and other types of losses, the thresholds are higher. You should
consult with your tax advisor regarding any tax filing and
reporting obligations that may apply in connection with
acquiring, owning and disposing of debt securities.
Other
considerations
Medicare
Tax
For taxable years beginning after December 31, 2012, a
United States holder that is an individual or estate, or a trust
that does not fall into a special class of trusts that is exempt
from such tax, will be subject to a 3.8% tax on the lesser of
(1) the United States holders net investment
income for the relevant taxable year and (2) the
excess of the United States holders modified adjusted
gross income for the taxable year over a certain threshold
(which in the case of individuals will be between $125,000 and
$250,000, depending on the individuals circumstances). A
holders net investment income will generally include its
dividend or interest income and its net gains from the
disposition of securities, unless such dividend or interest
income or net gains are derived in the ordinary course of the
conduct of a trade or business (other than a trade or
43
business that consists of certain passive or trading
activities). If you are a United States holder that is an
individual, estate or trust, you are urged to consult your tax
advisors regarding the applicability of the Medicare tax to your
income and gains in respect of your investment in the securities.
Information
with Respect to Foreign Financial Assets
Under recently enacted legislation, individuals that own
specified foreign financial assets with an aggregate
value in excess of $50,000 will generally be required to file an
information report with respect to such assets with their tax
returns. Specified foreign financial assets include
any financial accounts maintained by foreign financial
institutions, as well as any of the following, but only if they
are not held in accounts maintained by financial institutions:
(i) securities issued by
non-United
States persons, (ii) financial instruments and contracts
held for investment that have
non-United
States issuers or counterparties, and (iii) interests in
foreign entities. The securities may be subject to these rules.
United States holders that are individuals are urged to consult
their tax advisors regarding the application of this legislation
to their ownership of the securities.
Backup
Withholding and Information Reporting
If you are a noncorporate United States holder, information
reporting requirements, on Internal Revenue Service
Form 1099, generally will apply to:
|
|
|
|
|
dividend payments or payments of principal and interest on a
security or other taxable distributions made to you within the
United States, including payments made by wire transfer from
outside the United States to an account you maintain in the
United States, and
|
|
|
|
the payment of the proceeds from the sale of a security effected
at a United States office of a broker.
|
Additionally, backup withholding will apply to such payments if
you are a noncorporate United States holder that:
|
|
|
|
|
fails to provide an accurate taxpayer identification number,
|
|
|
|
is notified by the Internal Revenue Service that you have failed
to report all interest and dividends required to be shown on
your federal income tax returns, or
|
|
|
|
in certain circumstances, fails to comply with applicable
certification requirements.
|
Payment of the proceeds from the sale of a security effected at
a foreign office of a broker generally will not be subject to
information reporting or backup withholding. However, a sale of
a security that is effected at a foreign office of a broker will
generally be subject to information reporting and backup
withholding if:
|
|
|
|
|
the proceeds are transferred to an account maintained by you in
the United States,
|
|
|
|
the payment of proceeds or the confirmation of the sale is
mailed to you at a United States address, or
|
|
|
|
the sale has some other specified connection with the United
States as provided in U.S. Treasury regulations.
|
In addition, a sale of a security effected at a foreign office
of a broker will generally be subject to information reporting
if the broker is:
|
|
|
|
|
a United States person,
|
|
|
|
a controlled foreign corporation for United States tax purposes,
|
|
|
|
a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a United States trade
or business for a specified three-year period, or
|
|
|
|
a foreign partnership, if at any time during its tax year:
|
|
|
|
|
|
one or more of its partners are
U.S. persons
, as defined in
U.S. Treasury regulations, who in the aggregate hold more
than 50% of the income or capital interest in the
partnership, or
|
|
|
|
such foreign partnership is engaged in the conduct of a United
States trade or business.
|
Backup withholding will apply if the sale is subject to
information reporting and the broker has actual knowledge that
you are a United States person
You generally may obtain a refund of any amounts withheld under
the backup withholding rules that exceed your income tax
liability by filing a refund claim with the United States
Internal Revenue Service.
44
CANADIAN
TAXATION
In the opinion of Osler, Hoskin & Harcourt LLP, our
Canadian federal income tax counsel, the following summary
describes the principal Canadian federal income tax
considerations generally applicable to a purchaser who acquires
securities, including entitlement to all payments thereunder, as
a beneficial owner pursuant to this Offering and who, at all
relevant times, for purposes of the application of the
Income
Tax Act
(Canada) and the Income Tax Regulations
(collectively, the
Tax Act
), (1) is not,
and is not deemed to be, resident in Canada; (2) deals at
arms length with us and with any transferee resident (or
deemed to be resident) in Canada to whom the purchaser disposes
of debt securities, (3) is not affiliated with us,
(4) holds securities as capital property, (5) does not
receive any payment of interest on the debt securities in
respect of a debt or other obligation to pay an amount to a
person with whom we do not deal at arms length
,
and
(6) does not use or hold the securities in a business
carried on in Canada (a
Holder
). Special
rules, which are not discussed in this summary, may apply to a
non-Canadian holder that is an insurer that carries on an
insurance business in Canada and elsewhere.
This summary is based on the current provisions of the Tax Act
and on counsels understanding of the current
administrative policies and assessing practices of the Canada
Revenue Agency published in writing prior to the date hereof.
This summary takes into account all specific proposals to amend
the Tax Act publicly announced by or on behalf of the Minister
of Finance (Canada) prior to the date hereof (the
Proposed Amendments
) and assumes that all
Proposed Amendments will be enacted in the form proposed.
However, no assurances can be given that the Proposed Amendments
will be enacted as proposed, or at all. This summary does not
otherwise take into account or anticipate any changes in law or
administrative policy or assessing practice whether by
legislative, administrative or judicial action nor does it take
into account tax legislation or considerations of any province,
territory or foreign jurisdiction, which may differ from those
discussed herein.
Canadian federal income tax considerations applicable to
securities may be described more particularly when such
securities are offered (and then only to the extent material) in
a prospectus supplement or pricing supplement related thereto if
they are not addressed by the comments following and, in that
event, the following will be superseded thereby to the extent
indicated in such prospectus supplement or pricing supplement.
These Canadian federal income tax considerations may also be
supplemented, amended
and/or
replaced in a prospectus supplement or pricing supplement.
This summary is of a general nature only and is not, and is
not intended to be, legal or tax advice to any particular
holder. This summary is not exhaustive of all Canadian federal
income tax considerations. Accordingly, prospective purchasers
of securities should consult their own tax advisors having
regard to their own particular circumstances.
Currency
Conversion
Generally, for purposes of the Tax Act, all amounts relating
to the acquisition, holding or disposition of the securities
must be converted into Canadian dollars based on the exchange
rates as determined in accordance with the Tax Act. The amounts
subject to withholding tax and any capital gains or capital
losses realized by a Holder may be affected by fluctuations in
the Canadian / U.S. dollar exchange rate.
Shares
Dividends
on the Shares
Dividends paid or credited on the shares or deemed to be paid or
credited on the shares to a Holder will be subject to Canadian
non-resident withholding tax at the rate of 25%, subject to any
reduction in the rate of withholding to which the Holder is
entitled under any applicable income tax convention between
Canada and the country in which the Holder is resident. For
example, under the
Canada-U.S. Income Tax Convention
(1980) (the Convention), where dividends on the
shares are considered to be paid to or derived by a Holder that
is the beneficial owner of the dividends and a
U.S. resident for the purposes of, and is entitled to
benefits in accordance with, the provisions of the Convention,
the applicable rate of Canadian non-resident withholding tax is
generally reduced to 15%.
Disposition
of the Shares
A Holder will not be subject to tax under the Tax Act on any
capital gain realized on a disposition or deemed disposition of
shares, unless the shares are taxable Canadian
property to the Holder for purposes of the Tax Act and the
Holder is not entitled to relief under an applicable income tax
convention between Canada and the country in which the Holder is
resident.
45
Generally, the shares will not constitute taxable Canadian
property to a Holder at a particular time provided that the
shares are listed at that time on a designated stock exchange
(which includes the Toronto Stock Exchange), unless at any
particular time during the
60-month
period that ends at that time (1) the Holder, persons with
whom the Holder does not deal with at arms length, or the
Holder together with all such persons, has owned 25% or more of
the issued shares of any class or series of our capital stock
and (2) more than 50% of the fair market value of the
shares was derived directly or indirectly from one or any
combination of: (i) real or immovable properties situated
in Canada, (ii) Canadian resource properties
(as defined in the Tax Act), (iii) timber resource
properties (as defined in the Tax Act), and
(iv) options in respect of, or interests in, or for civil
law rights in, property in any of the foregoing whether or not
the property exists. Notwithstanding the foregoing, in certain
circumstances set out in the Tax Act, shares could be deemed to
be taxable Canadian property. Holders whose shares may
constitute taxable Canadian property should consult their own
tax advisors.
Debt
Securities
Interest paid or credited or deemed to be paid or credited by us
on a debt security (including amounts on account of, or in lieu
of, or in satisfaction of interest) to a Holder will not be
subject to Canadian non-resident withholding tax, unless any
portion of such interest (other than on a prescribed
obligation described below) is contingent or dependent on
the use of or production from property in Canada or is computed
by reference to revenue, profit, cash flow, commodity price or
any other similar criterion or by reference to dividends paid or
payable to shareholders of any class or series of shares of the
capital stock of a corporation. A
prescribed
obligation
is a debt obligation the terms or
conditions of which provide for an adjustment to an amount
payable in respect of the obligation for a period during which
the obligation was outstanding which adjustment is determined by
reference to a change in the purchasing power of money and no
amount payable in respect thereof, other than an amount
determined by reference to a change in the purchasing power of
money, is contingent or dependent upon any of the criteria
described in the preceding sentence.
If any interest payable
on a debt security, or any portion of the principal amount of a
debt security in excess of its issue price, is to be calculated
by reference to an index or formula, interest on the debt
security, together with any such portion of such principal, may
be subject to Canadian non-resident withholding tax.
In the event that a security which is not exempt from Canadian
non-resident withholding tax under its terms is redeemed,
cancelled, repurchased or purchased by us or any other person
resident or deemed to be resident in Canada from a Holder or is
otherwise assigned or transferred by a Holder to a person
resident or deemed to be resident in Canada for an amount which
exceeds, generally, the issue price thereof, or in certain
cases, the price for which such debt security was assigned or
transferred to the Holder by a person resident or deemed
resident in Canada, the excess may be deemed to be interest and
may, together with any interest that has accrued on the debt
security to that time, be subject to Canadian non-resident
withholding tax. Such excess will not be subject to Canadian
non-resident withholding tax if the debt security is considered
an excluded obligation for purposes of the Act. A
debt security that was issued for an amount not less than 97% of
the principal amount (as defined for the purposes of the Act) of
the debt security, and the yield from which, expressed in terms
of an annual rate (determined in accordance with the Act) on the
amount for which the debt security was issued does not exceed
4/3 of the interest stipulated to be payable on the debt
security, expressed in terms of an annual rate on the
outstanding principal amount from time to time will be an
excluded obligation for this purpose.
Generally, there are no other taxes on income (including taxable
capital gains) payable by a Holder on interest, discount, or
premium in respect of a debt security or on the proceeds
received by a Holder on the disposition of a debt security
(including redemption, cancellation, purchase or repurchase).
46
EMPLOYEE
RETIREMENT INCOME SECURITY ACT
A fiduciary of a pension, profit-sharing or other employee
benefit plan (a
plan
) subject to the Employee
Retirement Income Security Act of 1974, as amended
(
ERISA
), should consider the fiduciary
standards of ERISA in the context of the plans particular
circumstances before authorizing an investment in the
securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the
prudence and diversification requirements of ERISA and would be
consistent with the documents and instruments governing the
plan, and whether the investment would involve a prohibited
transaction under Section 406 of ERISA or Section 4975
of the Internal Revenue Code (the
Code
).
Section 406 of ERISA and Section 4975 of the Code
prohibit plans, as well as individual retirement accounts and
Keogh plans subject to Section 4975 of the Internal Revenue
Code (also
plans
), from engaging in certain
transactions involving
plan assets
with
persons who are
parties in interest
under
ERISA or
disqualified persons
under the Code
(
parties in interest
) with respect to the
plan or account. A violation of these prohibited transaction
rules may result in civil penalties or other liabilities under
ERISA and/or an excise tax under Section 4975 of the Code
for those persons, unless exemptive relief is available under an
applicable statutory, regulatory or administrative exemption.
Certain employee benefit plans and arrangements including those
that are governmental plans (as defined in section 3(32) of
ERISA), certain church plans (as defined in Section 3(33)
of ERISA) and foreign plans (as described in
Section 4(b)(4) of ERISA) (
non-ERISA
arrangements
) are not subject to the requirements of
ERISA or Section 4975 of the Code but may be subject to
similar provisions under applicable federal, state, local,
foreign or other regulations, rules or laws (
similar
laws
).
The acquisition of the securities by a plan with respect to
which the Bank or certain of our affiliates is or becomes a
party in interest may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless
those securities are acquired pursuant to and in accordance with
an applicable exemption. Section 408(b)(17) of ERISA and
Section 4975(d)(20) of the Code provide an exemption for
the purchase and sale of securities and related lending
transactions where neither the Bank nor any of its affiliates
have or exercise any discretionary authority or control or
render any investment advice with respect to the assets of the
plan involved in the transaction and the plan pays no more and
receives no less than
adequate consideration
in connection with the transaction (the
service
provider exemption
). Moreover, the United States
Department of Labor has issued five prohibited transaction class
exemptions, or
PTCEs
, that may provide
exemptive relief if required for direct or indirect prohibited
transactions that may arise from the purchase or holding of the
securities. These exemptions are:
|
|
|
|
|
PTCE
84-14,
an exemption for certain transactions determined or effected by
independent qualified professional asset managers;
|
|
|
|
PTCE
90-1,
an exemption for certain transactions involving insurance
company pooled separate accounts;
|
|
|
|
PTCE
91-38,
an exemption for transactions involving bank collective
investment funds;
|
|
|
|
PTCE
95-60,
an exemption for transactions involving certain insurance
company general accounts; and
|
|
|
|
PTCE
96-23,
an exemption for plan asset transactions managed by in-house
asset managers.
|
The securities may not be purchased or held by (1) any
plan, (2) any entity whose underlying assets include
plan assets
by reason of any plans
investment in the entity (a
plan asset
entity
) or (3) any person investing
plan
assets
of any plan, unless in each case the purchaser
or holder is eligible for the exemptive relief under one or more
of the PTCEs listed above, the service provider exemption or
another applicable similar exemption. Any purchaser or holder of
the securities or any interest in the securities will be deemed
to have represented by its purchase and holding of the
securities that it either (1) is not a plan or a plan asset
entity and is not purchasing those securities on behalf of or
with
plan assets
of any plan or plan asset
entity or (2) with respect to the purchase or holding, is
eligible for the exemptive relief available under any of the
PTCEs listed above, the service provider exemption or another
applicable exemption. In addition, any purchaser or holder of
the securities or any interest in the securities which is a
non-ERISA arrangement will be deemed to have represented by its
purchase and holding of the securities that its purchase and
holding will not violate the provisions of any similar law.
Due to the complexity of these rules and the penalties that may
be imposed upon persons involved in non-exempt prohibited
transactions, it is important that fiduciaries or other persons
considering purchasing the securities on behalf of or with
plan assets
of any plan, plan asset entity or
non-ERISA arrangement consult with their counsel regarding the
availability of exemptive relief under any of the PTCEs listed
above, the service provider exemption or any other applicable
exemption, or the potential consequences of any purchase or
holding under similar laws, as applicable.
47
If you are an insurance company or the fiduciary of a pension
plan or an employee benefit plan, and propose to invest in the
securities, you should consult your legal counsel.
PLAN OF
DISTRIBUTION
We may sell any of the securities at any time after
effectiveness of the Registration Statement of which this
prospectus forms a part in one or more of the following ways
from time to time:
|
|
|
|
|
through underwriters or dealers;
|
|
|
|
through agents; or
|
|
|
|
directly to one or more purchasers.
|
The offered securities may be distributed periodically in one or
more transactions at:
|
|
|
|
|
a fixed price or prices, which may be changed;
|
|
|
|
market prices prevailing at the time of sale;
|
|
|
|
prices related to the prevailing market prices; or
|
|
|
|
negotiated prices.
|
The applicable supplements will include:
|
|
|
|
|
the initial public offering price;
|
|
|
|
the names of any underwriters, dealers or agents;
|
|
|
|
the purchase price of the securities;
|
|
|
|
our proceeds from the sale of the securities;
|
|
|
|
any underwriting discounts or commissions or agency fees and
other underwriters or agents compensation;
|
|
|
|
any discounts or concessions allowed or reallowed or paid to
dealers;
|
|
|
|
the place and time of delivery of the securities; and
|
|
|
|
any securities exchange on which the securities may be listed.
|
If underwriters are used in the sale, they will buy the
securities for their own account. The underwriters may then
resell the securities in one or more transactions, at any time
or times at a fixed public offering price or at varying prices.
The underwriters may change from time to time any fixed public
offering price and any discounts or commissions allowed or
re-allowed or paid to dealers. If dealers are utilized in the
sale of the securities, we will sell the securities to the
dealers as principals. The dealers may then resell the
securities to the public at varying prices to be determined by
such dealers.
In connection with the offering of securities, we may grant to
the underwriters an option to purchase additional securities to
cover over-allotments, if any, at the initial public offering
price (with an additional underwriting commission), as may be
set forth in the applicable supplements for such securities. If
we grant any over-allotment option, the terms of the option will
be set forth in the applicable supplements for the securities.
This prospectus may be delivered by underwriters and dealers in
connection with short sales undertaken to hedge exposures under
commitments to acquire our securities to be issued on a delayed
or contingent basis.
Underwriters, dealers and agents that participate in the
distribution of the securities may be underwriters as defined in
the Securities Act. Any discounts or commissions that we pay
them and any profit they receive when they resell the securities
may be treated as underwriting discounts and commissions under
the Securities Act. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil
liabilities, including liabilities under the Securities Act, to
contribute with respect to payments which they may be required
to make in respect of such liabilities and to reimburse them for
certain expenses.
Underwriters, dealers and agents, and their affiliates or
associates, may engage in transactions with us or perform
services for us in the ordinary course of business and receive
compensation from us.
Each series of offered debt securities and preferred shares will
be a new issue of securities and will have no established
trading market. Securities may or may not be listed on a
national or foreign securities exchange or automated quotation
system. Our common shares are currently listed on the NYSE and
the TSX under the trading symbol
BMO
. Any
underwriters or agents to whom securities are sold for public
offering or sale may make, but are not required to make,
48
a market in the securities, and the underwriters or agents may
discontinue making a market in the securities at any time
without notice. No assurance can be given as to the liquidity or
the existence of trading markets for any securities.
Any underwriters utilized may engage in stabilizing transactions
and syndicate covering transactions in accordance with
Rule 104 of Regulation M under the Exchange Act.
Stabilizing transactions permit bids to purchase the offered
securities or any underlying security so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of securities in the open market
after the distribution has been completed in order to cover
syndicate short positions. Such stabilizing transactions and
syndicate covering transactions may cause the price of the
offered securities to be higher than would be the case in the
absence of such transactions.
Selling
Restrictions Outside the United States
Except as described in an applicable supplement, the Bank has
taken no action that would permit a public offering of the
securities or possession or distribution of this prospectus or
any other offering material in any jurisdiction outside the
United States where action for that purpose is required.
Accordingly, each underwriter will be required to represent,
warrant and agree, that it will comply with all applicable laws
and regulations in force in any jurisdiction in which it
purchases, offers or sells securities or possesses or
distributes this prospectus or any other offering material and
will obtain any consent, approval or permission required by it
for the purchase, offer or sale by it of securities under the
laws and regulations in force in any jurisdiction to which it is
subject or in which it makes such purchases, offers or sales and
the Bank shall have no responsibility in relation to this.
With regard to each security, the relevant purchaser will be
required to comply with those restrictions that the Bank and the
relevant purchaser shall agree and as shall be set out in an
applicable supplement.
Conflicts
of Interest
Our affiliate, BMO Capital Markets Corp., may participate in the
distribution of the securities as an underwriter, dealer or
agent. Any offering of securities in which BMO Capital Markets
Corp. participates will be conducted in compliance with the
applicable requirements of FINRA Rule 5121, a rule of the
Financial Industry Regulatory Authority, Inc.
(
FINRA
). BMO Capital Markets Corp. will not
participate in the distribution of an offering of securities
that do not have a bona fide public market within the meaning of
Rule 5121 or are not investment grade rated within the
meaning of Rule 5121 or securities in the same series that
have equal rights and obligations as investment grade rated
securities unless either (1) each member firm responsible
for managing the public offering does not have a conflict of
interest within the meaning of Rule 5121, is not an
affiliate of any member that does have a conflict of interest,
and meets the requirements of Rule 5121 with respect to
disciplinary history or (2) a qualified independent
underwriter has participated in the preparation of the
prospectus supplement or other offering document for the
offering of securities and has exercised the usual standards of
due diligence with respect thereto. Neither BMO Capital Markets
Corp. nor any other FINRA member participating in an offering of
these securities that has a conflict of interest will confirm
initial sales to any discretionary accounts over which it has
authority without the prior specific written approval of the
customer.
In compliance with the guidelines of FINRA, the maximum
commission or discount to be received by the participating FINRA
members may not exceed 8% of the aggregate principal amount of
securities offered pursuant to this prospectus. We anticipate,
however, that the maximum commission or discount to be received
in any particular offering of securities will be significantly
less than this amount.
Market-Making
Resale by Affiliates
This prospectus may be used by BMO Capital Markets Corp. or one
more of our affiliates in connection with offers and sales of
the securities in market-making transactions. In a market-making
transaction, BMO Capital Markets Corp. or one of our affiliates
may resell a security it acquires from other holders, after the
original offering and sale of security. Resales of this kind may
occur in the open market or may be privately negotiated, at
prevailing market prices at the time of resale or at related or
negotiated prices. In these transactions, BMO Capital Markets
Corp. or one of our affiliates may act as principal or agent,
including as agent for the counterparty in a transaction in
which BMO Capital Markets Corp. or one our affiliates, as
applicable, acts as principal, or as agent for both
counterparties in a transaction in which BMO Capital Markets
Corp. or such affiliate, as applicable, does not act as
principal. BMO Capital Markets Corp. or one of our affiliates
may receive compensation in the form of discounts and
commissions, including from both counterparties in some cases.
The securities to be sold in market-making transactions include
securities to be issued after the date of this prospectus, as
well as securities previously issued. We do not expect to
receive any proceeds from market-making
49
transactions. We do not expect that BMO Capital Markets Corp. or
any other affiliate that engages in these transactions will pay
any proceeds from its market-making resales to us.
Information about the trade and settlements dates, as well as
the purchase price, for a market-making transaction will be
provided to the purchaser in a separate confirmation of sale.
Unless we or an agent informs you in your confirmation of
sale that your security is being purchased in its original
offering and sale, you may assume that you are purchasing your
security in a market-making transaction.
LIMITATIONS
ON ENFORCEMENT OF U.S. LAWS
AGAINST THE BANK, OUR MANAGEMENT AND OTHERS
The Bank is incorporated under the laws of Canada pursuant to
the Bank Act. Substantially all of our directors and executive
officers, including many of the persons who signed the
Registration Statement on
Form F-3,
of which this prospectus forms a part, and some of the experts
named in this document, reside outside the United States, and
all or a substantial portion of our assets and the assets of
such persons are located outside the United States. As a result,
it may be difficult for you to effect service of process within
the United States upon such persons, or to realize upon
judgments rendered against the Bank or such persons by the
courts of the United States predicated upon, among other things,
the civil liability provisions of the federal securities laws of
the United States. In addition, it may be difficult for you to
enforce, in original actions brought in courts in jurisdictions
located outside the United States, among other things, civil
liabilities predicated upon such securities laws.
We have been advised by our Canadian counsel, Osler,
Hoskin & Harcourt LLP, that a judgment of a United
States court predicated solely upon civil liability under such
laws would probably be enforceable in Canada if the United
States court in which the judgment was obtained has a basis for
jurisdiction in the matter that was recognized by a Canadian
court for such purposes. We have also been advised by such
counsel, however, that there is substantial doubt whether an
original action could be brought successfully in Canada
predicated solely upon such civil liabilities.
EXPERTS
The consolidated financial statements of the Bank as of
October 31, 2010 and 2009 and for each of the years in the
three-year period ended October 31, 2010, and
managements assessment of the effectiveness of internal
control over financial reporting of the Bank as of
October 31, 2010 have been incorporated by reference herein
from the Banks Annual Report on
Form 40-F
for the year ended October 31, 2010, in reliance upon the
reports of KPMG LLP, an independent registered public accounting
firm, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements and the Reconciliation of
Canadian and United States Generally Accepted Accounting
Principles schedule of M&I incorporated herein by reference
from the Banks Report on
Form 6-K
filed on April 26, 2011 and the effectiveness of
M&Is internal control over financial reporting have
been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports
(which reports (1) express an unqualified opinion on the
consolidated financial statements and include an explanatory
paragraph relating to the announcement by M&I and the Bank
that they had entered into a merger agreement, (2) express
an unqualified opinion on the effectiveness of internal control
over financial reporting and (3) express an unqualified
opinion on the Reconciliation of Canadian and United States
Generally Accepted Accounting Principles schedule), which are
incorporated by reference herein. Such consolidated financial
statements and Reconciliation of Canadian and United States
Generally Accepted Accounting Principles schedule have been so
incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
50
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of the expenses (all of which are
estimated), other than underwriting discounts and commissions,
to be incurred in connection with the issuance and distribution
of the securities registered under the Registration Statement of
which this prospectus forms a part. Additional information about
the estimated or actual expenses in connection with a particular
offering of securities under the shelf will be provided in the
applicable supplements.
|
|
|
|
|
Registration Statement filing fee
|
|
US$
|
1,311,930
|
|
Trustees fees and expenses
|
|
US$
|
2,000
|
|
Legal fees and expenses
|
|
US$
|
340,000
|
|
FINRA fees and expenses
|
|
US$
|
75,500
|
|
Accounting fees and expenses
|
|
US$
|
65,000
|
|
Printing costs
|
|
US$
|
25,000
|
|
Miscellaneous
|
|
US$
|
30,570
|
|
Total
|
|
US$
|
1,850,000
|
|
51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
|
|
Item 8.
|
Indemnification
of Directors and Officers
|
Under the Bank Act, a bank may not, by contract, resolution or
by-law, limit the liability of its directors for breaches of the
Act, including their fiduciary duties imposed under the Act.
However, a bank may indemnify a director or officer, a former
director or officer or a person who acts or acted, at the
banks request, as a director or officer of or in a similar
capacity for another entity, and his or her heirs and personal
representatives, against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him or her because of any
civil, criminal, administrative, investigative or other
proceeding in which he or she is involved because of that
association and may advance funds to him or her for the costs,
charges or expenses of such a proceeding, provided however, that
a bank may not indemnify such a person unless:
|
|
|
|
(1)
|
that person acted honestly and in good faith with a view to the
best interests of, as the case may be, the bank or the other
entity for which he or she acted at the banks request as a
director or officer or in a similar capacity; and
|
|
|
(2)
|
in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, that person had
reasonable grounds for believing that his or her conduct was
lawful.
|
Under the Bank Act, these individuals are entitled to be
indemnified by the bank in respect of all costs, charges and
expenses reasonably incurred by them in connection with the
defense of any civil, criminal, administrative, investigative or
other proceeding in which he or she is involved because of an
association referred to above with the bank or other entity if
the person was not judged by the courts or other competent
authority to have committed any fault or omitted to do anything
that they ought to have done and fulfilled the conditions set
out in (1) and (2) above. A bank may, with the
approval of a court, also indemnify these individuals in respect
of, or advance amounts to him or her for the costs, charges and
expenses of, a proceeding referred to above, in respect of an
action by or on behalf of the bank or other entity to procure a
judgment in its favor, to which the person is made a party
because of an association referred to above with the bank or
other entity, if he or she fulfills the conditions set out in
(1) and (2) above.
The Banks by-laws provide that the Bank shall indemnify a
director or officer, a former director or officer, or a person
who acts or acted at the Banks request as a director or
officer of or in a similar capacity for another entity, and such
persons heirs and personal representatives, to the maximum
extent permitted by the Bank Act.
The Bank has purchased, at its expense, a Directors and
Officers Liability Insurance Policy that provides
protection for individual directors and officers of Bank of
Montreal and its subsidiaries solely while acting in their
capacity as such. The Insurance Policy provides for a limit of
$300 million per claim and in the aggregate. The policy is
in effect until October 31, 2011 and has no deductible.
In addition, the Bank has purchased a separate Directors
and Officers Liability Insurance Policy which provides for
payments on behalf of the Bank when the law permits or requires
the Bank to provide an indemnity to a director or an officer.
This policy has a net limit of $150 million for each claim
and in the aggregate and is subject to a $100 million
deductible for the Bank. This policy is in effect until
October 31, 2011.
Insofar as indemnification for liabilities arising from the
Securities Act may be permitted to directors, officers or
persons controlling the Bank pursuant to the foregoing
provisions, the Bank has been informed that in the opinion of
the U.S. Securities and Exchange Commission (the
Commission
) such indemnification is against
public policy as expressed in the Securities Act and is
therefore unenforceable.
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description of Exhibit
|
|
|
1
|
.1±
|
|
|
|
Form of Underwriting Agreement.
|
|
3
|
.1
|
|
|
|
By-laws of Bank of Montreal (incorporated by reference to the
Current Report on
Form 6-K
filed by Bank of Montreal with the SEC on March 28, 2011)
|
|
4
|
.1*
|
|
|
|
Senior Indenture between the Registrant and Wells Fargo Bank,
National Association, as trustee.
|
|
4
|
.2
|
|
|
|
Form of Subordinated Indenture between the Registrant and Wells
Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.2 to the Registration Statement on
Form F-3
(File
No. 333-148054)).
|
II-1
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description of Exhibit
|
|
|
5
|
.1*
|
|
|
|
Opinion of Sullivan & Cromwell LLP, U.S. counsel for
the Registrant, as to the validity of the securities.
|
|
5
|
.2*
|
|
|
|
Opinion of Osler, Hoskin & Harcourt LLP, Canadian
counsel for the Registrant, as to the validity of the securities.
|
|
8
|
.1*
|
|
|
|
Opinion of Sullivan & Cromwell LLP, U.S. counsel for
the Registrant, as to certain matters of United States federal
income taxation.
|
|
8
|
.2*
|
|
|
|
Opinion of Osler, Hoskin & Harcourt LLP, Canadian
counsel for the Registrant, as to certain matters of Canadian
taxation.
|
|
12
|
.1*
|
|
|
|
Statement regarding the computation of consolidated ratios of
earnings.
|
|
23
|
.1*
|
|
|
|
Consent of KPMG LLP.
|
|
23
|
.2*
|
|
|
|
Consent of Deloitte & Touche LLP.
|
|
23
|
.3*
|
|
|
|
Consent of Sullivan & Cromwell LLP (included in
Exhibit 5.1 above).
|
|
23
|
.4*
|
|
|
|
Consent of Osler, Hoskin & Harcourt LLP (included in
Exhibit 5.2 above).
|
|
23
|
.5*
|
|
|
|
Consent of Sullivan & Cromwell LLP (included in
Exhibit 8.1 above).
|
|
23
|
.6*
|
|
|
|
Consent of Osler, Hoskin & Harcourt LLP (included in
Exhibit 8.2 above).
|
|
24
|
.1*
|
|
|
|
Power of Attorney for Bank of Montreal (included on the
signature page hereto).
|
|
25
|
.1*
|
|
|
|
Statement of Eligibility of Trustee on
Form T-1
with respect to Exhibits 4.1 and 4.2.
|
|
|
±
|
To be filed as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Exchange Act.
|
|
*
|
Filed herewith.
|
Additional exhibits to this Registration Statement may be
subsequently filed in reports on
Form 40-F
or on
Form 6-K
that specifically state that such materials are incorporated by
reference as exhibits in Part II of this Registration
Statement.
The Registrant hereby undertakes:
|
|
|
|
(1)
|
To file, during any period in which offers or sales of the
registered securities are being made, a post-effective amendment
to this Registration Statement:
|
|
|
|
|
(i)
|
to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the
Securities
Act
);
|
|
|
(ii)
|
to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee
table in the
effective Registration Statement; and
|
|
|
(iii)
|
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement,
|
Provided, however,
that:
|
|
|
|
(A)
|
Paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with
or furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
(the
Exchange Act
) that are incorporated by
reference in the Registration Statement; and
|
|
|
(B)
|
Paragraphs (1)(i), (1)(ii) and (1)(iii) of this section do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the
|
II-2
|
|
|
|
|
Commission by the Registrant pursuant to Section 13 or
15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of
the Registration Statement.
|
|
|
|
|
(2)
|
That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial
bona fide
offering thereof.
|
|
|
(3)
|
To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
|
|
|
(4)
|
To file a post-effective amendment to the Registration Statement
to include any financial statements required by Item 8.A.
of
Form 20-F
at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Securities Act need not
be furnished,
provided,
that the Registrant includes in
the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph
(4) and other information necessary to ensure that all
other information in the prospectus is at least as current as
the date of those financial statements. Notwithstanding the
foregoing, a post-effective amendment need not be filed to
include financial statements and information required by
Section 10(a)(3) of the Securities Act or
Rule 3-19
of
Regulation S-X
if such financial statements and information are contained in
periodic reports filed with or furnished to the SEC by the
Registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in this
Registration Statement.
|
|
|
(5)
|
That, for the purpose of determining liability under the
Securities Act to any purchaser:
|
|
|
|
|
(i)
|
Each prospectus filed by the Registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
Registration Statement as of the date the filed prospectus was
deemed part of and included in the Registration Statement; and
|
|
|
(ii)
|
Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act shall be deemed to be
part of and included in the Registration Statement as of the
earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the Registration
Statement relating to the securities in the Registration
Statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
Provided, however,
that no statement made in a registration statement or prospectus
that is part of the Registration Statement or made in a document
incorporated or deemed incorporated by reference into the
Registration Statement or prospectus that is part of the
Registration Statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the Registration Statement
or prospectus that was part of the Registration Statement or
made in any such document immediately prior to such effective
date.
|
|
|
|
|
(6)
|
That, for the purpose of determining liability of the Registrant
under the Securities Act to any purchaser in the initial
distribution of the securities, in a primary offering of
securities of the Registrant pursuant to this Registration
Statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the Registrant will be a seller to the purchaser
and will be considered to offer or sell such securities to such
purchaser:
|
|
|
|
|
(i)
|
Any preliminary prospectus or prospectus of the Registrant
relating to the offering required to be filed pursuant to
Rule 424;
|
|
|
(ii)
|
Any free writing prospectus relating to the offering prepared by
or on behalf of the Registrant or used or referred to by the
Registrant;
|
II-3
|
|
|
|
(iii)
|
The portion of any other free writing prospectus relating to the
offering containing material information about the Registrant or
its securities provided by or on behalf of the Registrant; and
|
|
|
(iv)
|
Any other communication that is an offer in the offering made by
the Registrant to the purchaser.
|
|
|
|
|
(7)
|
That, for purposes of determining any liability under the
Securities Act, each filing of the Registrants annual
report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof.
|
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions set forth in Item 8 above, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Bank
of Montreal certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on this
Form F-3
and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Toronto, Province of Ontario, Canada, on May 4,
2011.
BANK OF MONTREAL
|
|
|
|
By:
|
/s/ Cathryn
E. Cranston
|
Cathryn E. Cranston
Senior Vice President,
Financial Strategy & Treasurer
Thomas E. Flynn
Chief Financial Officer
II-5
POWER OF
ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose
signature appears below constitutes and appoints each of William
A. Downe, Thomas E. Flynn and Cathryn E. Cranston his or her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to do any
and all things and execute any and all instruments that such
attorney may deem necessary or advisable under the U.S.
Securities Act of 1933 (the
Securities Act
),
and any rules, regulations and requirements of the U.S.
Securities and Exchange Commission (the
SEC
)
thereunder, in connection with the registration under the
Securities Act of the securities of Bank of Montreal (the
Bank
), including specifically, but without
limiting the generality of the foregoing, the power and
authority to sign his or her name, in his or her capacity as a
member of the Board of Directors or officer of the Bank, on this
Registration Statement or a registration statement that is to be
effective upon filing pursuant to Rule 462(b) under the
Securities Act relating to such securities and/or such other
form or forms as may be appropriate to be filed with the SEC as
any of them deem appropriate in respect of the securities of the
Bank, on any and all amendments, including post-effective
amendments, to such registration statement and on any and all
instruments and documents filed as part of or in connection with
such registration statement and any and all amendments thereto,
including post-effective amendments.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons
in the capacities indicated in the City of Toronto, Province of
Ontario, Canada, on May 4, 2011.
|
|
|
|
|
|
|
|
|
Signature Name
|
|
Title
|
|
Date
|
|
/s/ William
A. Downe
William
A. Downe
|
|
President and
Chief Executive Officer, Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Thomas
E. Flynn
Thomas
E. Flynn
|
|
Chief Financial
Officer
*
|
|
May 4, 2011
|
|
|
|
|
|
/s/ David
Galloway
David
Galloway
|
|
Chairman of the Board
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Robert
M. Astley
Robert
M. Astley
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ David
R. Beatty
David
R. Beatty
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Sophie
Brochu
Sophie
Brochu
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Robert
Chevrier
Robert
Chevrier
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ George
A. Cope
George
A. Cope
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Christine
A. Edwards
Christine
A. Edwards
|
|
Director
|
|
May 4, 2011
|
*
Principal
accounting officer.
II-6
|
|
|
|
|
|
|
|
|
Signature Name
|
|
Title
|
|
Date
|
|
/s/ Ronald
H. Farmer
Ronald
H. Farmer
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Harold
N. Kvisle
Harold
N. Kvisle
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Bruce
H. Mitchell
Bruce
H. Mitchell
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Philip
S. Orsino
Philip
S. Orsino
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Martha
C. Piper
Martha
C. Piper
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ J.
Robert S. Prichard
J.
Robert S. Prichard
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Guylaine
Saucier
Guylaine
Saucier
|
|
Director
|
|
May 4, 2011
|
|
|
|
|
|
/s/ Don
M. Wilson III
Don
M. Wilson III
|
|
Director
|
|
May 4, 2011
|
II-7
Pursuant to the requirements of Section 6(a) of the
Securities Act of 1933, the Authorized Representative has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, solely in her capacity as the duly authorized
representative of Bank of Montreal in the United States, in the
City of Chicago, State of Illinois, on May 4, 2011.
Bank of Montreal
Colleen Hennessy
Authorized Representative in the United States
II-8
INDEX TO
EXHIBITS
|
|
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
1
|
.1±
|
|
|
|
Form of Underwriting Agreement.
|
|
3
|
.1
|
|
|
|
By-laws of Bank of Montreal (incorporated by reference to the
Current Report on Form 6-K filed by Bank of Montreal with the
SEC on March 28, 2011).
|
|
4
|
.1*
|
|
|
|
Senior Indenture between the Registrant and Wells Fargo Bank,
National Association, as trustee.
|
|
4
|
.2
|
|
|
|
Form of Subordinated Indenture between the Registrant and Wells
Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.2 to the Registration Statement on Form
F-3 (File
No. 333-148054)).
|
|
5
|
.1*
|
|
|
|
Opinion of Sullivan & Cromwell LLP, U.S. counsel for the
Registrant, as to the validity of the securities.
|
|
5
|
.2*
|
|
|
|
Opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel
for the Registrant, as to the validity of the securities.
|
|
8
|
.1*
|
|
|
|
Opinion of Sullivan & Cromwell LLP, U.S. counsel for the
Registrant, as to certain matters of United States federal
income taxation.
|
|
8
|
.2*
|
|
|
|
Opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel
for the Registrant, as to certain matters of Canadian taxation.
|
|
12
|
.1*
|
|
|
|
Statement regarding the computation of consolidated ratios of
earnings.
|
|
23
|
.1*
|
|
|
|
Consent of KPMG LLP.
|
|
23
|
.2*
|
|
|
|
Consent of Deloitte & Touche LLP.
|
|
23
|
.3*
|
|
|
|
Consent of Sullivan & Cromwell LLP (included in Exhibit 5.1
above).
|
|
23
|
.4*
|
|
|
|
Consent of Osler, Hoskin & Harcourt LLP (included in
Exhibit 5.2 above).
|
|
23
|
.5*
|
|
|
|
Consent of Sullivan & Cromwell LLP (included in Exhibit 8.1
above).
|
|
23
|
.6*
|
|
|
|
Consent of Osler, Hoskin & Harcourt LLP (included in
Exhibit 8.2 above).
|
|
24
|
.1*
|
|
|
|
Power of Attorney for Bank of Montreal (included on the
signature page hereto).
|
|
25
|
.1*
|
|
|
|
Statement of Eligibility of Trustee on Form T-1 with respect to
Exhibits 4.1 and 4.2.
|
|
|
±
|
To be filed as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Exchange Act.
|
|
*
|
Filed herewith.
|
Additional exhibits to this Registration Statement may be
subsequently filed in reports on
Form 40-F
or on
Form 6-K
that specifically state that such materials are incorporated by
reference as exhibits in Part II of this Registration
Statement.
Exhibit 4.1
BANK OF MONTREAL
TO
WELLS FARGO BANK, NATIONAL ASSOCIATION
Trustee
Senior Indenture
Dated as of January 25, 2010
Senior Debt Securities
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page
|
|
PARTIES
|
|
|
1
|
|
|
|
|
|
|
|
RECITALS OF THE BANK
|
|
|
1
|
|
|
|
|
|
|
|
ARTICLE ONE
|
|
|
|
|
|
|
|
|
|
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
|
|
|
|
|
|
|
|
|
Section 101. Definitions
|
|
|
1
|
|
Section 102. Compliance Certificates and Opinions
|
|
|
7
|
|
Section 103. Form of Documents Delivered to Trustee
|
|
|
7
|
|
Section 104. Acts of Holders; Record Dates
|
|
|
8
|
|
Section 105. Notices, Etc., to Trustee and Bank
|
|
|
9
|
|
Section 106. Notice to Holders; Waiver
|
|
|
10
|
|
Section 107. Conflict with Trust Indenture Act
|
|
|
10
|
|
Section 108. Effect of Headings and Table of Contents
|
|
|
10
|
|
Section 109. Successors and Assigns
|
|
|
10
|
|
Section 110. Separability Clause
|
|
|
11
|
|
Section 111. Benefits of Indenture
|
|
|
11
|
|
Section 112. Governing Law
|
|
|
11
|
|
Section 113. Legal Holidays
|
|
|
11
|
|
|
|
|
|
|
|
ARTICLE TWO
|
|
|
|
|
|
|
|
|
|
SECURITY FORMS
|
|
|
|
|
|
|
|
|
|
Section 201. Forms Generally
|
|
|
11
|
|
Section 202. Form of Face of Security
|
|
|
12
|
|
Section 203. Form of Reverse of Security
|
|
|
13
|
|
Section 204. Form of Legend for Global Securities
|
|
|
17
|
|
Section 205. Form of Trustees Certificate of Authentication
|
|
|
17
|
|
|
|
|
|
|
|
ARTICLE THREE
|
|
|
|
|
|
|
|
|
|
THE SECURITIES
|
|
|
|
|
|
|
|
|
|
Section 301. Amount Unlimited; Issuable in Series
|
|
|
18
|
|
Section 302. Denominations
|
|
|
21
|
|
Section 303. Execution, Authentication, Delivery and Dating
|
|
|
21
|
|
Section 304. Temporary Securities
|
|
|
22
|
|
Section 305. Registration, Registration of Transfer and Exchange
|
|
|
23
|
|
Section 306. Mutilated, Destroyed, Lost and Stolen Securities
|
|
|
24
|
|
Section 307. Payment of Interest; Interest Rights Preserved
|
|
|
25
|
|
Note: This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.
i
|
|
|
|
|
|
|
Page
|
|
Section 308. Persons Deemed Owners
|
|
|
26
|
|
Section 309. Cancellation
|
|
|
26
|
|
Section 310. Computation of Interest
|
|
|
26
|
|
Section 311. CUSIP Numbers
|
|
|
27
|
|
Section 312. Original Issue Discount
|
|
|
27
|
|
|
|
|
|
|
|
ARTICLE FOUR
|
|
|
|
|
|
|
|
|
|
SATISFACTION AND DISCHARGE
|
|
|
|
|
|
|
|
|
|
Section 401. Satisfaction and Discharge of Indenture
|
|
|
27
|
|
Section 402. Application of Trust Money
|
|
|
28
|
|
|
|
|
|
|
|
ARTICLE FIVE
|
|
|
|
|
|
|
|
|
|
REMEDIES
|
|
|
|
|
|
|
|
|
|
Section 501. Events of Default
|
|
|
28
|
|
Section 502. Acceleration of Maturity; Rescission and Annulment
|
|
|
29
|
|
Section 503. Suits for Enforcement by Trustee
|
|
|
30
|
|
Section 504. Trustee May File Proofs of Claim
|
|
|
30
|
|
Section 505. Trustee May Enforce Claims Without Possession of Securities
|
|
|
31
|
|
Section 506. Application of Money Collected
|
|
|
31
|
|
Section 507. Limitation on Suits
|
|
|
31
|
|
Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest
|
|
|
32
|
|
Section 509. Restoration of Rights and Remedies
|
|
|
32
|
|
Section 510. Rights and Remedies Cumulative
|
|
|
32
|
|
Section 511. Delay or Omission Not Waiver
|
|
|
32
|
|
Section 512. Control by Holders
|
|
|
32
|
|
Section 513. Waiver of Past Defaults
|
|
|
33
|
|
Section 514. Undertaking for Costs
|
|
|
33
|
|
Section 515. Waiver of Usury, Stay or Extension Laws
|
|
|
33
|
|
|
|
|
|
|
|
ARTICLE SIX
|
|
|
|
|
|
|
|
|
|
THE TRUSTEE
|
|
|
|
|
|
|
|
|
|
Section 601. Certain Duties and Responsibilities
|
|
|
34
|
|
Section 602. Notice of Defaults
|
|
|
34
|
|
Section 603. Certain Rights of Trustee
|
|
|
34
|
|
Section 604. Not Responsible for Recitals or Issuance of Securities
|
|
|
35
|
|
Section 605. May Hold Securities
|
|
|
35
|
|
Section 606. Money Held in Trust
|
|
|
36
|
|
Section 607. Compensation and Reimbursement
|
|
|
36
|
|
Section 608. Conflicting Interests
|
|
|
37
|
|
Section 609. Corporate Trustee Required; Eligibility
|
|
|
37
|
|
Section 610. Resignation and Removal; Appointment of Successor
|
|
|
37
|
|
Section 611. Acceptance of Appointment by Successor
|
|
|
39
|
|
ii
|
|
|
|
|
|
|
Page
|
|
Section 612. Merger, Conversion, Consolidation or Succession to Business
|
|
|
40
|
|
Section 613. Preferential Collection of Claims Against Bank
|
|
|
40
|
|
Section 614. Appointment of Authenticating Agent
|
|
|
40
|
|
|
|
|
|
|
|
ARTICLE SEVEN
|
|
|
|
|
|
|
|
|
|
HOLDERS LISTS AND REPORTS BY TRUSTEE AND BANK
|
|
|
|
|
|
|
|
|
|
Section 701. Bank to Furnish Trustee Names and Addresses of Holders
|
|
|
41
|
|
Section 702. Preservation of Information; Communications to Holders
|
|
|
42
|
|
Section 703. Reports by Trustee
|
|
|
42
|
|
Section 704. Reports by Bank
|
|
|
42
|
|
|
|
|
|
|
|
ARTICLE EIGHT
|
|
|
|
|
|
|
|
|
|
CONSOLIDATION, AMALGAMATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
|
|
|
|
|
|
|
|
|
|
Section 801. Bank May Consolidate, Etc., Only on Certain Terms
|
|
|
43
|
|
Section 802. Successor Substituted
|
|
|
43
|
|
|
|
|
|
|
|
ARTICLE NINE
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INDENTURES
|
|
|
|
|
|
|
|
|
|
Section 901. Supplemental Indentures Without Consent of Holders
|
|
|
44
|
|
Section 902. Supplemental Indentures With Consent of Holders
|
|
|
45
|
|
Section 903. Execution of Supplemental Indentures
|
|
|
46
|
|
Section 904. Effect of Supplemental Indentures
|
|
|
46
|
|
Section 905. Conformity with Trust Indenture Act
|
|
|
46
|
|
Section 906. Reference in Securities to Supplemental Indentures
|
|
|
46
|
|
|
|
|
|
|
|
ARTICLE TEN
|
|
|
|
|
|
|
|
|
|
COVENANTS
|
|
|
|
|
|
|
|
|
|
Section 1001. Payment of Principal, Premium and Interest
|
|
|
47
|
|
Section 1002. Maintenance of Office or Agency
|
|
|
47
|
|
Section 1003. Money for Securities Payments to Be Held in Trust
|
|
|
47
|
|
Section 1004. Statement by Officers as to Default
|
|
|
48
|
|
Section 1005. Existence
|
|
|
48
|
|
Section 1006. Waiver of Certain Covenants
|
|
|
49
|
|
|
|
|
|
|
|
ARTICLE ELEVEN
|
|
|
|
|
|
|
|
|
|
REDEMPTION OF SECURITIES
|
|
|
|
|
|
|
|
|
|
Section 1101. Applicability of Article
|
|
|
49
|
|
iii
|
|
|
|
|
|
|
Page
|
|
Section 1102. Election to Redeem; Notice to Trustee
|
|
|
49
|
|
Section 1103. Selection by Trustee of Securities to Be Redeemed
|
|
|
49
|
|
Section 1104. Notice of Redemption
|
|
|
50
|
|
Section 1105. Deposit of Redemption Price
|
|
|
51
|
|
Section 1106. Securities Payable on Redemption Date
|
|
|
51
|
|
Section 1107. Securities Redeemed in Part
|
|
|
51
|
|
|
|
|
|
|
|
ARTICLE TWELVE
|
|
|
|
|
|
|
|
|
|
PURCHASE OR REPAYMENT OF SECURITIES BY THE BANK AT THE OPTION OF THE HOLDER
|
|
|
|
|
|
|
|
|
|
Section 1201. Applicability of Article
|
|
|
52
|
|
Section 1202. Notice of Repayment Date
|
|
|
52
|
|
Section 1203. Deposit of Repayment Price
|
|
|
52
|
|
Section 1204. Securities Payable on Repayment Date
|
|
|
53
|
|
Section 1205. Securities Repaid in Part
|
|
|
53
|
|
|
|
|
|
|
|
ARTICLE THIRTEEN
|
|
|
|
|
|
|
|
|
|
SINKING FUNDS
|
|
|
|
|
|
|
|
|
|
Section 1301. Applicability of Article
|
|
|
53
|
|
Section 1302. Satisfaction of Sinking Fund Payments with Securities
|
|
|
54
|
|
Section 1303. Redemption of Securities for Sinking Fund
|
|
|
54
|
|
|
|
|
|
|
|
ARTICLE FOURTEEN
|
|
|
|
|
|
|
|
|
|
DEFEASANCE AND COVENANT DEFEASANCE
|
|
|
|
|
|
|
|
|
|
Section 1401. Banks Option to Effect Defeasance or Covenant Defeasance
|
|
|
54
|
|
Section 1402. Defeasance and Discharge
|
|
|
55
|
|
Section 1403. Covenant Defeasance
|
|
|
55
|
|
Section 1404. Conditions to Defeasance or Covenant Defeasance
|
|
|
55
|
|
Section 1405. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions
|
|
|
57
|
|
Section 1406. Reinstatement
|
|
|
58
|
|
|
|
|
|
|
|
ARTICLE FIFTEEN
|
|
|
|
|
|
|
|
|
|
MISCELLANEOUS PROVISIONS
|
|
|
|
|
|
|
|
|
|
Section 1501. Consent to Jurisdiction and Service of Process
|
|
|
58
|
|
Section 1502. Indenture and Securities Solely Corporate Obligations
|
|
|
59
|
|
Section 1503. Execution in Counterparts
|
|
|
59
|
|
Section 1504. Waiver of Jury Trial
|
|
|
59
|
|
iv
Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:
|
|
|
|
|
|
|
|
Trust Indenture Act Section
|
|
Indenture Section
|
§ 310(a)(1)
|
|
609
|
|
(a)(2)
|
|
609
|
(a)(3)
|
|
Not Applicable
|
(a)(4)
|
|
Not Applicable
|
(b)
|
|
608
|
|
|
|
610
|
|
§ 311(a)
|
|
613
|
|
(b)
|
|
613
|
|
§ 312(a)
|
|
701
|
|
|
|
702
|
|
(b)
|
|
702
|
|
(c)
|
|
702
|
|
§ 313(a)
|
|
703
|
|
(b)
|
|
703
|
|
(c)
|
|
703
|
|
(d)
|
|
703
|
|
§ 314(a)
|
|
704
|
|
(a)(4)
|
|
101
|
|
|
|
1004
|
|
(b)
|
|
Not Applicable
|
(c)(1)
|
|
102
|
|
(c)(2)
|
|
102
|
|
(c)(3)
|
|
Not Applicable
|
(d)
|
|
Not Applicable
|
(e)
|
|
102
|
|
§ 315(a)
|
|
601
|
|
(b)
|
|
602
|
|
(c)
|
|
601
|
|
(d)
|
|
601
|
|
(e)
|
|
514
|
|
§ 316(a)
|
|
101
|
|
(a)(1)(A)
|
|
502
|
|
|
|
512
|
|
(a)(1)(B)
|
|
513
|
|
(a)(2)
|
|
Not Applicable
|
(b)
|
|
508
|
|
(c)
|
|
104
|
|
§ 317(a)(1)
|
|
503
|
|
(a)(2)
|
|
504
|
|
(b)
|
|
1003
|
|
§ 318(a)
|
|
107
|
|
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.
SENIOR INDENTURE, dated as of January 25, 2010, between Bank of Montreal, a Canadian chartered
bank (herein called the
Bank
), having its principal executive offices located at 100 King Street
West, 1 First Canadian Place, Toronto, Ontario, Canada M5X 1A1 and its head office located at 129
rue Saint Jacques, Montreal, Quebec, Canada H2Y 1L6, and Wells Fargo Bank, National Association, as
Trustee (herein called the
Trustee
).
RECITALS OF THE BANK
The Bank has duly authorized the execution and delivery of this Indenture to provide for the
issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness
(herein called the
Securities
), to be issued in one or more series as provided in this Indenture.
All things necessary to make this Indenture a valid agreement of the Bank, in accordance with
its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the
Securities or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101.
Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles in Canada, including the
accounting requirements of the Superintendent of Financial Institutions Canada, and, except
as otherwise herein expressly provided, the term generally accepted accounting principles
with respect to any computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an Article or a
Section refers to an Article or a Section, as the case may be, of this Indenture;
(5) the words herein, hereof and hereunder and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(6) all references to dollars and $ shall mean U.S. dollars unless otherwise
indicated.
Act
, when used with respect to any Holder, has the meaning specified in Section 104.
Affiliate
of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, control when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms controlling and
controlled have meanings correlative to the foregoing.
Authenticating Agent
means any Person authorized by the Trustee pursuant to Section 614 to
act on behalf of the Trustee to authenticate Securities of one or more series.
Bank
means the Person named as the Bank in the first paragraph of this instrument until a
successor Person shall have become such pursuant to the applicable provisions of this Indenture,
and thereafter Bank shall mean such successor Person.
Bank Request
or
Bank Order
means a written request or order signed in the name of the Bank
by any one of its President and Chief Executive Officer, the Chief Financial Officer, the Executive
Vice-President and Chief Risk Officer, the Executive Vice-President Finance and Treasurer, the
Executive Vice-President Finance, Vice-President Corporate Treasury, the Senior Vice-President
Financial Strategy, the Vice-President Financial Performance Management or any other Vice-President
of the Bank designated in writing by any one of the President and Chief Executive Officer, the
Chief Financial Officer, the Executive Vice-President and Chief Risk Officer or the Executive
Vice-President Finance and Treasurer and delivered to the Trustee.
Board of Directors
means either the board of directors of the Bank or any duly authorized
committee of that board.
Board Resolution
means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Bank to have been duly adopted by the Board of Directors and to be in full force
and effect on the date of such certification, and delivered to the Trustee.
Business Day
, when used with respect to any Place of Payment, means, unless otherwise
specified as contemplated by Section 301, each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in that Place of Payment are authorized or obligated by
law or executive order to close.
Commission
means the Securities and Exchange Commission, from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
2
Corporate Trust Office
means the principal corporate trust office of the Trustee in New
York, New York at which at any particular time its corporate trust business shall be administered,
or such other address as the Trustee may designate from time to time by notice to the Holders and
the Bank.
corporation
means a corporation, association, company, limited liability company,
joint-stock company, business trust or other entity.
Covenant Defeasance
has the meaning specified in Section 1403.
Defaulted Interest
has the meaning specified in Section 307.
Defeasance
has the meaning specified in Section 1402.
Depositary
means, with respect to Securities of any series issuable in whole or in part in
the form of one or more Global Securities, any Person that is designated to act as Depositary for
such Securities as contemplated by Section 301.
Event of Default
has the meaning specified in Section 501.
Exchange Act
means the Securities Exchange Act of 1934 and any statute successor thereto, in
each case as amended from time to time.
Expiration Date
has the meaning specified in Section 104.
Global Security
means a Security that evidences all or part of the Securities of any series
and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated
by Section 301 for such Securities).
Holder
means a Person in whose name a Security is registered in the Security Register.
Indenture
means this instrument as originally executed and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof, including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of
and govern this instrument and any such supplemental indenture, respectively. The term Indenture
shall also include the terms of particular series of Securities established as contemplated by
Section 301.
interest
, when used with respect to an Original Issue Discount Security which by its terms
bears interest only after Maturity, means interest payable after Maturity.
Interest Payment Date
, when used with respect to any Security, means the Stated Maturity of
an installment of interest on such Security.
Investment Company Act
means the Investment Company Act of 1940 and any statute successor
thereto, in each case as amended from time to time.
Maturity
, when used with respect to any Security, means the date on which the principal of
such Security or an installment of principal becomes due and payable as therein or
3
herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for redemption, exercise of
a Holders option to require the Bank to purchase or repay the Security or otherwise.
Notice of Default
means a written notice of the kind specified in Section 501(4).
Officers Certificate
means a certificate signed by any one of the Banks President and
Chief Executive Officer, the Chief Financial Officer, the Executive Vice-President and Chief Risk
Officer, the Executive Vice-President Finance and Treasurer, the Executive Vice-President Finance,
Vice-President Corporate Treasury, the Senior Vice-President Financial Strategy, the Vice-President
Financial Performance Management or any other Vice-President of the Bank designated in writing by
any one of the President and Chief Executive Officer, the Chief Financial Officer, the Executive
Vice-President and Chief Risk Officer or the Executive Vice-President Finance and Treasurer and
delivered to the Trustee. One of the officers signing an Officers Certificate given pursuant to
Section 1004 shall be the principal executive, financial or accounting officer of the Bank.
Opinion of Counsel
means a written opinion of counsel, who may be internal or external
counsel for the Bank, and who shall be acceptable to the Trustee.
Original Issue Discount Security
means any Security which provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 502.
Outstanding
, when used with respect to Securities, means, as of the date of determination,
all Securities theretofore authenticated and delivered under this Indenture,
except:
(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;
(2) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than the Bank) in trust
or set aside and segregated in trust by the Bank (if the Bank shall act as
its own Paying Agent) for the Holders of such Securities;
provided
that, if such
Securities are to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to Section 1402; and
(4) Securities that have been paid pursuant to Section 306 or in exchange for or in
lieu of which other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Securities are held by a
protected purchaser in whose hands such Securities are valid obligations of the Bank;
provided
,
however
, that in determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given, made or taken any request, demand, authorization, direction,
notice, consent, waiver or other action hereunder as of any date, (A) the principal
4
amount of an
Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the
principal thereof that would be due and payable as of such date upon acceleration of the Maturity
thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable
at the Stated Maturity of a Security is not determinable, the principal amount of such Security
which shall be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated in one or more
foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S.
dollar equivalent, determined as of such date in the manner provided as contemplated by Section
301, of the principal amount of such Security (or, in the case of a Security described in Clause
(A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by
the Bank or any other obligor upon the Securities or any Affiliate of the Bank or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether
the Trustee shall be protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only Securities that a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgees right so to act with respect to such Securities and that the pledgee is not the Bank
or any other obligor upon the Securities or any Affiliate of the Bank or of such other obligor.
Paying Agent
means any Person authorized by the Bank to pay the principal of or any premium
or interest on any Securities on behalf of the Bank and may be the Bank in such capacity.
Person
means any individual, corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization or government or any agency or political subdivision
thereof.
Place of Payment
, when used with respect to the Securities of any series, means the place or
places where the principal of and any premium and interest on the Securities of that series are
payable as specified as contemplated by Section 301, and as determined by the Trustee and the Bank.
Predecessor Security
of any particular Security means every previous Security evidencing all
or a portion of the same debt evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
Record Date
means any Regular Record Date or Special Record Date.
Redemption Date
, when used with respect to any Security to be redeemed, means the date fixed
for such redemption by or pursuant to this Indenture.
Redemption Price
, when used with respect to any Security to be redeemed, means the price at
which it is to be redeemed pursuant to this Indenture.
Regular Record Date
for the interest payable on any Interest Payment Date on the Securities
of any series means the date specified for that purpose as contemplated by Section 301.
5
Repayment Date
, when used with respect to Securities of any series the terms of which
provide each Holder an option to require the Bank to purchase or repay the Securities held by such
Holder, means the date, if any, fixed for such purchase or repayment pursuant to this Indenture.
Repayment Price
, when used with respect to Securities of any series the terms of which
provide each Holder an option to require the Bank to purchase or repay the Securities held by such
Holder, means the price, if any, at which such purchase or repayment is to occur pursuant to this
Indenture.
Responsible Officer
when used with respect to the Trustee, means any officer of the Trustee
with direct responsibility for administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of
such persons knowledge of and familiarity with the particular subject.
Securities
has the meaning stated in the first recital of this Indenture and more
particularly means Securities authenticated and delivered under this Indenture.
Securities Act
means the Securities Act of 1933 and any successor statute thereto, in each
case as amended from time to time.
Security Register
and
Security Registrar
have the respective meanings specified in Section
305.
Special Record Date
for the payment of any Defaulted Interest means a date fixed by the
Trustee pursuant to Section 307.
Stated Maturity
, when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the fixed date on which
the principal of such Security or such installment of principal or interest is due and payable.
Trust Indenture Act
means the Trust Indenture Act of 1939 as in force at the date as of
which this instrument was executed;
provided, however,
that in the event the Trust Indenture Act of
1939 is amended after such date, Trust Indenture Act means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
Trustee
means the Person named as the Trustee in the first paragraph of this instrument
until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, Trustee as used with respect to
the Securities of any series shall mean the Trustee with respect to Securities of that series.
U.S. Government Obligation
has the meaning specified in Section 1404.
Vice-President
, when used with respect to the Bank or the Trustee, means any vice-president,
whether or not designated by a number or a word or words added before or after the title
vice-president.
6
Section 102.
Compliance Certificates and Opinions.
Upon any application or request by the Bank to the Trustee to take any action under any
provision of this Indenture, the Bank shall furnish to the Trustee such certificates and opinions
as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given
in the form of an Officers Certificate, if to be given by an officer of the Bank, or an Opinion of
Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture
Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (except for certificates provided for in Section 1004) shall include,
(1) a statement that each individual signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, such individual has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.
Section 103.
Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an officer of the Bank may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an officer or officers of
the Bank stating that the information with respect to such factual matters is in the possession of
the Bank, unless such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
7
Section 104.
Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments are delivered to
the Trustee and, where it is hereby expressly required, to the Bank. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred
to as the Act of the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Bank, if
made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person executing the same, may also
be proved in any other manner which the Trustee deems sufficient.
For the purposes of this Indenture, the ownership of Securities shall be proved by the
Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Bank in
reliance thereon, whether or not notation of such action is made upon such Security.
The Bank may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or permitted by this
Indenture to be given, made or taken by Holders of Securities of such series,
provided
that the
Bank may not set a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or direction referred to in
the next paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders after such record
date;
provided
that no such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities
of such series on such record date. Nothing in this paragraph shall be construed to prevent the
Bank from setting a new record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders of the requisite principal amount of
Outstanding Securities of the relevant series on the date such action is taken. Promptly after any
record date is
8
set pursuant to this paragraph, the Bank, at its own expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration Date to be given to
the Trustee in writing and to each Holder of Securities of the relevant series in the manner set
forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining the Holders of
Outstanding Securities of any series entitled to join in the giving or making of (i) any Notice of
Default, (ii) any declaration of acceleration referred to in Section 502, (ii) any request to
institute proceedings referred to in Section 507(2) or (iii) any direction referred to in Section
512, in each case with respect to Securities of such series. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Securities of such series on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request or direction, whether
or not such Holders remain Holders after such record date;
provided
that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the
requisite principal amount of Outstanding Securities of such series on such record date. Nothing
in this paragraph shall be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person be cancelled and of
no effect), and nothing in this paragraph shall be construed to render ineffective any action taken
by Holders of the requisite principal amount of Outstanding Securities of the relevant series on
the date such action is taken. Promptly after any record date is set pursuant to this paragraph,
the Trustee, at the Banks expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Bank in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party hereto that sets such
record dates may designate any day as the Expiration Date and from time to time may change the
Expiration Date to any earlier or later day;
provided
that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in writing, and to
each Holder of Securities of the relevant series in the manner set forth in Section 106, on or
prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any
record date set pursuant to this Section, the party hereto that set such record date shall be
deemed to have initially designated the 180th day after such record date as the Expiration Date
with respect thereto, subject to its right to change the Expiration Date as provided in this
paragraph;
provided
that the Expiration Date shall not be later than the 180
th
day after
such record date.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with
regard to any particular Security may do so with regard to all or any part of the principal amount
of such Security or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such principal amount.
Section 105.
Notices, Etc., to Trustee and Bank.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with,
9
(1) the Trustee by any Holder or by the Bank shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office in the manner and as specified in an indenture supplemental hereto,
or
(2) the Bank by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, or by overnight courier or facsimile, to the Bank addressed to
it at the address of its principal executive offices specified in an indenture supplemental
hereto, or at any other address previously furnished in writing to the Trustee by the Bank.
Section 106.
Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his or her address as it
appears in the Security Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 107.
Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under such Act to be a part of and govern this Indenture, the latter provision
shall control. If any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may be.
Section 108.
Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 109.
Successors and Assigns.
All covenants and agreements in this Indenture by the Bank shall bind its successors and
assigns, whether so expressed or not.
10
Section 110.
Separability Clause.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 111.
Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
Section 112.
Governing Law.
This Indenture and the Securities shall be governed by and construed in accordance with the
law of the State of New York, except for Section 301(b), which shall be governed by and construed
in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.
Section 113.
Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, Repayment Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding
any other provision of this Indenture or of the Securities (other than a provision of any Security
which specifically states that such provision shall apply in lieu of this Section)) payment of
interest or principal (and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date, Redemption Date, Repayment Date, or at the
Stated Maturity;
provided
,
however
, that no interest shall accrue for the period from and after
such Interest Payment Date, Redemption Date, Repayment Date, or Stated Maturity, as the case may
be, to the date of such payment.
ARTICLE TWO
SECURITY FORMS
Section 201.
Forms Generally.
The Securities of each series shall be in substantially the form set forth in this Article, or
in such other form as shall be established by or pursuant to a Board Resolution, other appropriate
Bank authorization or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are required or permitted
by this Indenture, and may have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof. If the form of
Securities of any series is established by action taken pursuant to a Board Resolution or other
appropriate Bank authorization, a copy of an appropriate record of such action shall be certified
by the Secretary or an Assistant Secretary of the Bank and delivered to the Trustee at or prior to
11
the delivery of the Bank Order contemplated by Section 303 for the authentication and delivery of
such Securities. If all of the Securities of any series established by action taken pursuant to a
Board Resolution or other appropriate Bank authorization are not to be issued at one time, it shall
not be necessary to deliver a record of such action at the time of issuance of each Security of
such series, but an appropriate record of such action shall be delivered at or before the time of
issuance of the first Security of such series.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders
or may be produced in any other manner, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
Section 202.
Form of Face of Security.
[
Insert any legend required by Section 204
]
[
Insert any legend required by the Internal Revenue Code and the Income Tax Act (Canada) and
the regulations thereunder.
]
BANK OF MONTREAL
[
Insert title of Securities
]
This security will not constitute a deposit that is insured under
the Canada Deposit Insurance Corporation Act or by the
United States Federal Deposit Insurance Corporation.
|
|
|
No.
|
|
CUSIP No.
|
Issue Date.
|
|
Stated Maturity:
|
Bank of Montreal, a Schedule I bank under the Bank Act (Canada) (herein called the Bank,
which term includes any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to
, or registered assigns, the principal sum of
Dollars on
[
if the Security is to bear interest prior to Maturity, insert
, and to pay interest thereon
from
or from the most recent Interest Payment Date to which interest has been paid or duly
provided for,
[
semi-annually
]
on
and
in each year, commencing
, at the rate of % per annum,
until the principal hereof is paid or made available for payment
,
[
if applicable, insert
;
provided
that any principal and premium, and any such installment of interest, which is overdue
shall bear interest at the rate of
% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand
]
. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date for such interest,
which shall be the
or
(whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor Securities) is
12
registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Securities of this
series may be listed, and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
]
[
If the Security is not to bear interest prior to Maturity, insert
The principal of this
Security shall not bear interest except in the case of a default in payment of principal upon
acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any
overdue premium shall bear interest at the rate of % per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due until they are
paid or made available for payment. Interest on any overdue principal or premium shall be payable
on demand.
]
Payment of the principal of (and premium, if any) and
[
if applicable, insert
any such
]
interest on this Security will be made at the office or agency of the Bank maintained for that
purpose, in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts
[
if applicable, insert
;
provided
,
however
, that at the option of the Bank payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Security Register
]
.
Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under
the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Bank has caused this instrument to be duly executed.
Dated:
Section 203.
Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the Bank (herein called the
Securities), issued and to be issued in one or more series under a Senior Indenture, dated as of
, 2010 (herein called the Indenture, which term shall have the meaning assigned to it in such
instrument), between the Bank and Wells Fargo Bank, National Association, as Trustee (herein called
the Trustee, which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights, limitations of
13
rights,
duties and immunities thereunder of the Bank, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and delivered. This Security
is one of the series designated on the face hereof
[
if applicable, insert ,
[
initially
]
limited
in aggregate principal amount to $
,
provided
that the Bank may, without the consent of any
Holder, at any time and from time to time, increase the initial principal amount.
]
[
If applicable, insert
The Securities of this series are subject to redemption upon not
less than 30 days notice by mail,
[
if applicable, insert
(1) on
in any year commencing with
the year
and ending with the year
through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)
]
at any time
[
if applicable, insert
on or after
,
]
, as a whole or in part, at the election of the Bank, at the following
Redemption Prices (expressed as percentages of the principal amount): If redeemed
[
if applicable,
insert
on or before
,
%, and if redeemed
]
during the 12-month period beginning
of the
years indicated,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption
|
|
|
|
|
|
Redemption
|
Year
|
|
Price
|
|
Year
|
|
Price
|
and thereafter at a Redemption Price equal to
% of the principal amount, together in the case
of any such redemption
[
if applicable, insert
(whether through operation of the sinking fund or
otherwise)
]
with accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor Securities, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.
] [
(
if applicable, insert
the securities of this series are also redeemable as set forth hereinafter.
]
[
If applicable, insert
The Securities of this series are subject to redemption upon not
less than 30 days notice by mail, (1) on
in any year commencing with the year
and ending with
the year
through operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below, and (2) at any time
[
if applicable, insert
on or after
]
, as a
whole or in part, at the election of the Bank, at the Redemption Prices for redemption otherwise
than through operation of the sinking fund (expressed as percentages of the principal amount) set
forth in the table below: If redeemed during the 12-month period beginning
of the years indicated,
|
|
|
|
|
|
|
|
|
|
|
|
|
Redemption Price
|
|
|
|
|
|
|
For Redemption
|
|
Redemption Price For
|
|
|
|
|
Through Operation
|
|
Redemption Otherwise
|
|
|
|
|
of the
|
|
Than Through Operation
|
Year
|
|
Sinking Fund
|
|
of the Sinking Fund
|
|
|
14
and thereafter at a Redemption Price equal to
% of the principal amount, together in the case
of any such redemption (whether through operation of the sinking fund or otherwise) with accrued
interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to
such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
]
[
If applicable, insert
The sinking fund for this series provides for the redemption on
in
each year beginning with the year
and ending with the year
of
[
if applicable, insert
not
less than $
(mandatory sinking fund) and not more than
]
$
aggregate principal amount of
Securities of this series. Securities of this series acquired or redeemed by the Bank otherwise
than through
[
if applicable, insert
mandatory
]
sinking fund payments may be credited against
subsequent
[
if applicable, insert
mandatory
]
sinking fund payments otherwise required to be made
[
if applicable, insert
, in the inverse order in which they become due
]
.
]
[
If the Security is subject to redemption of any kind, insert
In the event of redemption of
this Security in part only, a new Security or Securities of this series and of like tenor for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
]
[
If applicable
, insert reference to any other right of the Bank to redeem a Security of this
series.
]
[
If applicable, insert
The Indenture contains provisions for defeasance at any time of
[
the
entire indebtedness of this Security
] [
or
] [
certain restrictive covenants and Events of Default
with respect to this Security
] [
, in each case
]
upon compliance with certain conditions set forth
in the Indenture.
]
[
If applicable
, insert provisions with respect to the option of Holders to require purchase or
repayment of Securities of this series by the Bank at the option of the Holder and the issuance of
Securities in lieu of Securities purchased or repaid by the Bank at the option of the Holder.
]
[
If applicable
, insert provisions requiring an adjustment to the interest rate in certain
circumstances.
]
[
If the Security is not an Original Issue Discount Security, insert
If an Event of Default
with respect to Securities of this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture.
]
[
If the Security is an Original Issue Discount Security, insert
If an Event of Default with
respect to Securities of this series shall occur and be continuing, an amount of principal of the
Securities of this series may be declared due and payable in the manner and with the effect
provided in the Indenture. Such amount shall be equal to
insert formula for determining the
amount
. Upon payment (i) of the amount of principal so declared due and payable and (ii) of
interest on any overdue principal, premium and interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Banks obligations in respect of
15
the payment of the principal of and premium and interest, if any, on the Securities of this series
shall terminate.
]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Bank and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Bank and the
Trustee with the consent of the Holders of a majority in principal amount of the Securities at the
time Outstanding of each series to be affected, or in certain cases the unanimous consent of each
of such Holders. The Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time Outstanding, on behalf
of the Holders of all Securities of such series, to waive compliance by the Bank with certain
provisions of the Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder
shall have previously given the Trustee written notice of a continuing Event of Default with
respect to the Securities of this series, the Holders of not less than 25% in principal amount of
the Securities of this series at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a
majority in principal amount of Securities of this series at the time Outstanding a direction
inconsistent with such request, and shall have failed to institute any such proceeding, for 90 days
after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Bank, which is absolute and unconditional, to pay the
principal of and any premium and interest on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
For disclosure purposes under the Interest Act (Canada), whenever in the Securities of this
series or the Indenture interest at a specified rate is to be calculated on the basis of a period
less than a calendar year, the yearly rate of interest to which such rate is equivalent is such
rate multiplied by the actual number of days in the relevant calendar year and divided by the
number of days in such period.
As provided in the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon surrender of this Security
for registration of transfer at the office or agency of the Bank in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Bank and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or
16
more new Securities of this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in
denominations of $
and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the
Bank or the Trustee may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Bank, the Trustee
and any agent of the Bank or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security be overdue, and
neither the Bank, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
Section 204.
Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the Securities evidenced
thereby, every Global Security authenticated and delivered hereunder shall bear a legend in
substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 205.
Form of Trustees Certificate of Authentication.
Subject to Section 614, each of the Trustees certificates of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
|
|
|
|
Dated:
|
|
Wells Fargo Bank,
National Association,
As Trustee
|
17
ARTICLE THREE
THE SECURITIES
Section 301.
Amount Unlimited; Issuable in Series.
(a) The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited.
(b) The Securities are unsubordinated and unsecured deposit liability obligations of the Bank.
(c) The Securities may be issued in one or more series. There shall be established in or
pursuant to a Board Resolution or other appropriate Bank authorization and, subject to Section 303,
set forth, or determined in the manner provided, in an Officers Certificate, or established in one
or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities
of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the series
which may be authenticated and delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906, 1107 or
1303 and except for any Securities which, pursuant to Section 303, are deemed never to have
been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if
other than the Person in whose name that Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the series is
payable;
(5) the rate or rates at which any Securities of the series shall bear interest, if
any, the date or dates from which any such interest shall accrue, the Interest Payment
Dates on which any such interest shall be payable and the Regular Record Date for any such
interest payable on any Interest Payment Date;
(6) the place or places where the principal of and any premium and interest on any
Securities of the series shall be payable, the place or places where the Securities of such
series may be presented for registration of transfer or exchange, any restrictions that may
be applicable to any such transfer or exchange in addition to or in lieu of those set forth
herein, and the place or places where notices and demands to or upon the Bank in respect of
the Securities of such series may be made;
18
(7) the period or periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series may be redeemed, in whole or in part, at
the option of the Bank and the manner in which any election by the Bank to redeem the
Securities shall be evidenced;
(8) the obligation, if any, of the Bank to redeem or purchase any Securities of the
series pursuant to any sinking fund or analogous provisions or at the option of the Holder
thereof and the period or periods within which, the price or prices at which and the terms
and conditions upon which any Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple thereof, the
denominations in which any Securities of the series shall be issuable;
(10) if the amount of principal of or any premium or interest on any Securities of the
series may be determined with reference to an index, a financial or economic measure or
pursuant to a formula, the manner in which such amounts shall be determined;
(11) if other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or any premium or interest on any
Securities of the series shall be payable and the manner of determining the equivalent
thereof in the currency of the United States of America for any purpose, including for
purposes of the definition of Outstanding in Section 101;
(12) if the principal of or any premium or interest on any Securities of the series is
to be payable, at the election of the Bank or the Holder thereof, in one or more currencies
or currency units other than that or those in which such Securities are stated to be
payable, the currency, currencies or currency units in which the principal of or any
premium or interest on such Securities as to which such election is made shall be payable,
the periods within which and the terms and conditions upon which such election is to be
made and the amount so payable (or the manner in which such amount shall be determined);
(13) if other than the entire principal amount thereof, the portion of the principal
amount of any Securities of the series which shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to Section 502;
(14) if the principal amount payable at the Stated Maturity of any Securities of the
series will not be determinable as of any one or more dates prior to the Stated Maturity,
the amount which shall be deemed to be the principal amount of such Securities as of any
such date for any purpose thereunder or hereunder, including the principal amount thereof
which shall be due and payable upon any Maturity other than the Stated Maturity or which
shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any
such case, the manner in which such amount deemed to be the principal amount shall be
determined);
(15) the manner in which any election by the Company to defease any Securities of the
series pursuant to Section 1402 or Section 1403 shall be evidenced;
19
whether any Securities
of the series other than Securities denominated in U.S. dollars and bearing interest at a
fixed rate are to be subject to Section 1402 or Section 1403; or, in the case of Securities
denominated in U.S. dollars and bearing interest at a fixed rate, if applicable, that the
Securities of the series, in whole or any specified part, shall not be defeasible pursuant
to Section 1402 or Section 1403 or both such Sections;
(16) if applicable, that any Securities of the series shall be issuable in whole or in
part in the form of one or more Global Securities and, in such case, the respective
Depositaries for such Global Securities, the form of any legend or legends which shall be
borne by any such Global Security in addition to or in lieu of that set forth in Section
204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the
last paragraph of Section 305 in which any such Global Security may be exchanged in whole
or in part for registered Securities, and any transfer of such Global Security in whole or
in part may be registered, in the name or names of Persons other than the Depositary for
such Global Security or a nominee thereof and any other provisions governing exchanges or
transfers of any such Global Security;
(17) any addition to or change in the Events of Default which applies to any
Securities of the series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the principal amount thereof due and payable pursuant to
Section 502;
(18) any addition to, deletion from or change in the covenants set forth in Article
Ten which applies to Securities of the series;
(19) if applicable, any conversion, exercise or exchange provisions, including the
terms on which and the period during which such conversion, exercise or exchange may occur;
(20) CUSIP or other identifying numbers of the Securities; and
(21) any other terms of the series (which terms shall not be inconsistent with the
provisions of this Indenture, except as permitted by Section 901(5)).
All Securities of any one series shall be substantially identical except as to denomination
and except as may otherwise be provided in or pursuant to the Board Resolution or other appropriate
Bank authorization referred to above and (subject to Section 303) set forth, or determined in the
manner provided, in the Officers Certificate referred to above or in any such indenture
supplemental hereto. All Securities of any one series need not be issued at one time and, unless
otherwise provided in or pursuant to the Board Resolution or other appropriate Bank authorization
referred to above and (subject to Section 303) set forth, or determined in the manner provided, in
the Officers Certificate referred to above or in any such indenture supplemental hereto with
respect to a series of Securities, additional Securities of a series may be issued, at the option
of the Bank, without the consent of any Holder, at any time and from time to time.
If any of the terms of the series are established by action taken pursuant to a Board
Resolution or other appropriate Bank authorization, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Bank and delivered to
20
the
Trustee at or prior to the delivery of the Officers Certificate setting forth the terms of the
series.
Section 302.
Denominations.
The Securities of each series shall be issuable only in registered form without coupons and
only in such denominations as shall be specified as contemplated by Section 301. In the absence of
any such specified denomination with respect to the Securities of any series, the Securities of
such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section 303.
Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Bank by any one of the Banks President and
Chief Executive Officer, the Chief Financial Officer, the Executive Vice-President and Chief Risk
Officer, the Executive Vice-President Finance and Treasurer, the Executive Vice-President Finance,
Vice-President Corporate Treasury, the Senior Vice-President Financial Strategy, the Vice-President
Financial Performance Management or any other Vice-President of the Bank designated in writing by
any one of the President and Chief Executive Officer, the Chief Financial Officer, the Executive
Vice-President and Chief Risk Officer or the Executive Vice-President Finance and Treasurer, and delivered to the Trustee (or any Person designated by one
of them in writing as authorized to execute and deliver Securities or any Person designated by the
Board of Directors as authorized to execute and deliver Securities). The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Bank shall bind the Bank, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery of such Securities
or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Bank
may deliver Securities of any series executed by the Bank to the Trustee for authentication,
together with a Bank Order for the authentication and delivery of such Securities, and the Trustee
in accordance with the Bank Order shall authenticate and deliver such Securities. If the form or
terms of the Securities of the series have been established by or pursuant to one or more Board
Resolutions or other appropriate Bank authorization as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional responsibilities under this Indenture
in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to Board
Resolution or other appropriate Bank authorization as permitted by Section 201, that such
form has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant to Board
Resolution or other appropriate Bank authorization as permitted by Section 301, that such
terms have been established in conformity with the provisions of this Indenture; and
21
(3) that such Securities, when authenticated and delivered by the Trustee and issued
by the Bank in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations of the Bank enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to or
affecting creditors rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be required to
authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect
the Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise
in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all
Securities of a series are not to be originally issued at one time, including in the event that the
size of a series of Outstanding Securities is increased as contemplated by Section 301, it shall
not be necessary to deliver the Officers Certificate otherwise required pursuant to Section 301 or
the Bank Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or
prior to the authentication of each Security of such series if such documents are delivered at or
prior to the authentication upon original issuance of the first Security of such series to be
issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the Bank, and the Bank
shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this Indenture.
Section 304.
Temporary Securities.
Pending the preparation of definitive Securities of any series, the Bank may execute, and upon
Bank Order the Trustee shall authenticate and deliver, temporary Securities that are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Bank will cause definitive Securities of
that series to be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities of such series at
the office or agency of the Bank in a Place of Payment for that series, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the
Bank shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of like tenor and
22
aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in
all respects be entitled to the same benefits under this Indenture as definitive Securities of such
series and tenor.
Section 305.
Registration, Registration of Transfer and Exchange.
The Bank shall cause to be kept at the Corporate Trust Office of the Trustee a register (the
register maintained in such office and in any other office or agency of the Bank in a Place of
Payment being herein sometimes collectively referred to as the Security Register) in which,
subject to such reasonable regulations as it may prescribe, the Bank shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby appointed
Security Registrar for the purpose of registering Securities and transfers of Securities as
herein provided.
Upon surrender for registration of transfer of any Security of a series at the office or
agency of the Bank in a Place of Payment for that series, the Bank shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series, of any authorized denominations and of like tenor and
aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged for other Securities of
the same series, of any authorized denominations and of like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Bank shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Bank, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if
so required by the Bank or the Trustee) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Bank and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities,
but the Bank or the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer or exchange
of Securities, other than exchanges pursuant to Section 304, 906, 1107 or 1303 not involving any
transfer.
If the Securities of any series (or of any series and specified tenor) are to be redeemed in
part, the Bank shall not be required (A) to issue, register the transfer of or exchange any
Securities of that series (or of that series and specified tenor, as the case may be) during a
period beginning at the opening of business 15 days before the day of the mailing of a notice of
redemption of any such Securities selected for redemption under Section 1103 and ending at the
close of business on the day of such mailing, or (B) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
23
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be registered in the
name of the Depositary designated for such Global Security or a nominee thereof and
delivered to such Depositary or a nominee thereof or custodian therefor, and each such
Global Security shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global Security may be
exchanged in whole or in part for registered Securities, and no transfer of a Global
Security in whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless (A) such Depositary has
notified the Bank that it is unwilling or unable or no longer permitted under applicable
law to continue as Depositary for such Global Security and the Bank does not appoint
another institution to act as Depositary within 60 days, (B) there shall have occurred and
be continuing an Event of Default with respect to such Global Security, (C) the Bank so
directs the Trustee by a Bank Order or (D) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have been
specified for this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security for other
Securities may be made in whole or in part, and all Securities issued in exchange for a
Global Security or any portion thereof shall be registered in such names as the Depositary
for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of transfer of, or in
exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to
this Section, Section 304, 306, 906, 1107 or 1303 or otherwise, shall be authenticated and
delivered in the form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such Global Security or a
nominee thereof.
Section 306.
Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Bank shall execute and the
Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and
of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Bank and the Trustee (i) evidence to their satisfaction of
the destruction, loss or theft of any Security and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Bank or the Trustee that such Security has been acquired by a protected
purchaser in good faith, the Bank shall execute and the Trustee shall authenticate and deliver, in
lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously outstanding.
24
In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Bank in its discretion may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section, the Bank may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in lieu of any mutilated,
destroyed, lost or stolen Security shall constitute an original additional contractual obligation
of the Bank, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities.
Section 307.
Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to any series of
Securities, interest on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Security of any series which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called Defaulted Interest) shall
forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Bank, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Bank may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Bank shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the same time the Bank
shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days and not
less than 10 days prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Bank of such Special Record Date and, in the name and at the expense of
the Bank, shall cause notice of the proposed payment of
25
such Defaulted Interest and the
Special Record Date therefor to be given to each Holder of Securities of such series in the
manner set forth in Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following Clause (2).
(2) The Bank may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Bank to the Trustee of the proposed payment
pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Section 308.
Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the Bank, the Trustee and
any agent of the Bank or the Trustee may treat the Person in whose name such Security is registered
as the owner of such Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest on such Security and for all other purposes whatsoever,
except as required by law, whether or not such Security be overdue, and neither the Bank, the
Trustee nor any agent of the Bank or the Trustee shall be affected by notice to the contrary.
Section 309.
Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or
for credit against any sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Bank may at any
time deliver to the Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Bank may have acquired in any manner whatsoever, and may deliver to the Trustee
(or to any other Person for delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Bank has not issued and sold, and all Securities so delivered
shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as expressly permitted by
this Indenture. All cancelled Securities held by the Trustee shall be disposed of in accordance
with its customary procedures.
Section 310.
Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities of any series,
interest on the Securities of each series shall be computed on the basis of a 360-day year of
twelve 30-day months. For disclosure purposes under the Interest Act (Canada), whenever in this
26
Indenture or any Securities issued hereunder interest at a specified rate is to be calculated on
the basis of a period less than a calendar year, the yearly rate of interest to which such rate is
equivalent is such rate multiplied by the actual number of days in the relevant calendar year and
divided by the number of days in such period.
Section 311.
CUSIP Numbers.
The Bank in issuing any series of the Securities may use CUSIP numbers, if then generally in
use, and thereafter with respect to such series, the Trustee may use such numbers in any notice of
redemption with respect to such series,
provided
that any such notice may state that no
representation is made as to the correctness of such numbers either as printed on the Securities of
that series or as contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Securities of that series, and any such redemption
shall not be affected by any defect in or omission of such numbers.
Section 312.
Original Issue Discount.
If any of the Securities is an Original Issue Discount Security, the Bank shall file with the
Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of
original issue discount (including daily rates and accrual periods) accrued on such Outstanding
Original Issue Discount Securities as of the end of such year and (ii) such other specific
information relating to such original issue discount as may then be relevant under the Internal
Revenue Code of 1986, as amended from time to time.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401.
Satisfaction and Discharge of Indenture.
This Indenture shall upon Bank Request cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein expressly provided
for), and the Trustee, at the expense of the Bank, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been mutilated, destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Bank and thereafter repaid to the Bank or discharged from such trust,
as provided in Section 1003) have been delivered to the Trustee for cancellation;
or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
27
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Bank,
and the Bank, in the case of (i), (ii) or (iii) above, has deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose money in an amount
sufficient to pay and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any premium and interest to
the date of such deposit (in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Bank has paid or caused to be paid all other sums payable hereunder by the
Bank; and
(3) the Bank has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Bank
to the Trustee under Section 607, and, if money shall have been deposited with the Trustee pursuant
to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 402
and the last paragraph of Section 1003 shall survive.
Section 402.
Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money deposited with the
Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Bank acting as its own Paying Agent) as the Trustee may determine, to
the Persons entitled thereto, of the principal and any premium and interest for whose payment such
money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
Section 501.
Events of Default.
Event of Default, wherever used herein with respect to Securities of any series, means any
one of the following events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any administrative or governmental body):
28
(1) default in the payment of any interest upon any Security of that series when it
becomes due and payable, and such default continues for a period of more than 30 days; or
(2) default in the payment of the principal of or any premium on any Security of that
series when it becomes due and payable, and such default continues for a period of five
days; or
(3) if the Bank shall become insolvent or bankrupt or subject to the provisions of the
Winding-Up and Restructuring Act of Canada, or go into liquidation either voluntarily or
under an order of a court of competent jurisdiction, or otherwise acknowledge its
insolvency (provided that a resolution or order for winding-up the Bank, with a view to its
consolidation, amalgamation or merger with another bank or the transfer of its assets as an
entirety to such other bank, as provided in Article Eight, shall not constitute an event of
default under this Section 501 if such last-mentioned bank shall, as a part of such
consolidation, amalgamation, merger or transfer, and, within 90 days from the passing of
the resolution or the date of the order for the winding-up or liquidation of the Bank or
within such further period of time as may be allowed by the Trustee, comply with the
conditions to that end stated in Article Eight); or
(4) any other Event of Default provided with respect to Securities of that series.
Section 502.
Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time Outstanding occurs
and is continuing, then in every such case the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of that series may declare the principal amount of
all the Securities of that series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be specified by the
terms thereof) to be due and payable immediately, by a notice in writing to the Bank (and to the
Trustee if given by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series
has been made and before a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of
the Outstanding Securities of that series, by written notice to the Bank and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Bank has paid or deposited with the Trustee a sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series that have become due otherwise than by such declaration of acceleration
and any interest thereon at the rate or rates prescribed therefor in such
Securities,
29
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel;
and
(2) all Events of Default with respect to Securities of that series, other than the
non-payment of the principal of Securities of that series that have become due solely by
such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 503. Suits for Enforcement by Trustee.
If an Event of Default with respect to Securities of any series occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 504.
Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Bank (or any other obligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and empowered, by
intervention in such proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder thereof or to
authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding;
provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors or other similar
committee.
30
Section 505.
Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and
enforced by the Trustee without the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in
respect of which such judgment has been recovered.
Section 506.
Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on
account of principal or any premium or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST:
To the payment of all amounts due the Trustee under Section 607; and
SECOND:
To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal and any
premium and interest, respectively.
Section 507.
Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a continuing
Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding Securities
of that series shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 90 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee
during such 90-day period by the Holders of a majority in principal amount of the
Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have any right in any
manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
31
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such Holders.
Section 508.
Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have
the right, which is absolute and unconditional, to receive payment of the principal of and any
premium and (subject to Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption or repayment, on the Redemption Date or
date for repayment, as the case may be) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such Holder.
Section 509.
Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every such case, subject to
any determination in such proceeding, the Bank, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such proceeding had
been instituted.
Section 510.
Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities in the last paragraph of Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 511.
Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right
or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by
this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 512.
Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities of any series
shall have the right to direct the time, method and place of conducting any proceeding for any
32
remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series,
provided
that:
(1) such direction shall not be in conflict with any rule of law or with this
Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction, and
(3) the Holders have provided the Trustee with reasonable indemnification against
liability and expenses arising from such action.
Section 513.
Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Outstanding Securities of
any series may, on behalf of the Holders of all the Securities of such series, waive any past
default hereunder with respect to such series and its consequences, except a default:
(1) in the payment of the principal of or any premium or interest on any Security of
such series, or
(2) in respect of a covenant or provision hereof which under Article Nine cannot be
modified or amended without the consent of the Holder of each Outstanding Security of such
series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 514.
Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require
any party litigant in such suit to file an undertaking to pay the costs of such suit, and may
assess reasonable costs against any such party litigant, in the manner and to the extent provided
in the Trust Indenture Act;
provided
that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an assessment in any
suit instituted by the Bank.
Section 515.
Waiver of Usury, Stay or Extension Laws.
The Bank covenants (to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any
usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Bank (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that
it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law had been enacted.
33
ARTICLE SIX
THE TRUSTEE
Section 601.
Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture
Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Section.
Section 602.
Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the Trustee shall give
the Holders of Securities of such series notice of such default as and to the extent provided by
the Trust Indenture Act. For the purpose of this Section, the term default means any event
which is, or after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 603.
Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may conclusively rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(2) any request or direction of the Bank mentioned herein shall be sufficiently
evidenced by a Bank Request or Bank Order, and any resolution of the Board of Directors
shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, conclusively rely upon an Officers
Certificate;
(4) the Trustee may consult with counsel of its selection and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
34
(5) the Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the Holders pursuant
to this Indenture, unless such Holders shall have offered to the Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Bank, personally or by agent or attorney
during the Banks normal business hours;
provided, however
, that the Trustee shall cause
its agents and attorneys to agree in writing to hold in confidence all such information
except to the extent disclosure may be required by law and except to the extent that the
Trustee, in its sole judgment, may determine that such disclosure is consistent with its
obligations hereunder;
(7) the Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder, and the Trustee may also employ advisors
and experts to assist in the performance of the Trustees powers and duties under this
Indenture;
(8) the rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder; and
(9) the Trustee shall not be deemed to have notice of any Event of Default unless a
Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact such a default is delivered to the Trustee in accordance with an
appropriate manner of delivery as set forth elsewhere in this Indenture, and such notice
references the Securities or this Indenture.
Section 604.
Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustees certificates of
authentication, shall be taken as the statements of the Bank, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the
use or application by the Bank of Securities or the proceeds thereof.
Section 605.
May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other agent of the Bank, in its
individual or any other capacity, may become the owner or pledgee of Securities and, subject
35
to
Sections 608 and 613, may otherwise deal with the Bank with the same rights it would have if it
were not Trustee, Paying Agent, Security Registrar or such other agent.
Section 606.
Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the Bank.
Section 607.
Compensation and Reimbursement.
The Bank agrees:
(1) to pay to the Trustee from time to time such compensation as shall be agreed to in
writing between the Bank and the Trustee for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made by the
Trustee (in addition to the compensation for its services) in accordance with any provision
of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence or bad faith;
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the reasonable costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of its powers
or duties hereunder;
(4) when the Trustee incurs any expenses or renders any services in connection
with an Event of Default specified in Section 501(3), such expenses (including the
reasonable charges and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under the Winding-Up and Restructuring
Act of Canada or any similar Canadian or United States federal or state law for the relief
of debtors;
(5) in connection with the payment obligations of the Bank in this Section 607, the
parties hereto hereby recognize that the Trustee shall have a claim prior to the Notes on
all money or property held by the Trustee in connection with this Indenture, except sums
that are held in trust to pay principal and interest on particular Securities; and
(6) the provisions of this Section shall survive the termination of this Indenture and
the resignation or removal of the Trustee.
36
Section 608.
Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.
To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest
by virtue of being a trustee under this Indenture with respect to Securities of more than one
series or the Subordinated Debt Indenture, dated the date hereof, between the Bank and the Trustee
as amended or supplemented.
Section 609.
Corporate Trustee Required; Eligibility.
There shall at all times be one Trustee hereunder with respect to the Securities of each
series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee
shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such
,
has a
combined capital and surplus of at least $50,000,000 and has its Corporate Trust Office in the
Borough of Manhattan, The City of New York. If any such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of its supervising or examining authority,
then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If at any time the Trustee with
respect to the Securities of any series shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610.
Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to
this Article shall become effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Bank. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such
series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of
the Holders of a majority in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Bank. If the instrument of acceptance by a successor Trustee
required by Section 611 shall not have been delivered to the Trustee within 30 days after the
giving of such notice of removal, the Trustee being removed may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such
series.
37
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request therefor
by the Bank or by any Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign
after written request therefor by the Bank or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Bank by a Board Resolution or other appropriate Bank authorization
may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder
who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall
occur in the office of Trustee for any cause, with respect to the Securities of one or more series,
the Bank shall promptly appoint a successor Trustee or Trustees with respect to the Securities of
that or those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the Securities of any particular series) and
shall comply with the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series delivered to the Bank and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 611, become the successor
Trustee with respect to the Securities of such series and to that extent supersede the successor
Trustee appointed by the Bank. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Bank or the Holders and accepted appointment in the
manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Securities of such series.
The Bank shall give notice of each resignation and each removal of the Trustee with respect to
the Securities of any series and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
38
Section 611.
Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect to all Securities,
every such successor Trustee so appointed shall execute, acknowledge and deliver to the Bank and to
the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Bank or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of
one or more (but not all) series, the Bank, the retiring Trustee and each successor Trustee with
respect to the Securities of one or more series shall execute and deliver an indenture supplemental
hereto wherein each successor Trustee shall accept such appointment and that (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series to which the appointment of such successor Trustee relates,
(2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of the Bank or any
successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Bank shall execute any and all instruments for
more fully and certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such
successor Trustee shall be qualified and eligible under this Article.
39
Section 612.
Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided
such corporation shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the parties hereto. In
case any Securities shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion, consolidation or sale to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such Securities.
Section 613.
Preferential Collection of Claims Against Bank.
If and when the Trustee shall be or become a creditor of the Bank (or any other obligor upon
the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act
regarding the collection of claims against the Bank (or any such other obligor).
Section 614.
Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series issued upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustees certificate of
authentication, such reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Bank and shall at all times be a corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia, authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000
and subject to supervision or examination by Federal or State authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to the requirements of
said supervising or examining authority, then for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate
agency or corporate trust business of an Authenticating Agent (including the authenticating agency
contemplated by this Indenture), shall continue to be an Authenticating Agent,
provided
such
corporation shall be otherwise eligible under this Section, without the
40
execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee
and to the Bank. The Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Bank. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor Authenticating Agent that shall be acceptable to the Bank and shall give notice
of such appointment in the manner provided in Section 106 to all Holders of Securities of the
series with respect to which such Authenticating Agent will serve. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under
the provisions of this Section.
The Bank agrees to pay to each Authenticating Agent from time to time reasonable compensation
for its services under this Section.
If an appointment with respect to one or more series is made pursuant to this Section, the
Securities of such series may have endorsed thereon, in addition to the Trustees certificate of
authentication, an alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
Dated:
|
|
|
|
|
|
Wells Fargo Bank, National Association,
As Trustee
|
|
|
By
|
|
|
|
|
As Authenticating Agent
|
|
|
|
|
|
|
|
|
|
|
By
|
|
|
|
|
Authorized Signatory
|
|
|
|
|
|
|
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND BANK
Section 701.
Bank to Furnish Trustee Names and Addresses of Holders.
The Bank will furnish or cause to be furnished to the Trustee
(1) semi-annually either (i) not later than January 15 and July 15 in each year in the
case of any series of Securities consisting solely of Original Issue Discount
41
Securities
which by their terms do not bear interest prior to Maturity, or (ii) not more than 15 days
after each Regular Record Date in the case of Securities of any other series, a list, in
such form as the Trustee may reasonably require, of the names and addresses of the Holders
of Securities of each series as of the preceding January 1 or July 1 or as of such Regular
Record Date, as the case may be; and
(2) at such other times as the Trustee may request in writing, within 30 days after
the receipt by the Bank of any such request, a list of similar form and content as of a
date not more than 15 days prior to the time such list is furnished;
excluding
from any such list names and addresses received by the Trustee in its capacity as
Security Registrar.
Section 702.
Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and
addresses of Holders contained in the most recent list furnished to the Trustee as provided in
Section 701 and the names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701
upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under
this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee,
shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Bank and the
Trustee that neither the Bank nor the Trustee nor any agent of either of them shall be held
accountable by reason of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.
Section 703.
Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
A copy of each such report shall, at the time of such transmission to Holders, be filed by the
Trustee with each stock exchange upon which any Securities are listed, with the Commission and with
the Bank. The Bank will notify the Trustee when any Securities are listed on any stock exchange.
Section 704.
Reports by Bank.
The Bank shall file with the Trustee and the Commission, and transmit to Holders, such
information, documents and other reports as may be required by the Trust Indenture Act;
provided
that any such information, documents or reports filed electronically with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act shall be deemed filed with, and delivered to, the
Trustee at the same time as filed with the Commission.
42
Delivery of such reports, information and documents to the Trustee is for informational
purposes only and shall not constitute a representation or warranty as to the accuracy or
completeness of the reports, information or documents. The Trustees receipt of such shall not
constitute constructive notice of any information contained therein or determinable from
information contained therein, including the Banks compliance with any of its covenants hereunder
(as to which the Trustee is entitled to conclusively rely exclusively on Officers Certificates).
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER,
CONVEYANCE, TRANSFER OR LEASE
Section 801.
Bank May Consolidate, Etc., Only on Certain Terms.
The Bank shall not merge, amalgamate, consolidate or otherwise combine with another entity or
sell or lease substantially all of the Banks assets to another entity, unless:
(1) in case the Bank shall merge, amalgamate, consolidate or otherwise combine with
another entity or sell or lease substantially all of the Banks assets to another entity,
the surviving, resulting or acquiring entity shall be a duly organized entity and shall be
legally responsible for and assume, whether by agreement, operation of law or otherwise,
the Securities and the Banks obligations under this Indenture;
(2) any such merger, amalgamation, consolidation or other combination, or sale or
lease of assets, would not result in an Event of Default, nor any event which, after any
requirements for giving the Bank default notice and any requirements for lapse of time for
the event to become a default were both disregarded, would become an Event of Default; and
(3) the Bank has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that such merger, amalgamation, consolidation or other combination,
or sale or lease of assets and, if a supplemental indenture is required in connection with
such transaction, such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been complied
with.
Section 802.
Successor Substituted.
Upon any consolidation or amalgamation of the Bank with, or merger of the Bank into, any other
Person or any conveyance, transfer or lease of the properties and assets of the Bank substantially
as an entirety in accordance with Section 801, the successor Person formed by or resulting from
such consolidation or amalgamation or into which the Bank is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Bank under this Indenture with the same effect as if such successor Person had
been named as the Bank herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under this Indenture and the Securities.
43
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901.
Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Bank and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Bank and the assumption by any
such successor of the covenants of the Bank herein and in the Securities; or
(2) to add to the covenants of the Bank for the benefit of some or all of the Holders
of all or any series of Securities or of particular Securities within a series (and if such
covenants are to be for the benefit of less than all series of Securities, stating that
such covenants are expressly being included solely for the benefit of such series or such
particular Securities) or to surrender any right or power herein conferred upon the Bank;
or
(3) to add any additional Events of Default for the benefit of some or all of the
Holders of all or any series of Securities or of particular Securities within a series (and
if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being
included solely for the benefit of such series or such particular Securities); or
(4) to add to or change any of the provisions of this Indenture to such extent as
shall be necessary to permit or facilitate the issuance of Securities in bearer form,
registrable or not registrable as to principal, and with or without interest coupons, or to
permit or facilitate the issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in respect
of one or more series of Securities,
provided
that any such addition, change or elimination
(A) shall neither (i) apply to any Security of any series created prior to the execution of
such supplemental indenture and entitled to the benefit of such provision nor (ii) modify
the rights of the Holder of any such Security with respect to such provision or (B) shall
become effective only when there is no Security described in clause (i) Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by
Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or
44
facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 611; or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Indenture,
provided
that such
action pursuant to this Clause (9) shall not adversely affect the interests of the Holders
of Securities of any series in any material respect.
Section 902.
Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series affected by such supplemental indenture, by Act of said
Holders delivered to the Bank and the Trustee, the Bank and the Trustee may enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of modifying in any manner the
rights of the Holders of Securities of such series under this Indenture;
provided, however
, that if
the supplemental indenture shall expressly provide that any provision to be changed or eliminated
shall apply to fewer than all the Outstanding Securities hereunder or under a particular series
under this Indenture, then, to the extent not inconsistent with the Trust Indenture Act, any such
consent may be given by Holders of not less than a majority in principal amount of the Outstanding
Securities hereunder or under such series to which such change or elimination shall apply;
provided
,
further
, that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby (whether or not such affected Securities comprise all
Securities under this Indenture or under a particular series),
(1) change the Stated Maturity of the principal of, or any installment of principal of
or interest on, any Security, or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or reduce the amount
of the principal of an Original Issue Discount Security or any other Security which would
be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency in which, any
Security or any premium or interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity thereof (or,
in the case of redemption, on or after the Redemption Date), or
(2) if any Security provides that the Holder may require the Bank to repurchase such
Security, impair such Holders right to require repurchase of such Security on the terms
provided therein, or
(3) reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(4) modify any of the provisions of this Section, Section 513 or Section 1006, except
to increase any such percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of each
45
Outstanding Security affected thereby;
provided, however,
that this clause shall not be
deemed to require the consent of any Holder with respect to changes in the references to
the Trustee and concomitant changes in this Section and Section 1006, or the deletion of
this proviso, in accordance with the requirements of Sections 611 and 901(8).
A supplemental indenture that changes or eliminates any covenant or other provision of this
Indenture that has expressly been included solely for the benefit of one or more identified series
of Securities or Securities within a series of Securities, or that modifies the rights of the
Holders of Securities of such series or Holders of particular Securities within a series with
respect to such covenant or other provision, shall be deemed to affect only the rights under this
Indenture of the Holders of Securities of the identified series or of particular Securities within
the identified series, and shall be deemed not to affect the rights under this Indenture of the
Holders of any other Securities.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
Section 903.
Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by this Indenture, the
Trustee shall be entitled to receive, in addition to the documents required by Section 102, and
(subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel and an
Officers Certificate stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustees own rights, duties or immunities under this
Indenture or otherwise.
Section 904.
Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
Section 905.
Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
Section 906.
Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental indenture. If the
Bank shall so determine, new Securities of any series so modified as to conform, in the opinion of
the Trustee and the Bank, to any such supplemental indenture may be prepared
46
and executed by the
Bank and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such
series.
ARTICLE TEN
COVENANTS
Section 1001.
Payment of Principal, Premium and Interest.
The Bank covenants and agrees for the benefit of each series of Securities that it will duly
and punctually pay the principal of and any premium and interest on the Securities of that series
in accordance with the terms of the Securities and this Indenture.
Section 1002.
Maintenance of Office or Agency.
The Bank will maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for payment, where
Securities of that series may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Bank in respect of the Securities of that series and this
Indenture may be served. The Bank will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at any time the Bank shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or served at such location
as determined by the Bank and the Trustee.
The Bank may also from time to time designate one or more other offices or agencies where the
Securities of one or more series may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations;
provided, however,
that no such
designation or rescission shall in any manner relieve the Bank of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such purposes. The Bank
will give prompt written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
If the Bank issues Securities of any series through a branch, agency or office other than its
head or home office, the Bank represents that, notwithstanding the place of booking office or
jurisdiction of incorporation or organization of the Bank, the obligations of the Bank in respect
of such Securities are the same as if it had issued such Securities through its head or home
office.
Section 1003.
Money for Securities Payments to Be Held in Trust.
If the Bank shall at any time act as its own Paying Agent with respect to any series of
Securities, it will, on or before each due date of the principal of or any premium or interest on
any of the Securities of that series, deposit in an account established for the purpose of
providing the Persons entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Bank shall have one or more Paying Agents for any series of Securities, it will,
prior to each due date of the principal of or any premium or interest on any Securities of that
47
series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Bank will
promptly notify the Trustee of its action or failure so to act.
The Bank will cause each Paying Agent for any series of Securities other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Bank (or any other obligor upon the Securities of that series) in
the making of any payment in respect of the Securities of that series, upon the written request of
the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment
in respect of the Securities of that series.
The Bank may at any time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or by Bank Order direct any Paying Agent to pay, to the
Trustee all sums held by the Bank or such Paying Agent, such sums to be held by the Trustee in
trust for the benefit of the Persons entitled thereto; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent in trust for the payment of the
principal of or any premium or interest on any Security of any series and remaining unclaimed for
two years after such principal, premium or interest has become due and payable shall be paid to the
Bank on Bank Request; and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Bank for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, shall thereupon cease;
provided, however,
that the
Trustee or such Paying Agent, before being required to make any such repayment, may at the
expense of the Bank cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Bank.
Section 1004.
Statement by Officers as to Default.
The Bank will deliver to the Trustee, within 120 days after the end of each fiscal year of the
Bank ending after the date hereof, an Officers Certificate, stating whether or not to the best
knowledge of the signers thereof the Bank is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Bank shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
Section 1005.
Existence.
Subject to Article Eight, the Bank will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.
48
Section 1006.
Waiver of Certain Covenants.
Subject to Section 502 and Section 902, and except as otherwise specified as contemplated by
Section 301 for Securities of such series, the Bank may, with respect to the Securities of any
series, omit in any particular instance to comply with any term, provision or condition set forth
in any covenant provided pursuant to Section 301(c)(18), 901(2) or 901(7) for the benefit of the
Holders of such series or in Section 1005 if before the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Securities of such series shall, by Act of
such Holders, either waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Bank and the duties of the Trustee in respect of any such term, provision or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101.
Applicability of Article.
Subject to any law restricting the redemption of the Securities, Securities of any series that
are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 301 for such Securities) in accordance
with this Article.
Section 1102.
Election to Redeem; Notice to Trustee.
The election of the Bank to redeem any Securities shall be evidenced by a Board Resolution or
in another manner specified as contemplated by Section 301 for such Securities. In
case of any redemption at the election of the Bank of the Securities of any series (including
any such redemption affecting only a single Security), the Bank shall, at least 45 days prior to
the Redemption Date fixed by the Bank (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of Securities of such
series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed. In the
case of any redemption of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the Bank shall furnish the
Trustee with an Officers Certificate evidencing compliance with such restriction.
Section 1103.
Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all the Securities of
such series and of a specified tenor are to be redeemed or unless such redemption affects only a
single Security), the particular Securities to be redeemed shall be selected not more than 45 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal amount of any
Security of such series,
provided
that the unredeemed portion of the principal amount of any
Security shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities of such series and of
a
49
specified tenor are to be redeemed (unless such redemption affects only a single Security), the
particular Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor
not previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Bank in writing of the Securities selected for
redemption as aforesaid and, in case of any Securities selected for partial redemption as
aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect to any redemption
affecting only a single Security, whether such Security is to be redeemed in whole or in part. In
the case of any such redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of such Securities that has been
or is to be redeemed.
Section 1104.
Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than
30 nor more than 45 days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series consisting of more than
a single Security are to be redeemed, the identification (and, in the case of partial
redemption of any such Securities, the principal amounts) of the particular Securities to
be redeemed and, if less than all the Outstanding Securities of any series consisting of a
single Security are to be redeemed, the principal amount of the particular Security to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become due and payable upon
each such Security to be redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date,
(5) the place or places where each such Security is to be surrendered for payment of
the Redemption Price,
(6) that the redemption is for a sinking fund, if such is the case; and
(7) if applicable, the CUSIP or other identifying numbers of the Securities of that
series.
50
Notice of redemption of Securities to be redeemed at the election of the Bank shall be given
by the Bank or, at the Banks request, by the Trustee in the name and at the expense of the Bank
and, unless otherwise specified or contemplated by Section 301, shall be irrevocable.
Section 1105.
Deposit of Redemption Price.
Prior to any Redemption Date, the Bank shall deposit with the Trustee or with a Paying Agent
(or, if the Bank is acting as its own Paying Agent, deposit in an account established for the
purpose as provided in Section 1003 an amount of money sufficient to pay the Redemption Price of,
and (except if the Redemption Date shall be an Interest Payment Date or the Securities of the
series provide otherwise) accrued interest on, all the Securities which are to be redeemed on that
date.
Section 1106.
Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall,
on the Redemption Date, become due and payable at the Redemption Price therein specified, and from
and after such date (unless the Bank shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with said notice, such Security shall be paid by the Bank at
the Redemption Price, together, if applicable, with accrued interest to the Redemption Date;
provided, however,
that, unless otherwise specified as contemplated by Section 301, installments of
interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal and any premium shall, until paid, bear interest from the Redemption Date
at the rate prescribed therefor in the Security.
Section 1107.
Securities Redeemed in Part.
Any Security that is to be redeemed only in part shall be surrendered at a Place of Payment
therefor (with, if the Bank or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Bank and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Bank shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of
the principal of the Security so surrendered.
51
ARTICLE TWELVE
PURCHASE OR REPAYMENT OF SECURITIES BY THE BANK
AT THE OPTION OF THE HOLDER
Section 1201.
Applicability of Article.
Subject to any applicable law restricting the purchase or repayment of the Securities by the
Bank at the option of the Holder, Securities of any series the terms of which provide to each
Holder the option to require the Bank to purchase or repay such Securities in certain circumstances
shall, upon exercise of such option, be repayable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series) in accordance with
this Article.
Section 1202.
Notice of Repayment Date.
Notice of any Repayment Date with respect to Securities of any series shall, unless otherwise
specified by the terms of the Securities of such series, be given by the Bank not less than 30 nor
more than 90 days prior to such Repayment Date to each Holder of Securities of such series in
accordance with Section 106.
Such notice shall state:
(a) the Repayment Date;
(b) the Repayment Price;
(c) the place or places where, and the date by which, such Securities are to be surrendered
for payment of the Repayment Price;
(d) a description of the procedure which a Holder must follow to exercise the purchase or
repayment option;
(e) that exercise of the purchase or repayment option to elect repayment is irrevocable; and
(f) such other information as the Bank may consider appropriate for inclusion.
No failure of the Bank to give the foregoing notice shall limit any Holders right to exercise
a repayment right.
Section 1203.
Deposit of Repayment Price.
Prior to the Repayment Date, the Bank shall deposit with the Trustee or with a Paying Agent
(or, if the Bank is acting as its own Paying Agent, deposit in an account established for the
purpose provided in Section 1103) an amount of money sufficient to pay the Repayment Price of and
(unless the Repayment Date shall be an Interest Payment Date) accrued and unpaid interest, if any,
on all of the Securities of such series that are to be repaid on that date.
52
Section 1204.
Securities Payable on Repayment Date.
Holders having duly exercised the option to require purchase or repayment by the Bank on any
Repayment Date as specified in the form of Security for such series as provided in Section 203, the
Securities of such series so to be purchased or repaid shall, on the Repayment Date, become due and
payable at the Repayment Price applicable thereto and from and after such date (unless the Bank
shall default in the payment of the Repayment Price and accrued interest (including any Additional
Interest)) such Securities shall cease to bear interest. Upon surrender of any such Security for
purchase or repayment in accordance with the terms of such Security, provided the option has been
duly exercised and the Security duly surrendered as specified in the form of such Security, such
Security shall be paid by the Bank at the Repayment Price together with accrued interest to the
Repayment Date;
provided
,
however
, that installments of interest whose Stated Maturity is on or
prior to such Repayment Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security shall not be paid upon due exercise of the option and surrender thereof for
purchase or repayment, the Repayment Price shall, until paid, bear interest from the Repayment Date
at the rate prescribed therefor in such Security.
Section 1205.
Securities Repaid in Part.
Any Security that by its terms may be purchased or repaid by the Bank in part at the option of
the Holder and that is to be purchased or repaid only in part by the Bank shall be surrendered at
any office or agency of the Bank designated for that purpose pursuant to Section 1102 (with, if the
Bank or the Trustee so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Bank and the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Bank shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security or Securities of the same
series, of any authorized denomination as requested by such Holder, in aggregate principal amount
equal to and in exchange for the unpurchased or unrepaid portion of the principal of the Security
so surrendered.
ARTICLE THIRTEEN
SINKING FUNDS
Section 1301.
Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for the retirement of
Securities of any series except as otherwise specified as contemplated by Section 301 for such
Securities.
The minimum amount of any sinking fund payment provided for by the terms of any series of
Securities is herein referred to as a mandatory sinking fund payment, and any payment in excess
of such minimum amount provided for by the terms of such Securities is herein referred to as an
optional sinking fund payment. If provided for by the terms of any series of Securities, the
cash amount of any sinking fund payment may be subject to reduction as provided in Section
53
1302. Each sinking fund payment shall be applied to the redemption of Securities of the series as
provided for by the terms of such Securities.
Section 1302.
Satisfaction of Sinking Fund Payments with Securities.
The Bank (1) may deliver Outstanding Securities of a series (other than any previously called
for redemption) and (2) may apply as a credit Securities of a series which have been redeemed
either at the election of the Bank (a) pursuant to the terms of such Securities or through the
application of permitted optional sinking fund payments pursuant to the terms of such Securities,
in each case in satisfaction of all or any part of any sinking fund payment with respect to any
Securities of such series required to be made pursuant to the terms of such Securities as and to
the extent provided for by the terms of such series or (b) have been purchased or repaid by the
Bank through the exercise of an option by the Holder as provided for in the terms of such
Securities;
provided
that the Securities to be so credited have not been previously so credited.
The Securities to be so credited shall be received and credited for such purpose by the Trustee at
the Redemption Price, as specified in the Securities so to be redeemed, for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 1303.
Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any Securities, the Bank
will deliver to the Trustee an Officers Certificate specifying the amount of the next ensuing
sinking fund payment for such Securities pursuant to the terms of such Securities, the portion
thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which
is to be satisfied by delivering and crediting Securities pursuant to Section 1302 and will also
deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such
sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Bank in the manner provided in Section
1104. Such notice having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1106 and 1107.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401.
Banks Option to Effect Defeasance or Covenant Defeasance.
Unless otherwise provided as contemplated by Section 301, Sections 1402 and 1403 shall apply
to any Securities or any series of Securities, as the case may be, in either case, denominated in
U.S. dollars and bearing interest at a fixed rate, in accordance with any applicable requirements
provided pursuant to Section 301 and upon compliance with the conditions set forth below in this
Article; and the Bank may elect, at its option at any time, to have Sections 1402 and 1403 applied
to any Securities or any series of Securities, as the case may be, designated pursuant to Section
301 as being defeasible pursuant to such Section 1402 or 1403, in accordance with any applicable
requirements provided pursuant to Section 301 and upon compliance with the conditions set forth
below in this Article. Any such election to have or not to have Sections 1402 and 1403 apply, as
54
the case may be, shall be evidenced by a Board Resolution or in another manner specified as
contemplated by Section 301 for such Securities.
Section 1402.
Defeasance and Discharge.
Upon the Banks exercise of its option (if any) to have this Section applied to any Securities
or any series of Securities, as the case may be, or if this Section shall otherwise apply to any
Securities or any series of Securities, as the case may be, the Bank shall be deemed to have been
discharged from its obligations with respect to such Securities as provided in this Section on and
after the date the conditions set forth in Section 1404 are satisfied (hereinafter called
Defeasance). For this purpose, such Defeasance means that the Bank shall be deemed to have paid
and discharged the entire indebtedness represented by such Securities and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such Securities are concerned
(and the Trustee, at the expense of the Bank, shall execute proper instruments acknowledging the
same), subject to the following, which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund
described in Section 1404 and as more fully set forth in such Section, payments in respect of the
principal of and any premium and interest on such Securities when payments are due, (2) the Banks
obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, (3) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article.
Subject to compliance with this Article, the Bank may exercise its option (if any) to have this
Section applied to the Securities of any series notwithstanding the prior exercise of its option
(if any) to have Section 1403 applied to such Securities.
Section 1403.
Covenant Defeasance.
Upon the Banks exercise of its option (if any) to have this Section applied to any Securities
or any series of Securities, as the case may be, or if this Section shall otherwise apply to any
Securities or any series of Securities, as the case may be, (1) the Bank shall be released from its
obligations under Section 1005 and any covenants provided pursuant to Section 301(c)(18), Section
901(2) or Section 901(7) for the benefit of the Holders of such Securities and (2) the occurrence
of any event specified in Section 501(4) shall be deemed not to be or result in an Event of
Default, in each case with respect to such Securities as provided in this Section on and after the
date the conditions set forth in Section 1404 are satisfied (hereinafter called
Covenant Defeasance). For this purpose, such Covenant Defeasance means that, with respect
to such Securities, the Bank may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such specified Section, whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or by reason of any
reference in any such Section to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
Section 1404.
Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1402 or 1403 to any
Securities or any series of Securities, as the case may be:
(1) The Bank shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee that satisfies the requirements contemplated by Section 609 and
agrees to comply with the provisions of this Article applicable to it) as
55
trust funds in
trust for the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefits of the Holders of such Securities, (A) money in
an amount, or (B) U.S. Government Obligations that through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, money in an amount, or (C) a
combination thereof, in each case sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee
(or any such other qualifying trustee) to pay and discharge, the principal of and any
premium and interest on such Securities on the respective Stated Maturities, in accordance
with the terms of this Indenture and such Securities. As used herein, U.S. Government
Obligation means (x) any security that is (i) a direct obligation of the United States of
America for the payment of which the full faith and credit of the United States of America
is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United States of
America, which, in either case (i) or (ii), is not callable or redeemable at the option of
the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any U.S. Government Obligation
which is specified in clause (x) above and held by such bank for the account of the holder
of such depositary receipt, or with respect to any specific payment of principal of or
interest on any U.S. Government Obligation which is so specified and held, provided that
(except as required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment of principal
or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1402 apply to any Securities or any
series of Securities, as the case may be, the Bank shall have delivered to the Trustee an
Opinion of Counsel stating that (A) the Bank has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there
has been a change in the applicable Federal income tax law, in either case (A) or (B) to
the effect that, and based thereon such opinion shall confirm that, the
Holders of such Securities will not recognize gain or loss for Federal income tax
purposes as a result of the deposit, Defeasance and discharge to be effected with respect
to such Securities and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would be the case if such deposit, Defeasance and
discharge were not to occur.
(3) In the event of an election to have Section 1403 apply to any Securities or any
series of Securities, as the case may be, the Bank shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Securities will not recognize
gain or loss for Federal income tax purposes as a result of the deposit and Covenant
Defeasance to be effected with respect to such Securities and will be subject to Federal
income tax on the same amount, in the same manner and at the same times as would be the
case if such deposit and Covenant Defeasance were not to occur.
56
(4) No event that is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Securities or any other Securities shall have occurred and
be continuing at the time of the deposit referred to in clause
Error! Reference source not
found.
or, with regard to any such event specified in Section 501(3), at any time on or
prior to the 90th day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until after such 90th day).
(5) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities
are in default within the meaning of such Act).
(6) Such Defeasance or Covenant Defeasance shall not result in a breach or violation
of, or constitute a default under, any other agreement or instrument to which the Bank is a
party or by which it is bound.
(7) Such Defeasance or Covenant Defeasance shall not result in the trust arising from
such deposit constituting an investment company within the meaning of the Investment
Company Act unless such trust shall be registered under such Act or exempt from
registration thereunder.
(8) The Bank shall have delivered to the Trustee an Officers Certificate and an
Opinion of Counsel, each stating that all conditions precedent with respect to such
Defeasance or Covenant Defeasance have been complied with (in each case, subject to the
satisfaction of the condition in clause (4)).
|
|
|
Section 1405.
|
|
Deposited Money and U.S. Government Obligations to Be Held in Trust;
Miscellaneous Provisions.
|
Subject to the provisions of the last paragraph of Section 1003, all money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee
(solely for purposes of this Section and Section 1406, the Trustee and any such other trustee are
referred to collectively as the Trustee) pursuant to Section 1404 in respect of any Securities
shall be held in trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any such Paying Agent
(including the Bank acting as its own Paying Agent) as the Trustee may determine, to the
Holders of such Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated from other funds
except to the extent required by law.
The Bank shall pay and indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against the U.S. Government Obligations deposited pursuant to Section 1404 or the
principal and interest received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to
the Bank from time to time upon Bank Request any money or U.S. Government Obligations held by it as
provided in Section 1404 with respect to any Securities which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then be required
57
to be
deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such
Securities.
Section 1406.
Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in accordance with this
Article with respect to any Securities by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the
obligations under this Indenture and such Securities from which the Bank has been discharged or
released pursuant to Section 1402 or 1403 shall be revived and reinstated as though no deposit had
occurred pursuant to this Article with respect to such Securities, until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust pursuant to Section 1405 with respect
to such Securities in accordance with this Article;
provided, however
, that if the Bank makes any
payment of principal of or any premium or interest on any such Security following such
reinstatement of its obligations, the Bank shall be subrogated to the rights (if any) of the
Holders of such Securities to receive such payment from the money so held in trust.
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
Section 1501.
Consent to Jurisdiction and Service of Process.
The Bank irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in The City of New York over any suit, action or proceeding arising out of or relating to
this Indenture or any Security. The Bank irrevocably waives, to the fullest extent permitted by
law, any objection that it may have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or proceeding brought
in such a court has been brought in any inconvenient forum. The Bank agrees that final judgment in
any such suit, action or proceeding brought in such a court shall be conclusive and binding upon
the Bank and may be enforced in the courts of Canada (or any other courts to the jurisdiction of
which the Bank is subject) by a suit upon such judgment, provided that service of process is
effected upon the Bank in the manner specified in the following paragraph or as otherwise permitted
by law;
provided
,
however
, that the Bank does not waive, and the foregoing provisions of this
sentence shall not constitute or be deemed to constitute a waiver of, (i) any right
to appeal any such judgment, to seek any stay or otherwise to seek reconsideration or review
of any such judgment or (ii) any stay of execution or levy pending an appeal from, or a suit,
action or proceeding for reconsideration or review of, any such judgment.
As long as any of the Securities remain outstanding, the Bank will at all times have an
authorized agent in the Borough of Manhattan, The City of New York upon whom process may be served
in any legal action or proceeding arising out of or relating to the Indenture or any Security.
Service of process upon such agent and written notice of such service mailed or delivered to the
Bank shall to the extent permitted by law be deemed in every respect effective service of process
upon the Bank in any such legal action or proceeding. The Bank hereby appoints BMO Capital Markets
Corp., as its agent for such purpose, and covenants and agrees that service of process in any such
legal action or proceeding may be made upon it at the office of such agent at BMO Capital Markets
Corp., 3 Times Square, 28
th
Floor, New York, New York
58
10036 (Attention: Secretary) (or
at such other address in the Borough of Manhattan, The City of New York, as the Bank may designate
by written notice to the Trustee).
The Bank hereby consents to process being served in any suit, action or proceeding of the
nature referred to in the preceding paragraphs by service upon such agent together with the mailing
of a copy thereof by registered or certified mail, postage prepaid, return receipt requested, to
the address of the Bank in Toronto set forth in the first paragraph of this instrument or to any
other address of which the Bank shall have given written notice to the Trustee. The Bank
irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any
such service (but does not waive any right to assert lack of subject matter jurisdiction) and
agrees that such service (i) shall be deemed in every respect effective service of process upon the
Bank in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by law,
be taken and held to be valid personal service upon and personal delivery to the Bank.
Nothing in this Section shall affect the right of the Trustee or any Holder to serve process
in any manner permitted by law or limit the right of the Trustee to bring proceedings against the
Bank in the courts of any jurisdiction or jurisdictions.
Section 1502.
Indenture and Securities Solely Corporate Obligations.
No recourse under or upon any obligation, covenant or agreement of this Indenture, any
supplemental indenture, or of any Security, or for any claim based thereon or otherwise in respect
thereof, shall be had against any incorporator, shareholder, officer or director, as such, past,
present or future, of the Bank or of any successor corporation, either directly or through the
Bank, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers
or directors, as such, of the Bank or of any successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants
or agreements contained in this Indenture or any of the Securities or implied therefrom; and that
any and all such personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such incorporator, shareholder,
officer or director, as such, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this Indenture or in
any of the Securities or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and the issue of
such Securities.
Section 1503.
Execution in Counterparts.
This instrument may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 1504.
Waiver of Jury Trial.
EACH OF THE BANK AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT
59
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
60
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, all as of the day and year first above written.
|
|
|
|
|
|
BANK OF MONTREAL
|
|
|
By:
|
/s/ Cathryn E. Cranston
|
|
|
|
Name:
|
Cathryn E. Cranston
|
|
|
|
Title:
|
Senior Vice President, Financial Strategy
|
|
|
|
|
|
|
|
|
BANK OF MONTREAL
|
|
|
By:
|
/s/ Patrick Cronin
|
|
|
|
Name:
|
Patrick Cronin
|
|
|
|
Title:
|
Executive Managing Director & Head
Financial Products & Debt Products
BMO Capital Markets
|
|
|
|
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Trustee
|
|
|
By:
|
/s/ Martin Reed
|
|
|
|
Name:
|
Martin Reed
|
|
|
|
Title:
|
Vice President
|
|
|
61