BANK OF MONTREAL Senior Medium-Term Notes Series A Distribution Agreement
EXHIBIT 99.1
BANK OF MONTREAL
U.S. $5,000,000,000
Senior Medium-Term Notes
Series A
Series A
January 25, 2010
To the Agents named in Annex VI hereto.
Ladies and Gentlemen:
Bank of Montreal, a Canadian chartered bank (the “Bank”), proposes, subject to the terms and
conditions stated herein, to issue and sell, from time to time, its Senior Medium-Term Notes,
Series A (the “Securities”), at an aggregate initial offering price of up to U.S. $5,000,000,000 or
the equivalent thereof in one or more foreign or composite currencies or currency units, provided
that the Bank may increase the amount of Securities it may sell at any time as provided in Section
11(c) hereof, and agrees with each of you (individually, an “Agent” and, collectively, the
“Agents”) as set forth in this Distribution Agreement (the “Agreement”).
Subject to the terms and conditions stated herein (including Section 15 hereof), the Bank
hereby appoints each Agent as an agent of the Bank for the purpose of soliciting and receiving
offers to purchase the Securities from the Bank, and the Bank and each of the Agents severally
agree that whenever the Bank determines to sell Securities directly to any Agent as principal for
resale to others, the Bank and such Agent will, unless otherwise agreed by them, enter into either
a separate agreement, substantially in the form of Annex I hereto, relating to such sale,
or another agreement (which may be oral and confirmed in writing) relating to the purchase by such
Agent as principal (each, a “Terms Agreement”), in each case in accordance with Section 2(b)
hereof. The Bank reserves the right to sell Securities directly on its own behalf and to enter
into agreements with other broker-dealers as Agents as contemplated by Section 11(b) hereof. This
Agreement shall not be construed to create either an obligation on the part of the Bank to sell any
Securities or an obligation of any Agent to purchase Securities as principal.
The terms, conditions and rights of the Securities shall be as specified in or established
pursuant to the Senior Indenture, dated as of January 25, 2010, as it may be amended and
supplemented from time to time (the “Indenture”), between the Bank and Xxxxx Fargo Bank, National
Association, as trustee (the “Trustee”). The Securities shall have the maturity ranges, annual
interest rates (if any), redemption provisions (if any) and other terms set forth in supplements to
the Basic Prospectus referred to below. The Securities may be issued in amounts denominated in
United States dollars or in amounts denominated in foreign currencies, including the Euro, or any
composite currency. References herein to amounts stated in United States dollars shall be deemed
to refer to the equivalent amount of foreign currency or composite currency to the extent
applicable. The Securities will be issued, and the terms thereof established,
from time to time by the Bank in accordance with the Indenture and, if applicable, such terms
will be specified in a related Terms Agreement.
The Bank has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement (No. 333-148054) on Form F-3 for the registration under the Securities Act
of 1933, as amended (the “Act”), of, among other securities, the Securities. Such registration
statement, and any post-effective amendment thereto as of the date of this Agreement, excluding the
exhibits thereto, but including all documents incorporated by reference in the prospectus included
therein and the information, if any, deemed to be part of the registration statement pursuant to
Rule 430B under the Act, has been declared effective by the Commission. The prospectus filed as
part of the registration statement, in the form in which it has most recently been filed with the
Commission on or prior to the date of this Agreement is hereinafter called the “Basic Prospectus”;
any preliminary prospectus (including the Basic Prospectus or the Prospectus (as hereinafter
defined), as supplemented by any preliminary prospectus supplement) relating to the Securities
filed with the Commission pursuant to Rule 424 under the Act is hereinafter called a “Preliminary
Prospectus”; the various parts of such registration statement, including all exhibits thereto but
excluding Form T-1 and including all documents incorporated by reference in the prospectus included
therein and any prospectus supplement relating to the Securities that is filed with the Commission
and deemed by virtue of Rule 430B under the Act to be part of such registration statement, each as
amended at the time such part of such registration statement became effective, are hereinafter
collectively called the “Registration Statement”; the prospectus (including, if applicable, any
prospectus supplement) relating to the Securities in the form in which it has most recently been
filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, is
hereinafter called the “Prospectus”; any reference herein to the Basic Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to the applicable form under the Act, as of the date of such prospectus;
any supplement to the Prospectus that sets forth only the terms of a particular issue of the
Securities and is filed in accordance with Section 4(a) hereof is hereinafter called a “Pricing
Supplement”; any reference to any amendment or supplement to the Basic Prospectus, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any post-effective amendment
to the Registration Statement, any prospectus supplement relating to the Securities filed with the
Commission pursuant to Rule 424(b) under the Act and any documents filed under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and incorporated by reference therein, in
each case, after the date of the Basic Prospectus, such Preliminary Prospectus or the Prospectus,
as the case may be; any reference herein to the “Prospectus as amended or supplemented”, when used
with respect to any date, other than in Section 1(c) hereof, shall be deemed to refer to and
include the Prospectus as most recently amended or supplemented (including by the applicable
Pricing Supplement and any other prospectus supplement specifically referred to in such Pricing
Supplement) in relation to the Securities to be sold pursuant to this Agreement, in the form most
recently filed or transmitted for filing with the Commission pursuant to Rule 424(b) under the Act
and in accordance with Section 5(a) hereof, including any documents incorporated by reference
therein as of the date of such filing. The term “Issuer Free Writing Prospectus” means any “issuer
free writing prospectus,” as defined in Rule 433(h) under the Act, of the Bank relating to the
Securities. The term “Applicable Time” in respect of a particular offering of the Securities means
the time specified in the applicable Terms Agreement or, if no Terms Agreement exists for a
particular offering of the Securities, the time immediately prior to the time of the first sale by
an Agent of any Securities with regard to such particular offering of the Securities. The term
“Pricing Disclosure Package” means the Prospectus as amended or supplemented immediately
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prior to the Applicable Time, together with the Term Sheet (as hereinafter defined), if any,
and any other Issuer Free Writing Prospectus, if any, identified on a schedule to the applicable
Terms Agreement or, if no Terms Agreement exists, any other Issuer Free Writing Prospectus, if any,
that has been prepared by or on behalf of the Bank relating to any particular offering of the
Securities as of the Applicable Time for such particular offering.
1. The Bank represents and warrants to, and agrees with, each Agent that:
(a) The Bank meets the requirements for use of Form F-3 under the Securities Act of 1933, as
amended (the “Act”); the Registration Statement has been declared effective by the Commission and
no stop order suspending the effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been initiated or threatened by the Commission;
(b) (i) Each part of the Registration Statement and the Prospectus conform and, as amended or
supplemented as of the date of any Pricing Supplement and the related settlement date, will
conform, in all material respects with the requirements of the Act, the Trust Indenture Act of 1939
(the “Trust Indenture Act”) and the rules and regulations of the Commission thereunder; (ii) each
part of the Registration Statement, when such part became effective, did not contain and each such
part, as amended or supplemented as of the date of any Pricing Supplement and the related
settlement date, will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading; and (iii) the Prospectus does not contain and, as amended or supplemented as of the
date of any Pricing Supplement and the related settlement date, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, except that
with respect to clauses (i) through (iii), (1) the foregoing shall not apply to (A) statements in
or omissions from any such document in reliance upon, and in conformity with, written information
furnished to the Bank by such Agent expressly for use in the preparation thereof, or (B) those
parts of the Registration Statement that constitute the Statements of Eligibility (Forms T-1) under
the Trust Indenture Act of the Trustees and (2) the representations and warranties set forth above,
when made as of the date of this Agreement, shall be deemed not to cover information concerning an
offering of particular Securities;
(c) (i) With respect to any issue of Securities to be sold pursuant to a Terms Agreement, the
“Applicable Time” will be such time on the date of such Terms Agreement as is specified therein as
the Applicable Time, and the “Pricing Disclosure Package” will be the Prospectus as amended or
supplemented at the Applicable Time together with (A) the information referenced in Schedule II(b)
to such Terms Agreement and (B) such other documents, if any, as may be listed in Schedule II(a) to
such Terms Agreement, taken together; (ii) with respect to each such issue of Securities, the
Pricing Disclosure Package, as of the Applicable Time and as of the settlement date with respect to
such issue of Securities, will not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and (iii) with respect to each such issue
of Securities, each Issuer Free Writing Prospectus listed in Schedule II(a) to the applicable Terms
Agreement, if any, will not conflict (except to the extent that such conflict is a modification of
or supersedes previous information) with the information contained in the Registration Statement,
the Prospectus or the Prospectus as amended or supplemented and, taken together with the Pricing
Disclosure Package as of the Applicable Time, will not include any
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untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they are made, not
misleading; provided, however, that the representations and warranties in clauses (ii) and (iii) of
this Section 1(c) shall not apply to statements or omissions made in any Pricing Disclosure Package
or Issuer Free Writing Prospectus in reliance upon and in conformity with information furnished in
writing to the Bank by such Agent expressly for use therein;
(d) The documents incorporated by reference in the Prospectus, when they became effective or
were filed with the Commission, or furnished to the Commission and expressly incorporated by
reference, as the case may be, complied in all material respects with the requirements of the Act
or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and
any further documents so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective or are filed, or furnished
and expressly incorporated by reference, with the Commission, as the case may be, will comply in
all material respects with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder;
(e) The Bank exists as a Schedule I bank under the Bank Act (Canada), and has the requisite
corporate power and authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus as amended or supplemented and is
qualified to transact business, except to the extent that the failure to be so qualified would not
have a Material Adverse Effect as hereinafter defined;
(f) The Bank is not an “ineligible issuer” in connection with the offering of Securities
pursuant to Rule 164 under the Act. Any Issuer Free Writing Prospectus that the Bank is required
to file pursuant to Rule 433(d) under the Act has been, or will be, filed with the Commission in
accordance with the requirements of the Act and the applicable rules and regulations of the
Commission thereunder. Each Issuer Free Writing Prospectus that the Bank has filed or is required
to file, pursuant to Rule 433(d) under the Act complies or will comply, in all material respects,
with the requirements of the Act and the applicable rules and regulations of the Commission
thereunder;
(g) Since the date of the latest audited financial statements included or incorporated by
reference in the Prospectus as amended or supplemented there has not been (i) any material change
in the share capital (other than as occasioned by common shares of the Bank having been issued
pursuant to the Bank’s employee stock purchase plans, equity incentive option plans or dividend
reinvestment plans, as occasioned upon conversion of convertible securities, as occasioned by
shares issued in exchange for subsidiary corporation shares or acquisitions, and other than
repurchased under the Bank’s normal course issuer bid), or (ii) any material adverse change in or
affecting the financial position, shareholders’ equity or results of operations of the Bank and its
consolidated subsidiaries considered as an entirety, in each case, otherwise than as set forth or
contemplated in the Prospectus and the Registration Statement, each as amended or supplemented
(any such change described in clause (ii) is referred to as a “Material Adverse Change”);
(h) This Agreement has been authorized, executed and delivered by the Bank;
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(i) The series constituting the Securities has been duly authorized and established in
conformity with the Indenture and, when the terms of a particular Security and of the issue and
sale thereof have been duly authorized and established by all necessary corporate action in
conformity with the Indenture, and such Security has been duly executed, authenticated and issued
in accordance with the Indenture, and delivered against payment therefor as contemplated by this
Agreement and any applicable Terms Agreement, such Security will have been duly executed,
authenticated, issued and delivered and will constitute a valid and legally binding obligation of
the Bank entitled to the benefits provided by the Indenture, 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; the Indenture has been duly
qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by,
and constitutes a valid and legally binding obligation of, the Bank, enforceable in accordance with
its 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; and the Indenture conforms and the Securities will conform in all material
respects to the descriptions thereof in the Prospectus as amended or supplemented;
(j) The execution and delivery by the Bank of this Agreement, the Indenture, the Securities
and the issue and sale of the Securities and the compliance by the Bank with all of the provisions
of the Securities, the Indenture, this Agreement and any Terms Agreement, and the consummation of
the transactions herein and therein contemplated, will not result in a violation or breach of any
of the terms or provisions of, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument to which the Bank is a
party or by which the Bank is bound or to which any of the property or assets of the Bank is
subject, or result in any violation of any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Bank or any of its properties, except, in
each case, for such conflicts, breaches, defaults and violations that would not have a material
adverse effect on the business, financial position, shareholders’ equity or results of operations
of the Bank and its subsidiaries considered as an entirety (a “Material Adverse Effect”) or affect
the validity of the Securities, nor will such action result in any material violation of the
provisions of the Bank Act (Canada) or a violation of the by-laws of the Bank; and no consent,
approval, authorization, order, registration or qualification of or with any court or governmental
agency or body is required by the Bank for the solicitation of offers to purchase Securities and
the issue and sale of the Securities or the consummation by the Bank of the other transactions
contemplated by this Agreement, any Terms Agreement or the Indenture, except to the extent that the
failure to obtain or make such consents, approvals, authorizations, orders, registrations or
qualifications would not have a Material Adverse Effect or affect the validity of the Securities,
and such consents, approvals, authorizations, orders, registrations or qualifications as have been,
or will have been prior to the date of this Agreement, obtained under the Act or the Trust
Indenture Act and such consents, approvals, authorizations, orders, registrations or qualifications
as may be required under state securities or Blue Sky laws (including insurance laws of any state
relating to offers and sales of securities in such state) or under applicable Canadian securities
or banking laws in connection with the solicitation by any Agent of offers to purchase the
Securities from the Bank and with purchases of the Securities by any Agent as principal, as the
case may be, both in the manner contemplated hereby;
(k) There is no action, suit or proceeding pending or to the knowledge of the executive
officers of the Bank threatened against the Bank or any of its subsidiaries, which has, or
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may reasonably be expected in the future to have, a Material Adverse Effect, except as set
forth or contemplated in the Registration Statement and the Prospectus, each as amended or
supplemented;
(l) The Bank is not, and after giving effect to the offer and sales of the Securities and
application of the proceeds thereof as described in the Registration Statement, the Pricing
Disclosure Package and the Prospectus, will not be required to register as an “investment company”
under the Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder;
(m) Any auditor who audited the financial statements incorporated by reference into the
Registration Statement and the Prospectus as amended or supplemented was an independent registered
public accounting firm for the period covered by such auditor’s opinion with respect to such
financial statements within the meaning of the Act and the regulations thereunder;
(n) Neither the Bank nor any of its subsidiaries or affiliates, nor any director, officer, or
employee, nor, to the Bank’s knowledge, any agent or representative of the Bank or of any of its
subsidiaries or affiliates, has taken or will take any action in furtherance of an offer, payment,
promise to pay, or authorization or approval of the payment or giving of money, property, gifts or
anything else of value, directly or indirectly, to any “government official” (including any officer
or employee of a government or government-owned or controlled entity or of a public international
organization, or any person acting in an official capacity for or on behalf of any of the
foregoing, or any political party or party official or candidate for political office) to influence
official action or secure an improper advantage; and the Bank and its subsidiaries and affiliates
have conducted their businesses in compliance with applicable anti-corruption laws and have
instituted and maintain and will continue to maintain policies and procedures designed to promote
and achieve compliance with such laws and with the representation and warranty contained herein;
(o) The operations of the Bank and its subsidiaries are and have been conducted at all times
in material compliance with all applicable financial recordkeeping and reporting requirements,
including, to the extent applicable, those of the Bank Secrecy Act, as amended by Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of
jurisdictions where the Bank and its subsidiaries conduct business, the rules and regulations
thereunder and any applicable related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering
Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Bank or any of its subsidiaries with respect to the
Anti-Money Laundering Laws is pending or, to the best knowledge of the executive officers of the
Bank, threatened; and
(p) (i) The Bank represents that neither the Bank nor any of its subsidiaries (collectively,
the “Entity”) or, to the knowledge of the Entity, any director, officer, employee, agent, affiliate
or representative of the Entity, is an individual or entity (“Person”) that is, or is owned or
controlled by a Person that is:
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(A) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control, the Canadian Government,
the United Nations Security Council, the European Union, Her Majesty’s Treasury, or
other relevant sanctions authority (collectively, “Sanctions”), nor
(B) located, organized or resident in a country or territory that is the
subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran,
North Korea, Sudan and Syria).
(ii) The Bank represents and covenants that it will not, directly or indirectly, use the
proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other Person in any manner that[, to the knowledge of the
Entity,] will result in a violation of applicable Sanctions in the jurisdiction in which such
activity is carried out by such Person (including any Person participating in the offering, whether
as underwriter, advisor, investor or otherwise).
2. (a) On the basis of the representations and warranties, and subject to the terms and
conditions, herein set forth, each of the Agents hereby severally and not jointly agrees to use its
reasonable efforts to solicit and receive offers to purchase the Securities from the Bank upon the
terms and conditions set forth herein, in the Prospectus as amended or supplemented from time to
time and in any applicable Term Sheet.
The Bank reserves the right, in its sole discretion, to instruct the Agents to suspend at any
time, for any period of time or permanently, the solicitation of offers to purchase the Securities.
Upon receipt of instructions from the Bank, the Agents will forthwith suspend solicitation of
offers to purchase Securities from the Bank until such time as the Bank has advised the Agents that
such solicitation may be resumed. During such time as the solicitation of offers to purchase the
Securities shall be suspended, the Bank shall not be required to comply with the provisions of
Sections 4(f), 4(g) and 4(h).
The Bank agrees to pay each Agent a commission, at the Time of Delivery of each sale of
Securities by the Bank as a result of a solicitation made by such Agent, in an amount to be agreed
to by the Bank and such Agent at the time of solicitation, it being understood and agreed that the
commissions may not be the same for each Agent.
As Agents, you are authorized to solicit offers to purchase the Securities only in accordance
with applicable securities laws and in authorized denominations as set forth in the Prospectus at a
purchase price equal to 100% of their principal amount unless otherwise indicated on the applicable
Term Sheet, if any, and Pricing Supplement. Each Agent shall communicate to the Bank, orally or in
writing, each offer to purchase Securities other than those rejected by such Agent. The Bank shall
have the sole right to accept offers to purchase Securities and may reject any proposed purchase of
Securities as a whole or in part. The Agents shall have the right, in their discretion reasonably
exercised, to reject any offer to purchase Securities, as a whole or in part, and any such
rejection by the Agents shall not be deemed a breach of their agreements contained herein.
The obligation of any Agent, as agent of the Bank, to solicit offers to purchase the
Securities shall be subject, in such Agent’s reasonable discretion, to the condition that the
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Bank shall have performed, or be in compliance with, in all material respects, its agreements
in Sections 4(e), (f), and (g) and shall have performed, in all material respects, all of its other
obligations hereunder theretofore in each case to be performed.
(b) Unless the Bank and the Agents otherwise agree, each sale of Securities to any Agent as
principal shall be made in accordance with the terms of this Agreement and, unless the Bank and
such Agent shall otherwise agree, a Terms Agreement which will provide for the sale of such
Securities to, and the purchase thereof by, such Agent. A Terms Agreement may also specify certain
provisions relating to the reoffering of such Securities by such Agent. Unless the Bank and such
Agent shall otherwise agree, the commitment of any Agent to purchase Securities pursuant to any
Terms Agreement shall be deemed to have been made on the basis of the representations and
warranties, and subject to the terms and conditions, herein set forth. Each Terms Agreement shall
include a specification of the principal amount of Securities to be purchased by any Agent pursuant
thereto, the price to be paid to the Bank for such Securities, the currency in which such
Securities are to be denominated, any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the reoffering of the Securities, and the time
(each, a “Time of Delivery”) and place of delivery of and payment for such Securities. Such Terms
Agreement shall also specify any requirements for officers’ certificates, opinions of counsel and
accountants’ letters pursuant to Section 4 hereof.
(c) Procedural details relating to the issue and delivery of Securities, the solicitation of
offers to purchase, and purchases by any Agent as principal of, Securities, and the payment in each
case therefor, are set forth in the Administrative Procedures attached hereto as Attachment
A (the “Procedures”). Each Agent and the Bank agree to perform the respective duties and
obligations specifically provided to be performed by each of them in the Procedures as it may be
amended from time to time by written agreement between the Agents and the Bank.
(d) Each Agent severally agrees, with respect to any Security denominated in a currency other
than U.S. dollars, as agent, directly or indirectly, not to solicit offers to purchase, and as a
principal under any Terms Agreement or otherwise, directly or indirectly, not to offer, sell or
deliver, such Security in, or to residents of, the country issuing such currency (or if such
Security is denominated in euros, not to residents of the 12 member states of the European Monetary
Union; or if such Security is denominated in a composite currency, not to residents in any country
issuing a currency comprising a portion of such composite currency), except, in each case, as
permitted by applicable law.
(e) Each Agent severally represents and agrees with the Bank that it will promptly advise the
Bank upon the completion of the distribution of any offering of Securities.
(f) Each Agent severally represents and agrees with the Bank that it will comply with or
observe any restrictions or limitations set forth in the Prospectus as amended or supplemented on
persons to whom, or the jurisdictions or manner in which, the Securities may be offered, sold,
resold or delivered.
3. Any documents required to be delivered pursuant to Section 7 hereof shall be made available
to the Agents and their counsel at the office of the Bank’s counsel, Xxxxxxxx & Xxxxxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and copies of such documents, other than documents
delivered pursuant to Section 7(b), shall be made available to the Agents and their counsel
electronically.
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4. The Bank covenants and agrees with each Agent:
(a) (i) To make no amendment or supplement (other than an amendment or supplement as a result
of the Bank’s filing of a report under the Exchange Act) to the Registration Statement, the Pricing
Disclosure Package or the Prospectus after the date of any Terms Agreement and prior to the related
Time of Delivery which shall be disapproved by any Agent party to such Terms Agreement promptly
after reasonable notice thereof; (ii) to prepare, with respect to a particular offering of
Securities to be sold by the Bank through or to such Agent pursuant to this Agreement, a Pricing
Supplement and, if applicable, a Term Sheet with respect to such Securities in a form previously
approved by such Agent and to file such Pricing Supplement or Term Sheet pursuant to Rule 424(b) or
Rule 433(d) under the Act within the time required by such rule; (iii) to make no amendment or
supplement to the Registration Statement, the Pricing Disclosure Package or the Prospectus other
than any Term Sheet or Pricing Supplement (and other than an amendment or supplement as a result of
filings by the Bank under the Exchange Act and other than the filing of prospectuses, preliminary
prospectuses, preliminary prospectus supplements, free-writing prospectuses and other documents
pursuant to Rule 424(b) or Rule 433 under the Act relating to securities other than the Securities
purchased through or by such Agent), at any other time prior to having afforded each Agent a
reasonable opportunity to review it; (iv) if requested by such Agent prior to the Applicable Time,
to prepare an Issuer Free Writing Prospectus that is a final term sheet relating to such Securities
in the form set forth in Annex II hereto (each, a “Term Sheet”), and to file such term
sheet pursuant to Rule 433(d) under the Act within the time required by such rule; and (v) to file
promptly all other material required to be filed by the Bank with the Commission pursuant to Rule
433(d) under the Act; to file promptly all reports and any definitive proxy or information
statements required to be filed by the Bank with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities, and during such same period to advise such
Agent, promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus or to the Pricing Disclosure Package has been filed with, or transmitted for
filing to, the Commission (other than an amendment or supplement as a result of filings by the Bank
under the Exchange Act and other than the filing of prospectuses, preliminary prospectuses,
preliminary prospectus supplements, free-writing prospectuses and other documents pursuant to Rule
424(b) or Rule 433 under the Act relating to securities other than the Securities purchased through
or by such Agent), of the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Securities, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement, Pricing Disclosure Package or Prospectus
or for additional information; and, in the event of the issuance of any such stop order or of any
such order preventing or suspending the use of any such prospectus or suspending any such
qualification, to use promptly its commercially reasonable efforts to obtain its withdrawal;
(b) To furnish such Agent with copies of the Registration Statement and each amendment
thereto, and with copies of the Prospectus as each time amended or supplemented, other than any
Pricing Supplement or Term Sheet (except as provided in the Procedures) or amendment or supplement
relating solely to an offering of securities other than the Securities, in the form in which it is
filed with, or transmitted for filing to, the Commission pursuant to Rule 424 under the Act, both
in such quantities as such Agent may reasonably request
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from time to time; and, if the delivery of a prospectus is required at any time within 90 days
after sale of the Securities (including Securities purchased from the Bank by such Agent as
principal) and if at such time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify
such Agent as promptly as practicable and request such Agent to suspend solicitation of offers to
purchase Securities from the Bank and, if so notified, such Agent shall forthwith cease such
solicitations; and if the Bank shall decide to amend or supplement the Registration Statement or
the Prospectus as then amended or supplemented, to so advise such Agent promptly by telephone (with
confirmation in writing) and to prepare and cause to be filed promptly with the Commission an
amendment or supplement to the Registration Statement or the Prospectus as then amended or
supplemented that will correct such statement or omission or effect such compliance; provided,
however, that if during such same period such Agent continues to own Securities purchased from the
Bank by such Agent as principal which such Agent proposes to sell, upon the reasonable request of
such Agent, the Bank shall promptly prepare and file with the Commission such an amendment or
supplement, the expense of such preparation and filing to be borne by the Bank if such amendment or
supplement occurs within 90 days of the date of the relevant Pricing Supplement or Term Sheet and
if after such 90-day period, by such Agent;
(c) That, from the date of any Terms Agreement with such Agent and continuing to and including
the earlier of (i) the termination of the trading restrictions for the Securities purchased
thereunder, as notified to the Bank by such Agent and (ii) the related Time of Delivery, the Bank
will not, without the prior consent (such consent not to be unreasonably withheld or delayed) of
such Agent, offer, sell, contract to sell or otherwise dispose of any debt securities of the Bank
that (i) mature more than one year after such Time of Delivery, (ii) have the same maturity, and
(iii) are otherwise substantially similar to the Securities. The restriction imposed by this
Section 4(c) shall not apply to (i) any issue of debt securities denominated in a currency other
than U.S. dollars, (ii) any securities issued by the Bank’s Chicago branch, (iii) an issue of debt
securities of which at least 90% (based on gross offering proceeds) is offered and sold outside the
United States or (iv) guarantees by the Bank of debt securities of its subsidiaries;
(d) That each acceptance by the Bank of an offer to purchase Securities hereunder, and each
sale of Securities to such Agent pursuant to a Terms Agreement, shall be deemed to be an
affirmation to such Agent that the representations and warranties of the Bank contained in or made
pursuant to this Agreement are true and correct in all material respects as of the date of such
acceptance or of such Terms Agreement as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented at such time);
(e) That each time the Registration Statement or the Prospectus shall be amended or
supplemented as a result of the filing by the Bank of its annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act, and each time, if so indicated in the applicable Terms Agreement, the
Bank sells Securities to such Agent as principal, the Bank shall furnish or cause to be furnished
(as promptly as reasonably practicable in the case of any such amendment or supplement) to such
Agent, upon its request, a certificate of an officer of the Bank, in his or her
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capacity as an officer of the Bank, dated the date of such supplement, amendment or Time of
Delivery related to such sale, in form satisfactory to such Agent in its reasonable judgment to the
effect that the statements contained in the certificate referred to in Section 7(f) hereof which
was last furnished to such Agent are true and correct, in all material respects, at such date, as
though made at and as of such date (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of
such certificate, certificates of the same tenor as the certificates referred to in said Section
7(f) but modified to relate to the Registration Statement and the Prospectus as amended and
supplemented to such date;
(f) That each time the Registration Statement or the Prospectus shall be amended or
supplemented as a result of the filing by the Bank of its annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act, and each time, if so indicated in the applicable Terms Agreement, the
Bank sells Securities to such Agent as principal, the Bank shall furnish or cause to be furnished
(as promptly as reasonably practicable in the case of any such amendment or supplement) to such
Agent, upon its request, a written opinion and letter of Xxxxxxxx & Xxxxxxxx LLP, United States
counsel for the Bank, and a written opinion of Torys LLP, Canadian counsel for the Bank, or, in
either case, other counsel satisfactory to such Agent in its reasonable judgment, dated the date of
such amendment, supplement or Time of Delivery relating to such sale, each in form satisfactory to
such Agent in its reasonable judgment, to the effect that such Agent may rely on the opinion and
letter referred to in Section 7(c) or the opinion referred to in Section 7(d) hereof, as the case
may be, which was last furnished to such Agent to the same extent as though it were dated the date
of such letter authorizing reliance (except that statements in such last opinion or letter shall be
deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to
such date) or, in lieu of either such opinion, an opinion and letter of the same tenor as the
opinion and letter referred to in Section 7(c) or an opinion of the same tenor as the opinion
referred to in Section 7(d) hereof, as the case may be, but modified to relate to the Registration
Statement and the Prospectus as amended and supplemented to such date;
(g) That each time the Registration Statement or the Prospectus shall be amended or
supplemented as a result of the filing by the Bank of its annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act to set forth financial information included in or derived from the
Bank’s consolidated financial statements, and each time, if so indicated in the applicable Terms
Agreement, the Bank sells Securities to such Agent as principal, the Bank shall cause its
independent registered public accounting firm to furnish (as promptly as reasonably practicable in
the case of any such amendment or supplement) to such Agent, upon its request, a letter, dated a
date which is as soon as reasonably practicable after the date of such amendment or supplement, or
a letter, dated the Time of Delivery relating to such sale, in either case in form satisfactory to
such Agent in its reasonable judgment, of the same tenor as the letter referred to in Section 7(e)
hereof but modified to relate to the Registration Statement and the Prospectus as amended or
supplemented to the date of such amendment or supplement or Terms Agreement and Time of Delivery,
as the case may be, with such changes as may be necessary to reflect changes in the financial
statements and other information derived from the accounting records of the Bank, to the extent
such financial statements and other information are available as of a date not more than five
business days prior to the date of such letter; and
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(h) To consider any request by the Agents to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Agents shall reasonably request.
5. (a) The Bank and each Agent agree that the Agents may prepare and use one or more
preliminary or final term sheets relating to the Securities containing customary information;
provided that such information has been approved by the Bank in writing before the first
communication containing such information is used;
(b) Each Agent severally represents that it has not and will not use, authorize use of, refer
to, or participate in the planning for use of, any written communication that constitutes an offer
to sell or the solicitation of an offer to buy the Securities other than (A) any written
communication permitted under subparagraph (a) above, (B) any Term Sheet or (C) any written
communication prepared by such Agent and approved by the Bank in advance in writing;
(c) Except in the case of Securities sold directly by the Bank, with respect to any particular
issuance of Securities, the Bank represents to the Agent purchasing or soliciting the purchase of
such Securities that it has not and will not use, authorize use of, refer to, or participate in the
planning for use of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy such Securities other than (A) any written communication permitted
under subparagraph (a) above, (B) any Term Sheet or (C) any written communication approved by such
Agent in advance in writing;
(d) The Bank represents and agrees that it has complied and, in connection with any issuance
of securities, will comply with the requirements of Rule 433 under the Act applicable to any Issuer
Free Writing Prospectus related to such issuance, including timely filing with the Commission where
required, legending and record keeping, and neither the Bank nor any Agent, without the written
consent of the Bank or each relevant Agent, as the case may be, will take any action that would
result in the Bank or any Agent, as the case may be, being required to file with the Commission
pursuant to Rule 433(d) under the Act a Free Writing Prospectus that would not otherwise have been
required to be filed thereunder;
(e) With respect to any issue of Securities, the Bank agrees that if at any time following the
relevant Applicable Time until and including the related Time of Delivery any event occurred or
occurs as a result of which an Issuer Free Writing Prospectus included in the relevant Pricing
Disclosure Package would conflict (except to the extent that such conflict is a modification of or
supersedes previous information) with the information in the Registration Statement, the
Prospectus, the Prospectus as amended or supplemented or the Pricing Supplement or, taken together
with the relevant Pricing Disclosure Package, would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, (i) the Bank will give prompt
notice thereof to the relevant Agents and, (ii) if requested by such Agents, will prepare and
furnish without charge to each Agent an Issuer Free Writing Prospectus or other document which will
correct such conflict, statement or omission; provided, however, that this Section 5(e) shall not
apply to any statements or omissions in an Issuer Free Writing Prospectus made in reliance upon and
in conformity with information furnished in writing to the Bank by the Agent or Agents making such
request expressly for use therein;
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(f) Each Agent severally covenants and agrees with the Bank that each acceptance by such
Agent of an offer to purchase Securities hereunder, and each sale of Securities from the Bank to
such Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation to the Bank that the
representations and warranties of such Agent contained in or made pursuant to this Agreement are
true and correct in all material respects as of the date of such acceptance or of such Terms
Agreement as though made at and as of such time; and
(g) Each Agent severally represents and agrees that:
(i) it will only sell Securities in accordance with the terms and conditions set forth
in this Agreement, any applicable Terms Agreement and the Pricing Disclosure Package;
(ii) 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
the Prospectus as amended or supplemented, the Prospectus Supplement, any Pricing
Supplement, any Term Sheet or any Issuer Free Writing Prospectus 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; and
(iii) it will not offer or sell any Securities purchased by it, directly or
indirectly, in Canada or to any resident of Canada without the consent of the Bank, and
further agrees that it will include a comparable provision in any sub-underwriting, banking
group or selling group agreement or similar arrangement with respect to any Securities that
may be entered into by such Agent.
6. The Bank covenants and agrees with each Agent that the Bank will pay or cause to be paid
the following: (i) the fees, disbursements and expenses of the Bank’s counsel and accountants in
connection with the registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus, the Prospectus, any Term Sheet, any Issuer Free Writing Prospectus and any Pricing
Supplements and all other amendments and supplements thereto and the mailing and delivering of
copies thereof to such Agent; (ii) the reasonable fees and expenses of counsel for the Agents in
connection with the transactions contemplated hereunder; (iii) the cost of printing,
word-processing or reproducing this Agreement, the Registration Statement, any Preliminary
Prospectus, the Prospectus, the Pricing Disclosure Package, any Issuer Free Writing Prospectus, any
Terms Sheet and any Pricing Supplements, any Indenture, any Blue Sky and Legal Investment Memoranda
and any other documents in connection with the offering, purchase, sale and delivery of the
Securities; (iv) all expenses in connection with the qualification of the Securities for offering
and sale under state securities laws as provided in Section 4(h) hereof, including fees and
disbursements of the Bank’s counsel and reasonable fees and disbursements of Agent’s counsel in
connection with such qualification and in connection with the Blue Sky and legal investment surveys
and all filing fees incurred in connection with the review and qualification of the offering of the
Securities by the Financial Industry Regulatory Authority; (v) any fees charged by security rating
services for rating the Securities; (vi) the cost of preparing the Securities; (vii) the fees and
expenses of the Trustee and any agent of the Trustee and the fees
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and disbursements of counsel for the Trustee in connection with the Indenture and the Securities;
(viii) any advertising expenses connected with the solicitation of offers to purchase and the sale
of Securities so long as such advertising expenses have been pre-approved by the Bank; (ix) the
costs and expenses of the Bank relating to investor presentations on any “road show” undertaken in
connection with the marketing of the offering of the Securities, including, without limitation,
expenses associated with the preparation or dissemination of any electronic road show, expenses
associated with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the prior approval of the
Bank, travel and lodging expenses of the representatives and officers of the Bank and any such
consultants, and the cost of any aircraft chartered in connection with the road show; (x) all
reasonable costs and expenses related to the transfer and delivery of the Securities to the Agents,
including any transfer or other similar taxes payable thereon; and (xi) all other costs and
expenses incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. Each Agent shall pay all other fees and expenses it
incurs.
7. The obligation of any Agent hereunder, as agent of the Bank, shall be subject, in such
Agent’s reasonable discretion, to the condition that all representations and warranties and other
statements of the Bank herein are true and correct, in all material respects, at and as of the date
of this Agreement and to the condition that the Bank shall have performed, in all material
respects, all of its obligations hereunder theretofore in each case to be performed and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated or threatened by the Commission
or, to the knowledge of the executive officers of the Bank, shall be contemplated by the
Commission; and all requests for additional information on the part of the Commission shall have
been complied with to the reasonable satisfaction of such Agent;
(b) Such Agent shall have received, upon its request, from Shearman & Sterling LLP, United
States counsel to the Agents, or other counsel satisfactory to such Agent in its reasonable
judgment, such opinion and letter, dated the date of this Agreement, with respect to the validity
of the Indenture and the Securities, matters related to the Registration Statement and the
Prospectus, as amended or supplemented, and such other matters as such Agent may request in its
reasonable judgment, and the Bank shall have furnished to such counsel such documents as such
counsel requests in its reasonable judgment for the purpose of enabling such counsel to pass upon
such matters;
(c) Such Agent shall have received an opinion and letter of Xxxxxxxx & Xxxxxxxx LLP, United
States counsel for the Bank, or other counsel satisfactory to such Agent in its reasonable
judgment, dated the date of this Agreement, to the effect set forth in Annex III hereto;
(d) Such Agent shall have received an opinion of Torys LLP, Canadian counsel for the Bank, or
other counsel satisfactory to such Agent in its reasonable judgment, dated the date of this
Agreement, to the effect set forth in Annex IV hereto;
(e) At 11:00 A.M., New York City time, on the date of this Agreement, the independent
registered public accounting firm who have audited the financial statements of the Bank and its
subsidiaries included or incorporated by reference in the Registration Statement and
-14-
the Prospectus shall have furnished to such Agent a letter, dated such applicable date, in
form and substance satisfactory to such Agent, to the effect set forth in Annex V hereto;
and
(f) The Bank shall have furnished or caused to be furnished to such Agent a certificate of any
Vice Chairman, any Executive or Senior Vice President, any Executive Managing Director or any Vice
President or any principal financial or accounting officer of the Bank, dated the date of this
Agreement, in which such officer, in his or her capacity as such, to the best of his or her
knowledge after reasonable investigation, shall state that the representations and warranties of
the Bank in this Agreement are true and correct, in all material respects, as of such applicable
date, that the Bank has complied with all agreements and satisfied all conditions on its part to be
performed or satisfied, in all material respects, at or prior to such applicable date, that no stop
order suspending the effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are threatened by the Commission, and that, since the
respective dates as of which information is given in the Registration Statement and the Prospectus,
as amended or supplemented, there has not been any Material Adverse Change, otherwise than as set
forth or contemplated in the Registration Statement and the Prospectus, as amended or supplemented.
8. (a) The Bank will indemnify and hold harmless each Agent and each person, if any, who
controls any of the Agents within the meaning of the Act, against any losses (other than loss of
profits), claims, damages or liabilities, joint or several, to which such Agent or such controlling
person may become subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any preliminary prospectus, any
preliminary prospectus supplement, the Registration Statement or the Prospectus, each as amended or
supplemented, or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse such Agent and such controlling
person for any legal or other expenses reasonably incurred by it in connection with investigating
or defending any such action or claim, as incurred; provided, however, that the Bank will not be
liable in any such case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus, any preliminary prospectus supplement, the Registration
Statement, the Pricing Disclosure Package, the Prospectus, each as amended or supplemented, or any
Issuer Free Writing Prospectus, in reliance upon and in conformity with written information
furnished to the Bank by such Agent expressly for use therein.
(b) Each Agent, severally and not jointly, will indemnify and hold harmless the Bank and each
person, if any who controls the Bank within the meaning of the Act, against any losses, claims,
damages or liabilities to which the Bank or such controlling person may become subject, under the
Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any preliminary prospectus, any preliminary prospectus
supplement, the Registration Statement or the Prospectus, each as amended or supplemented, or any
Issuer Free Writing Prospectus, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission
-15-
or alleged omission was made in any preliminary prospectus, any preliminary prospectus
supplement, the Registration Statement, or the Prospectus, each as amended or supplemented, or any
Issuer Free Writing Prospectus, in reliance upon and in conformity with written information
furnished to the Bank by such Agent expressly for use therein; and will reimburse the Bank for any
legal or other expenses reasonably incurred by the Bank or such controlling person in connection
with investigating or defending any such action or claim, as incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice
of the commencement of any action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; provided, however, that the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such indemnified party,
in connection with the defense thereof other than reasonable costs of investigation. In any such
proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both parties by the
same counsel would, in the judgment of counsel, be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party shall not, in
connection with any proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties. Such firm shall be designated in writing by the Agents in the case
of parties indemnified pursuant to Section 8(a) and by the Bank in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which such consent shall
not be unreasonably conditioned, delayed or withheld), effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is an actual or potential party and
indemnity could have been sought hereunder by such indemnified party, unless such settlement
includes (x) no admission of culpability of such indemnified party and (y) an unconditional release
of such indemnified party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses
(other than loss of profits), claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount paid or payable
-16-
by such indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Bank on the one hand and each Agent on the other from the offering of the
Securities to which such loss, claim, damage or liability (or action in respect thereof) relates.
If, however, the allocation provided by the immediately preceding sentence is not permitted by
applicable law, or if the indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Bank on the one hand and each Agent on the other in connection
with the statements or omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Bank on the one hand and each Agent on the other shall be deemed to be in
the same proportion as the total net proceeds from the sale of Securities (before deducting
expenses) received by the Bank bear to the total commissions or discounts received by such Agent in
respect thereof. The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Bank on the one hand or by
any Agent on the other and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Bank and each Agent agree that
it would not be just and equitable if contribution pursuant to this subsection (d) were determined
by pro rata allocation or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount paid or payable by
an indemnified party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this subsection (d), an
Agent shall not be required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased by or through it were sold exceeds the amount of any
damages which such Agent has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) or found to be grossly negligent by a court of
competent jurisdiction shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of the Bank under this Section 8 shall be in addition to any liability
which the Bank may otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Agent within the meaning of the Act; and the obligations of each
Agent under this Section 8 shall be in addition to any liability which such Agent may otherwise
have and shall extend, upon the same terms and conditions, to each officer and director of the Bank
and to each person, if any, who controls the Bank within the meaning of the Act.
9. Subject to Section 15, in soliciting offers by others to purchase Securities from the Bank,
each Agent is acting solely as agent for the Bank, and not as principal (other than in respect of
any purchase by an Agent pursuant to a Terms Agreement). Each Agent will make reasonable efforts
to assist the Bank in obtaining performance by each purchaser whose offer to purchase Securities
from the Bank has been accepted by the Bank, but such Agent shall not have any liability to the
Bank in the event such purchase for any reason is not consummated. If the
-17-
Bank shall default on its obligation to deliver Securities to a purchaser whose offer it has
accepted, the Bank shall indemnify and hold each Agent harmless against any loss (other than loss
of profits), claim or damage arising from or as a result of such default by the Bank.
10. The respective indemnities, agreements, representations, warranties, and other statements
by any Agent and the Bank or its officers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation or statement as to the results
thereof made by or on behalf of any Agent or the Bank or any of its officers or directors or any
controlling person, and will survive each delivery of and payment for any of the Securities.
11. (a) The provisions of this Agreement relating to the solicitation of offers to purchase
the Securities may be suspended or terminated at any time by the Bank as to any Agent or by any
Agent as to such Agent upon the giving of written notice of such suspension or termination to such
Agent or the Bank, as the case may be. In the event of any such suspension or termination, with
respect to any Agent, this Agreement shall remain in full force and effect with respect to any
Agent as to which such suspension or termination has not occurred and no party shall have any
liability to the other party hereto, except as provided in the third paragraph of Section 2(a),
Section 6, Section 8, Section 9 and Section 10 and except that, if at the time of such suspension
or termination, an offer for the purchase of Securities shall have been accepted by the Bank but
the delivery of the Securities relating thereto to the purchaser or his agent shall not yet have
occurred, the Bank shall have the obligations provided in subsections (e), (f) and (g) of Section
4.
(b) The Bank, in its sole discretion, may appoint one or more additional parties to act as
Agents hereunder from time to time. Any such appointment shall be made in a writing signed by the
Bank and the party so appointed. Such appointment shall become effective in accordance with its
terms after the execution and delivery of such writing by the Bank and such other party. When such
appointment is effective, such other party shall be deemed to be one of the Agents referred to in,
and to have the rights and obligations of an Agent under, this Agreement, subject to the terms and
conditions of such appointment.
(c) The Bank, in its sole discretion, may increase the aggregate initial offering price of the
Securities from time to time without consent of, or notice to, any Agent.
(d) The Bank and any Agent may amend, eliminate or otherwise change any provision of this
Agreement with respect to such Agent without consent of, or notice to, any other Agent. Any such
amendment, elimination or change shall be made in a writing signed by the Bank and each Agent that
is a party to such amendment, elimination or change. In the event of such amendment, elimination
or change, this Agreement shall remain in full force and effect with respect to any Agent that is
not a party to such amendment, elimination or change (without giving effect to such amendment,
elimination or change with respect to such Agent) unless suspended or terminated with respect to
such Agent pursuant to clause (a) of this Section 11.
12. The following terms shall apply to any Terms Agreement if provided for therein:
(a) If any Agent shall default in its obligation to purchase the Securities which it has
agreed to purchase pursuant to such Terms Agreement, the representatives, if any, named in such
Terms Agreement may in their discretion arrange for the representatives or another
-18-
party or parties to purchase such Securities on the terms provided by such Terms Agreement.
If within thirty-six hours after such default by any Agent the representatives do not arrange for
the purchase of such Securities, then the Bank shall be entitled to a further period of thirty-six
hours within which to procure another party or parties satisfactory to the representatives to
purchase such Securities on such terms.
(b) In the event that, within the respective prescribed periods, the representatives notify
the Bank that they have so arranged for the purchase of such Securities, or the Bank notifies the
representatives that it has so arranged for the purchase of such Securities, the representatives or
the Bank shall have the right to postpone the Time of Delivery for a period of not more than seven
calendar days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement, the Pricing Disclosure Package or the Prospectus as amended or
supplemented, or in any other documents or arrangements, and the Bank agrees to file promptly any
amendments or supplements to the Registration Statement, the Pricing Disclosure Package or the
Prospectus which in the representatives’ opinion may thereby be made necessary. The term “Agent”
as used with respect to such Terms Agreement shall include any person substituted under this
Section 12 (if applicable) with like effect as if such person had originally been a party to such
Terms Agreement.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Agent or Agents by the representatives and the Bank as provided in subsection (a) above,
the aggregate principal amount of such Securities which remains unpurchased does not exceed
one-eleventh of the aggregate principal amount of all the Securities covered by such Terms
Agreement, then the Bank shall have the right to require each non-defaulting Agent which is a party
to that Terms Agreement to purchase the principal amount of Securities which such Agent agreed to
purchase pursuant to such Terms Agreement and, in addition, to require each non-defaulting Agent
which is a party to that Terms Agreement to purchase its pro rata share (based on the principal
amount of Securities which such Agent agreed to purchase pursuant to such Terms Agreement) of the
Securities of such defaulting Agent or Agents for which such arrangements have not been made;
provided, however, that nothing in this Section 12(c) shall relieve a defaulting Agent from
liability for its default.
(d) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Agent or Agents by the Agents and the Bank as provided in subsection (a) above, the
aggregate principal amount of Securities pursuant to such Terms Agreement which remains unpurchased
exceeds one-eleventh of the aggregate principal amount of all the Securities covered by such Terms
Agreement, or if the Bank shall not exercise the right described in subsection (c) above to require
non-defaulting Agents to purchase Securities of a defaulting Agent or Agents, then such Terms
Agreement shall thereupon terminate, without liability on the part of any non-defaulting Agent or
the Bank, except for the expenses to be borne by the Bank and the Agents as provided in Section 6
hereof incorporated therein by reference and the indemnity and contribution agreement in Section 8
hereof incorporated therein by reference; provided, however, that nothing in this Section 12(d)
shall relieve a defaulting Agent from liability for its default.
13. Except as otherwise specifically provided herein or in the Procedures, all statements,
requests, notices and advices hereunder shall be in writing, or by telephone if promptly confirmed
in writing, and if to an Agent, shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail as set forth in Annex VI hereto
-19-
under such Agent’s name, and if to the Bank shall be sufficient in all respects when delivered
or sent by registered mail to Bank of Montreal, 0 Xxxxx Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, Facsimile Transmission: (000) 000-0000, Attention: Senior Vice-President, Financial Strategy, with a copy to Osler,
Xxxxxx & Harcourt LLP, 100 King Street West, Suite 6600, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, Facsimile Transmission: (000) 000-0000, Attention: Xxxxxxx Xxxxxxxxx.
14. This Agreement and any Terms Agreement shall be binding upon, and inure solely to the
benefit of, each Agent (or the applicable Agent, in the case of a Terms Agreement) and the Bank,
and to the extent provided in Section 8 and Section 10 hereof, the officers and directors of the
Bank and any person who controls any Agent or the Bank and an affiliate of an Agent, and their
respective personal representatives, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any Terms Agreement. No purchaser of any of
the Securities through or from any Agent hereunder shall be deemed a successor or assign by reason
of such purchase.
15. The Bank acknowledges and agrees that (i) the purchase and sale of the Securities pursuant
to this Agreement and any Terms Agreement is an arm’s-length commercial transaction between the
Bank, on the one hand, and the Agents, on the other, (ii) in connection therewith and with the
process leading to such transaction each Agent is acting solely as a principal and not the agent or
fiduciary of the Bank, (iii) no Agent has assumed an advisory or fiduciary responsibility in favor
of the Bank with respect to the offering contemplated hereby or the process leading thereto
(irrespective of whether such Agent has advised or is currently advising the Bank on other matters)
or any other obligation to the Bank except the obligations expressly set forth in this Agreement
and (iv) the Bank has consulted its own legal and financial advisors to the extent it deemed
appropriate. The Bank agrees that it will not claim that the Agent, or any of them, has rendered
advisory services of any nature or respect, or owes a fiduciary or similar duty to the Bank, in
connection with such transaction or the process leading thereto.
16. This Agreement and any Terms Agreement supersede all prior agreements and understandings
(whether written or oral) between the Bank and the Agents, or any of them, with respect to the
subject matter hereof.
17. This Agreement and any Terms Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
18. The Bank irrevocably (i) agrees that any legal suit, action or proceeding against the Bank
brought by any Agent or by any person who controls any Agent arising out of or based upon this
Agreement or any Terms Agreement may be instituted in any state or federal court in The City of New
York (a “New York Court”), (ii) waives, to the fullest extent it may effectively do so, any
objection that it may now or hereafter have to the laying of venue of any such proceeding, and
(iii) submits to the jurisdiction of such courts in any such suit, action or proceeding. The Bank
irrevocably waives any immunity to jurisdiction to which it may otherwise be entitled or become
entitled (including immunity to pre-judgment attachment, post-judgment attachment and execution) in
any legal suit, action or proceeding against it arising out of or based on this Agreement or any
Terms Agreement or the transactions contemplated hereby and thereby that is instituted in any New
York Court. The Bank has appointed BMO Capital Markets Corp., 0 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention: Secretary), as its authorized agent (the “Authorized Agent”) upon which process may
be served in any such action arising out of or based on this Agreement or any Terms Agreement that
may be instituted in any New York Court by any Agent or by any person who controls any Agent,
expressly consents to the jurisdiction of any such court
-20-
in respect of any such action, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. The Bank represents and warrants that the Authorized Agent has
agreed to act as such agent for service of process and agrees to take any and all action, including
the filing of any and all documents and instruments, which may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent
and written notice of such service to the Bank shall be deemed, in every respect, effective service
of process upon the Bank. Notwithstanding the foregoing, neither the Bank’s appointment of the
Authorized Agent as its agent for service of process nor its consent to the jurisdiction of any New
York Court and waiver of any defenses or objections thereto provided in this Section 18 shall apply
to any legal action, suit or proceeding arising out of or based upon United States federal
securities laws.
19. If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder into any currency other than United States dollars, the parties hereto agree, to the
fullest extent that they may effectively do so, that the rate of exchange used shall be the rate at
which, in accordance with normal banking procedures, the relevant Agents could purchase United
States dollars with such other currency in The City of New York on the business day preceding that
on which final judgment is given. The obligation of the Bank with respect to any sum due from it to
any Agent or any person controlling any Agent shall, notwithstanding any judgment in a currency
other than United States dollars, not be discharged until the first business day following receipt
by such Agent or controlling person of any sum in such other currency, and only to the extent that
such Agent or controlling person may in accordance with normal banking procedures purchase United
States dollars with such other currency. If the United States dollars so purchased are less than
the sum originally due to such Agent or controlling person hereunder, the Bank agrees as a separate
obligation and notwithstanding any such judgment, to indemnify such Agent or controlling person
against such loss. If the United States dollars so purchased are greater than the sum originally
due to such Agent or controlling person hereunder, such Agent or controlling person agrees to pay
to the Bank an amount equal to the excess of the dollars so purchased over the sum originally due
to such Agent or controlling person hereunder.
20. Time shall be of the essence in this Agreement and any Terms Agreement. As used herein,
“business day” shall mean any day other than a day when the Commission’s office in Washington, D.C.
is not open for business or banking institutions are authorized or obligated by law or executive
order to close in The City of New York or Toronto, Ontario.
21. This Agreement and any Terms Agreement may be executed by any one or more of the parties
hereto and thereto in any number of counterparts, each of which shall be deemed to be an original,
but all of such respective counterparts shall together constitute one and the same instrument.
22. Notwithstanding anything herein to the contrary, the Bank is authorized to disclose to any
persons the U.S. federal and state income tax treatment and tax structure of any potential
transaction and all materials of any kind (including tax opinions and other tax analyses) provided
to the Bank relating to that treatment and structure, without any Agent imposing any limitation of
any kind. However, any information relating to the tax treatment and tax structure shall remain
confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any
person to comply with securities laws. For this purpose, “tax structure” is limited to any facts
that may be relevant to the U.S. federal and state income tax treatment of the potential
transaction.
-21-
If the foregoing is in accordance with your understanding, please sign and return to us five
counterparts hereof, whereupon this letter and the acceptance by each of you thereof shall
constitute a binding agreement between the Bank and each of you in accordance with its terms.
| Very truly yours, BANK OF MONTREAL |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxx | |||
| Title: | Senior Vice-President, Financial Strategy | |||
| Accepted in New York, New York | ||||||||
| By: | /s/ Xxxxxxx Xxxxxx | |||||||
| BMO CAPITAL MARKETS CORP. | Name: | Xxxxxxx Xxxxxx | ||||||
| Title: | Executive Managing Director & Head, | |||||||
| By: | /s/ Xxx XxXxxxx | Financial Products & Debt Products | ||||||
| Name: | Xxx XxXxxxx | BMO Capital Markets | ||||||
| Title: | Managing Director BMO Capital Markets |
|||||||
-22-
ANNEX I
Bank of Montreal
U.S. $5,000,000,000
U.S. $5,000,000,000
Senior Medium-Term Notes, Series A
Terms Agreement
[Date]
[Name(s) and Address(es) of Agent(s)]
Ladies and Gentlemen:
Bank of Montreal (the “Bank”) proposes, subject to the terms and conditions stated herein and
in the Distribution Agreement, dated January 25, 2010 (the “Distribution Agreement”), among the
Bank, [Name(s) of Agent(s)] (individually, an “Agent” and, collectively, the “Agents”) and the
other agents listed in Annex VI thereto, to issue and sell to the Agents the securities specified
in Schedule I hereto (the “Purchased Securities”). Each of the provisions of the
Distribution Agreement not specifically related to the solicitation by the Agents, as agents of the
Bank, of offers to purchase Securities is incorporated herein by reference in its entirety, and
shall be deemed to be part of this Terms Agreement to the same extent as if such provisions had
been set forth in full herein. Nothing contained herein or in the Distribution Agreement shall
make any party hereto an agent of the Bank or make such party subject to the provisions therein
relating to the solicitation of offers to purchase Securities from the Bank, solely by virtue of
its execution of this Terms Agreement. Each of the representations and warranties set forth
therein shall be deemed to have been made at and as of the date of this Terms Agreement, except
that each representation and warranty in Section 1 of the Distribution Agreement which makes
reference to the Registration Statement, the Pricing Disclosure Package or the Prospectus shall be
deemed to be a representation and warranty as of the date of the Distribution Agreement in relation
to the Registration Statement, the Pricing Disclosure Package or the Prospectus (each as therein
defined), and also a representation and warranty as of the date of this Terms Agreement in relation
to the Registration Statement, the Pricing Disclosure Package or the Prospectus as amended and
supplemented in relation to the Purchased Securities.
An amendment to the Registration Statement, or a supplement to the Prospectus, or a Term
Sheet, as the case may be, relating to the Purchased Securities, in the form heretofore delivered
to you, is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Distribution Agreement
incorporated herein by reference, the Bank agrees to issue and sell to the Agents and the Agents
agree to purchase from the Bank the Purchased Securities, at the time and place, in the principal
amount and at the purchase price set forth in Schedule I hereto. The obligation of any
Agent to purchase Securities as principal pursuant to this Terms Agreement shall be subject, in
such Agent’s reasonable discretion, to the condition that each representation and warranty in
Section 1 of the Distribution Agreement which makes reference to the Registration Statement, the
Pricing
AI-1
Disclosure Package or the Prospectus are true and correct, in all material respects, as of the
date of this Terms Agreement in relation to the Registration Statement, the Pricing Disclosure
Package or the Prospectus as amended and supplemented in relation to the Purchased Securities and
the settlement date hereunder, and to the condition that the Bank shall have performed, in all
material respects, all of its obligations under the Distribution Agreement theretofore in each case
to be performed and to the following additional conditions:
(a) Since the respective dates as of which information is given in the Registration Statement
and the Prospectus, as amended or supplemented in relation to the Purchased Securities, there shall
not have been any Material Adverse Change which, in the reasonable judgment of the Agents, makes it
impracticable or inadvisable to market the Securities on the terms and in the manner contemplated
in the applicable Pricing Disclosure Package;
(b) During the period between the date of this Terms Agreement and the related Time of
Delivery, there shall not have occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York Stock Exchange or the Toronto Stock
Exchange if the effect of any such event, in the reasonable judgment of such Agents, is to make it
impracticable or inadvisable to proceed with the purchase by such Agents of Securities from the
Bank, as principal; (ii) a general moratorium on commercial banking activities in New York declared
by either Federal or New York State authorities or in Toronto declared either by federal or
provincial authorities; (iii) the outbreak or escalation of hostilities involving the United States
or Canada or the declaration by the United States or Canada of a national emergency or war, other
than any such outbreak, escalation or declaration arising out of or relating to the United States’
war on terrorism that does not represent a significant departure from the conditions that exist on
the date of this Terms Agreement; (iv) the suspension in trading in the Bank’s securities on the
New York Stock Exchange or the Toronto Stock Exchange; (v) any downgrading in the rating accorded
the Bank’s senior debt securities by Xxxxx’x Investors Service, a subsidiary of Xxxxx’x
Corporation, or Standard & Poor’s, a division of the XxXxxx-Xxxx Companies, Inc.; or (vi) any
material disruption in securities settlement, payment or clearance services in the United States or
Canada, if the effect of such an event in the reasonable judgment of such Agents, is to make it
impracticable or inadvisable to proceed with the purchase of Securities by such Agents from the
Bank as principal on the terms and in the manner contemplated in the applicable Pricing Disclosure
Package as amended or supplemented.
(c) [List any additional conditions].
If the foregoing is in accordance with your understanding, please sign and return to us [___]
counterparts hereof, and, upon acceptance hereof by you, this letter and such acceptance hereof,
including those provisions of the Distribution Agreement incorporated herein by reference, shall
constitute a binding agreement between you and the Bank.
| Bank of Montreal |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
AI-2
Accepted:
[Name(s) of Agent(s)]
By:
Name:
Title:
Name:
Title:
AI-3
Schedule I to Annex I
Title of Purchased Securities:
|
[•] | |
Aggregate Principal Amount:
|
[$•] or units of other Specified Currency | |
Price to Public: |
||
Applicable Time:
|
[time of day, month, day and year] | |
Purchase Price by [Name(s) of
Agent(s)]:
|
•% of the principal amount of the Purchased Securities[, plus accrued interest from to ] [and accrued amortization, if any, from to ] | |
Method of and Specified Funds
for Payment of Purchase
Price:
|
[By certified or official bank cheque or cheques, payable to the order of the Bank, in [New York] [Clearing House] [immediately available] funds] | |
| [By wire transfer to a bank account specified by the Bank in [next day] [immediately available] funds] | ||
Indenture:
|
Indenture, dated as of January 25, 2010, as amended or supplemented, between the Bank and Xxxxx Fargo Bank, National Association, as Trustee | |
Time of Delivery: |
||
Closing Location for Delivery
of Securities: |
||
Maturity Date: |
||
Interest Rate:
|
[%] | |
Interest Payment Dates:
|
[months and dates] | |
Regular Record Dates:
|
[months and dates] | |
Documents to be Delivered:
|
The following documents referred to in the Distribution Agreement shall be delivered as a condition to the Closing: | |
| [None] | ||
| or | ||
| [1. The officers’ certificate referred to in Section 4(e).] | ||
| [2. The opinions of counsel to the Bank referred to in Section 4(f).] | ||
| [3. The accountants’ letter referred to in Section 4(g).] |
AI-4
Schedule II to Annex I
(d) Issuer Free Writing Prospectuses:
[Term Sheet in the form set forth in Annex II of the Distribution Agreement,
but only if the Bank is requested by the Agent(s) to prepare and file such term
sheet pursuant to Section 4(a) of the Distribution Agreement.]
(e) Additional Information in Pricing Disclosure Package:
[List any free writing prospectus, other than the Term Sheet, that the Bank
and the Agent(s) have expressly agreed in writing to include as part of the Pricing
Disclosure Package]
AI-5
ANNEX II
Form of Term Sheet
[To be modified as appropriate and completed prior to the Applicable Time]
Bank of Montreal
Title of Purchased Securities:
Aggregate Principal Amount Offered:
Price to Public:
Settlement Date:
Managing Agent(s):
Discount/Purchase Price by Agent(s):
Maturity Date:
Interest Rate:
Interest Payment Dates:
Interest Reset Dates:
Redemption Provisions:
[Treasury Benchmark/Treasury Price and Yield/Spread to Treasury/Reoffer Yield/Minimum
Denominations/Other Provisions:]
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get these documents for free by visiting
XXXXX on the SEC website at xxx.xxx.xxx. Alternately, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it by calling
toll-free •.
AII-1
ANNEX III
Form of Opinion of Xxxxxxxx & Xxxxxxxx LLP
January [ ], 2010
BMO Capital Markets Corp.,
0 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
In connection with the execution today by you and Bank of Montreal, a Canadian chartered bank
(the “Bank”), of the Distribution Agreement, dated January 25, 2010 (the “Distribution Agreement”),
relating to up to U.S. $5,000,000,000 of the Bank’s Senior Medium-Term Notes, Series A, at an
initial offering price of up to U.S. $5,000,000,000, or the equivalent thereof in other currencies
or currency units (such series of securities being hereinafter referred to as the “Series” and any
securities to be issued from time to time as part of such Series being hereinafter referred to
individually as a “Security” and collectively as the “Securities”), to be issued pursuant to the
Senior Debt Indenture, dated as of January 25, 2010 (the “Indenture”), between the Bank and Xxxxx
Fargo Bank, National Association, as Trustee (the “Trustee”), we, as United States counsel for the
Bank, have examined such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the
basis of such examination, it is our opinion that:
(1) Assuming the Indenture has been duly authorized, executed and delivered by the
Bank insofar as the laws of Canada and Ontario are concerned, the Indenture has been duly
authorized, executed and delivered by the Bank and duly qualified under the Trust Indenture
Act of 1939 and constitutes a valid and legally binding obligation of the Bank enforceable
in accordance with its 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.
(2) Assuming the Series has been duly authorized by the Bank insofar as the laws of
Canada and Ontario are concerned, the Series has been duly authorized and established in
conformity with the Indenture, and, when the terms of a particular Security and of its
issuance and sale have been duly authorized and established by all necessary corporate
action in conformity with the Indenture, and such Security has been duly completed,
executed, authenticated and issued in accordance with the Indenture and
delivered against payment in accordance with
AIII-1
BMO Capital Markets Corp.
the Distribution Agreement, such Security will constitute a valid and legally
binding obligation of the Bank enforceable in accordance with its 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.
(3) Assuming the Distribution Agreement has been duly authorized, executed and
delivered by the Bank insofar as the laws of Canada and Ontario are concerned, the
Distribution Agreement has been duly authorized, executed and delivered by the Bank.
(4) The Bank is not required to register as an “investment company” under the
Investment Company Act of 1940, as amended.
(5) Assuming the validity of such action under the laws of Canada and Ontario, under
the laws of the State of New York relating to submission to personal jurisdiction, the Bank
has validly and effectively submitted to the personal jurisdiction of any state or Federal
court in The City of New York, State of New York and has validly appointed BMO Capital
Markets Corp., 0 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (Attention:
Secretary) as its authorized agent for the purposes described in Section 1501 of the
Indenture.
In connection with our opinion set forth in paragraph (2) above, we have, with your approval,
assumed that at the time of the issuance, sale and delivery of each particular Security the
authorization of the Series will not have been modified or rescinded and, with respect to each
Security, that such Security will conform to the draft forms of the Securities examined by us.
In connection with our opinion set forth in paragraph (2) above, we have, also with your
approval, assumed that at the time of the issuance, sale and delivery of each particular Security
there will not have occurred any change in law affecting the validity, legally binding character or
enforceability of such Security and that the issuance, sale and delivery of such Security, all of
the terms of such Security and the performance by the Bank of its obligations thereunder will
comply with applicable law and with each requirement or restriction imposed by any court or
governmental body having jurisdiction over the Bank and will not result in a default under or a
breach of any agreement or instrument then binding upon the Bank.
In connection with our opinion set forth in paragraph (2) above, we note that, as of the date
of this opinion, a judgment for money in an action based on Securities denominated in foreign
currencies or currency units in a Federal or state court in the United States ordinarily would be
enforced in the United States only in United States dollars. The date used to determine the rate
of conversion of the foreign currency or
AIII-2
BMO Capital Markets Corp.
currency unit in which a particular Security is denominated into United States dollars will
depend upon various factors, including which court renders the judgment. In the case of a Security
denominated in a foreign currency, a state court in the State of New York rendering a judgment on
such Security would be required under Section 27 of the New York Judiciary Law to render such
judgment in the foreign currency in which the Security is denominated, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date of entry of the
judgment.
The foregoing opinion is limited to the Federal laws of the United States and the laws of the
State of New York, and we are expressing no opinion as to the effect of the laws of any other
jurisdiction. With respect to all matters of the laws of Canada and Ontario, we note that you are
relying upon the opinion, dated January 25, 2010, of Torys LLP, Canadian counsel for the Bank,
delivered to you pursuant to Section 7(d) of the Distribution Agreement, and our opinion is subject
to the same assumptions, qualifications and limitations with respect to such matters as are
contained in such opinion of Torys LLP.
We have also relied as to certain matters upon information obtained from public officials,
officers of the Bank and other sources believed by us to be responsible, and we have assumed that
the Indenture has been duly authorized, executed and delivered by the Trustee and that the
signatures on all documents examined by us are genuine, assumptions which we have not independently
verified.
Very truly yours,
AIII-3
Form of Letter of Xxxxxxxx & Xxxxxxxx LLP
January [ ], 2010
BMO Capital Markets Corp.,
0 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
0 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Ladies and Gentlemen:
This is with reference to the registration under the Securities Act of 1933 (the “Securities
Act”) and offering of U.S. $5,000,000,000 aggregate initial offering price, or the equivalent
thereof in other currencies or currency units, of Senior Medium-Term Notes, Series A (the
“Securities”), of Bank of Montreal (the “Bank”).
The Registration Statement relating to the Securities (File No. 333-148054) was filed on Form
F-3 in accordance with procedures of the Securities and Exchange Commission (“Commission”)
permitting a delayed or continuous offering of securities pursuant thereto and, if appropriate, a
post-effective amendment, document incorporated by reference therein or prospectus supplement that
provides information relating to the terms of the securities and the manner of their distribution.
The Securities will be offered by the Prospectus, dated May 16, 2008 (the “Basic Prospectus”), as
supplemented by the Prospectus Supplement, dated January 25, 2010 (the “Prospectus Supplement”),
which updates or supplements certain information contained in the Basic Prospectus. The Basic
Prospectus will be further supplemented by pricing supplements, each of which will be dated
approximately as of the date of sale of particular Securities and will furnish information as to
the specific terms thereof. The Basic Prospectus may also be supplemented from time to time by one
or more product supplements. The Basic Prospectus, as supplemented by the Prospectus Supplement,
does not necessarily contain a current description of the Bank’s business and affairs since,
pursuant to Form F-3, it incorporates by reference certain documents filed with the Commission that
contain information as of various dates.
As United States counsel to the Bank, we reviewed the Registration Statement, the Basic
Prospectus, and the Prospectus Supplement and participated in discussions with your representatives
and those of the Bank, its accountants and its Canadian counsel. In addition, we reviewed
certificates of certain officers of the Bank, a letter addressed to you from the Bank’s accountants
and an opinion addressed to you from the Bank’s Canadian counsel. On the basis of the information
that we gained in the
AIII-4
| BMO Capital Markets Corp. | -2- |
course of the performance of the services referred to above, considered in the light of our
understanding of the applicable law (including the requirements of Form F-3 and the character of
prospectus contemplated thereby) and the experience we have gained through our practice under the
Securities Act, we confirm to you that, in our opinion, each part of the Registration Statement,
when such part became effective, and the Basic Prospectus, as supplemented by the Prospectus
Supplement, as of the date of the Prospectus Supplement, appeared on their face to be appropriately
responsive, in all material respects relevant to the offering of the Securities, to the
requirements of the Securities Act, the Trust Indenture Act of 1939 and the applicable rules and
regulations of the Commission thereunder; provided, however, that we express no opinion on
compliance as to form in respect of those parts of the Bank’s annual report on Form 40-F
incorporated by reference into the Basic Prospectus that, in accordance with the
Multijurisdictional Disclosure System between Canada and the United States, are prepared in
conformity with applicable Canadian requirements (you are receiving an opinion of Torys LLP in
respect of such matters). Also, we confirm to you that the statements contained in the
Registration Statement, the Basic Prospectus and the Prospectus Supplement under the captions
“Description of Debt Securities We May Offer,” “United States Taxation,” and “Plan of Distribution”
in the Basic Prospectus and “Description of the Notes We May Offer,” “Certain Income Tax
Consequences — United States Federal Income Taxation,” and “Supplemental Plan of Distribution” in
the Prospectus Supplement, insofar as they relate to provisions of the Securities, the Senior
Indenture, dated as of January 25, 2010, between the Bank and Xxxxx Fargo Bank, National
Association, as trustee, and the Distribution Agreement, dated January 25, 2010, between you and
the Bank or to provisions of United States federal income tax law therein described, constitute a
fair and accurate summary of such provisions in all material respects.
Further, nothing that came to our attention in the course of such review has caused us to
believe that, insofar as relevant to the offering of the Securities,
(a) any part of the Registration Statement, when such part became effective, contained
any untrue statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading, or
(b) the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the date
of the Prospectus Supplement, contained any untrue statement of a material fact or omitted
to state any material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
The limitations inherent in the independent verification of factual matters and the character
of determinations involved in the registration process are such, however, that we do not assume any
responsibility for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Basic Prospectus or the
AIII-5
| BMO Capital Markets Corp. | -3- |
Prospectus Supplement, except to the extent specifically noted in the fourth sentence of the
second preceding paragraph. Also, we do not express any opinion or belief as to the financial
statements or other financial data derived from accounting records contained in the Registration
Statement, the Basic Prospectus or the Prospectus Supplement, as to management’s report of its
assessment of the effectiveness of the Bank’s internal control over financial reporting or the
auditors’ report as to the Bank’s internal control over financial reporting, each as included in
the Registration Statement, the Basic Prospectus or the Prospectus Supplement, or as to the
statement of the eligibility of the Trustee under the Indenture under which the Securities are
being issued, or as to any statement with respect to the laws of Canada or Ontario in the
Registration Statement, in the Basic Prospectus, as supplemented by the Prospectus Supplement, or
in the documents incorporated by reference therein.
This letter is furnished by us, as United States counsel to the Bank, to the Agent, solely for
the benefit of the Agent in its capacity as such, and may not be relied upon by any other person.
This letter may not be quoted, referred to or furnished to any purchaser or prospective purchaser
of the Securities and may not be used in furtherance of any offer or sale of the Securities.
Very truly yours,
AIII-6
ANNEX IV
Form of Opinion of Torys LLP
January [ ], 2010
Bank of Montreal
0 Xxxxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
0 Xxxxx Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
BMO Capital Markets Corp.
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
Shearman & Sterling LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
00000
Dear Sirs/Mesdames:
| Re: | U.S.$5,000,000,000 – Senior Medium-Term Notes, Series A |
We have acted as Canadian counsel to Bank of Montreal (the “Bank”) in connection with the
Distribution Agreement, dated January 22, 2010 (the “Distribution Agreement”), relating to the
Bank’s Senior Medium-Term Notes, Series A, in an aggregate amount of up to US$5,000,000,000, or the
equivalent thereof in other currencies or currency units (such series of securities being
hereinafter referred to as the “Series” and any securities to be issued from time to time as part
of such Series being hereinafter referred to individually as a “Security” and collectively as the
“Securities”), to be issued pursuant to the Senior Indenture, dated as of January 22, 2010, as it
may be amended and supplemented from time to time, between the Bank and Xxxxx Fargo Bank, National
Association, as Trustee (the “Trustee”), (the “Indenture”).
Capitalized terms used herein and not otherwise defined herein have the meanings ascribed to such
terms in the Distribution Agreement.
We have participated, together with Xxxxxxxx & Xxxxxxxx LLP, United States counsel to the Bank, and
Shearman & Sterling LLP, United States counsel to the Agents, in the preparation of the following:
| (i) | the Distribution Agreement; | ||
| (ii) | the Indenture; |
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| (iii) | the registration statement of the Bank on Form F-3 dated December 13, 2007, Amendment No. 1 thereto, dated January 16, 2008 and Amendment No. 2 thereto, dated May 16, 2008 (collectively, the “Registration Statement”); and | ||
| (iv) | the prospectus of the Bank dated May 16, 2008 included in the Registration Statement (the “Basic Prospectus”) as supplemented by the prospectus supplement dated January 25, 2010 specifically relating to the Securities (the “Prospectus Supplement”, and together with the Basic Prospectus, the “Program Prospectus”). |
We understand that the Registration Statement and the Program Prospectus were filed with the United
States Securities and Exchange Commission in connection with the Series.
For the purposes of our opinion below, we have examined such statutes, public and corporate
records, certificates and other documents, and considered such questions of law, as we have
considered relevant and necessary as a basis for the opinions hereinafter set forth. In such
examination we have assumed the genuineness of all signatures and the authenticity of all documents
submitted to us as certified or photostatic copies or facsimiles. For the purposes of the opinions
expressed herein, we have, without independent investigation or verification, assumed that each of
the Indenture and the Distribution Agreement has been duly authorized, executed and delivered by,
and constitutes or will constitute, as the case may be, a legal, valid and binding obligation of,
each party thereto other than the Bank.
In giving this opinion, we express no opinion as to any laws other than the laws, at the date
hereof, of the Province of Ontario and the federal laws of Canada applicable therein.
With respect to the continuing existence of the Bank as a Schedule I bank under the Bank Act
(Canada) referred to in paragraph 1 below, we have relied, without independent investigation or
verification, exclusively upon a Certificate of Confirmation dated January 25, 2010 issued by the
Office of the Superintendent of Financial Institutions.
With respect to our opinion in paragraph 7 below, we have assumed that the Bank has filed all press
releases with the Ontario Securities Commission (“OSC”) which are required to be filed under
Ontario securities laws upon the occurrence of a material change.
Based and relying upon and subject to the qualifications set forth herein, we are of the opinion
that:
| 1. | the Bank validly exists as a Schedule I bank under the Bank Act (Canada) and has the corporate power to own, lease and operate its properties and to conduct its business as described in the Program Prospectus, to create the Series and to create, issue and sell the Securities and to execute, deliver and perform its obligations under the Distribution Agreement and the Indenture; | |
| 2. | the creation of the Series has been duly authorized by the Bank, and when the terms of particular Securities and the issuance and sale of such Securities have been duly authorized by all necessary corporate action in conformity with the Indenture, and when such Securities have been duly executed, authenticated and issued in accordance with the Indenture and delivered against payment in accordance with the Distribution Agreement and any applicable terms agreement, such Securities will be validly issued; |
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| 3. | the Distribution Agreement has been duly authorized, executed and, to the extent delivery is a matter governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein, delivered by the Bank; | |
| 4. | the Indenture has been duly authorized, executed and, to the extent delivery is a matter governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein, delivered by the Bank and, with respect to the provisions thereof governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein, constitutes a legal, valid and binding obligation of the Bank enforceable in accordance with its terms; | |
| 5. | the execution and delivery by the Bank of, and the performance by the Bank of its obligations under the Indenture and the Distribution Agreement do not contravene any existing provision of applicable law or result in a breach (whether after notice or lapse of time or both) of any of the terms, conditions or provisions of the Bank Act (Canada) or the by-laws of the Bank; | |
| 6. | no registration, filing or recording of the Indenture under the laws of the Province of Ontario and the federal laws of Canada applicable therein is necessary in order to preserve or protect the validity or enforceability of the Distribution Agreement, the Securities or the Indenture; | |
| 7. | the Canadian disclosure documents of the Bank required to be filed pursuant to National Instrument 51-102 Continuous Disclosure Obligations with the OSC under Ontario securities laws which are incorporated by reference in, and filed as Exhibits 99.1 — 99.2 to the Report on 40-F of the Bank incorporated by reference in the Registration Statement (except for the financial statements and other financial and statistical data included therein or omitted therefrom, as to which we express no opinion), when they were filed with the OSC under Ontario securities laws, appear on their face to have been appropriately responsive in all material respects to the requirements of Ontario securities laws as interpreted and applied by the OSC; | |
| 8. | a court of competent jurisdiction in the Province of Ontario (an “Ontario Court”) would give effect to the choice of the law of the State of New York (“New York Law”) as the proper law governing the Indenture (to the extent the Indenture is governed by New York Law) and the Distribution Agreement, provided that such choice of law is bona fide (in the sense that it was not made with a view to avoiding the consequences of the laws of any other jurisdiction) and provided that such choice of New York Law is not contrary to public policy (“Public Policy”), as that term is understood under the laws in the Province of Ontario and the federal laws of Canada applicable therein (“Ontario Law”). However, in our view, there are no reasons under the laws of the Province of Ontario or the federal laws of Canada applicable therein for avoiding the choice of New York law to govern the Distribution Agreement, the Securities and the Indenture; | |
| 9. | in an action on a final and conclusive judgment in personam of any state or federal court sitting in The City of New York, New York (a “New York Court”) that is not impeachable as void or voidable under New York Law, an Ontario Court would recognize the validity of and give effect to (i) the appointment by the Bank of Xxxxxxx Xxxxxxxx, Bank of Montreal, 000 Xxxx Xxxxxx Xxxxxx, X.X. Xxx 000, Xxxxxxx, Xxxxxxxx, 00000, as its agent for service of process in the United States of America under the Registration Statement and (ii) the appointment by the Bank of BMO Capital Markets Corp., 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 Attn: Secretary as its agent for service of process in |
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| the United States of America under the Indenture and the Distribution Agreement and give effect to the provisions in the Indenture and the Distribution Agreement whereby the Bank has submitted to the jurisdiction of a New York Court; | ||
| 10. | if the Indenture (to the extent the Indenture is governed by New York Law), or the Distribution Agreement are sought to be enforced in the Province of Ontario in accordance with the laws applicable thereto as chosen by the parties, namely New York Law, an Ontario Court would, subject to the qualifications set out in paragraph 8 above, recognize the choice of New York Law, and apply such law, provided that in any such proceeding, and notwithstanding the parties’ choice of law, the Ontario Court; |
| (a) | will not take judicial notice of the provisions of New York Law but will only apply such provisions if they are pleaded and proven by expert testimony; | ||
| (b) | will apply Ontario Law that under such law would be characterized as procedural and will not apply any New York Law that under Ontario Law would be characterized as procedural; | ||
| (c) | will apply provisions of Ontario Law that have overriding effect; | ||
| (d) | will not apply New York Law if such application would be characterized under Ontario Law as the direct or indirect enforcement of a foreign revenue, expropriatory or penal law or if its application would be contrary to Public Policy; and | ||
| (e) | will not enforce the performance of any obligation that is illegal under the laws of any jurisdiction in which the obligation is to be performed; |
| 11. | an Ontario Court would enforce a final and conclusive judgment in personam of a New York Court that is subsisting and unsatisfied respecting the enforcement of the Indenture and the Distribution Agreement that is not impeachable as void or voidable under New York Law for a sum certain (the “Foreign Judgment”) provided that: |
| (a) | the New York Court had jurisdiction over the subject matter and the parties to such agreements as recognized by the Ontario Court and the New York Court (although submission by the Bank to the jurisdiction of the New York Court pursuant to the Indenture and the Distribution Agreement will be sufficient for this purpose); | ||
| (b) | no new admissible evidence, right or defence relevant to the action accrues or is discovered prior to the rendering of a judgment by the Ontario Court; | ||
| (c) | an action to enforce the Foreign Judgment is commenced in the Ontario Court within any applicable limitation period; | ||
| (d) | the Ontario Court has discretion to stay or decline to hear an action on the Foreign Judgment if the Foreign Judgment is under appeal, or there is another subsisting judgment in any jurisdiction relating to the same cause of action; and | ||
| (e) | the Ontario Court will render judgment only in Canadian dollars; |
| subject to the following defences: |
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| (i) | the Foreign Judgment was obtained by fraud or in a manner contrary to the principles of natural justice; | ||
| (ii) | the Foreign Judgment is for a claim which under Ontario Law would be characterized as based on a foreign revenue, expropriatory or penal law; | ||
| (iii) | the Foreign Judgment is contrary to Public Policy or to an order made by the Attorney General of Canada under the Foreign Extraterritorial Measures Act (Canada) or by the Competition Tribunal under the Competition Act (Canada) in respect of certain judgments referred to therein; or | ||
| (iv) | the Foreign Judgment has been satisfied or is void or voidable under New York Law; and |
| 12. | our opinion as summarized in the Basic Prospectus under the heading “Limitations on Enforcement of U.S. Laws Against the Bank, our Management and Others” regarding enforceability of United States securities law is true and correct. |
The opinion set forth in paragraph 4 above as to the enforceability of the Indenture is subject to
the following qualifications:
| (i) | equitable remedies, such as specific performance and injunctive relief, are remedies which may only be granted at the discretion of a court of competent authority; | ||
| (ii) | enforceability may be limited by bankruptcy, insolvency and other laws of general application affecting the rights of creditors (including the provisions of the Bank Act (Canada) respecting such matters); and | ||
| (iii) | pursuant to the Currency Act (Canada), a judgment by a court in any province in Canada may be awarded in Canadian currency only and such judgment may be based on a rate of exchange which may be the rate in existence on a day other than the day of payment of such judgment. |
The opinions expressed herein are provided solely for the benefit of the addressees in connection
with the creation of the Series and are not to be transmitted to any other person, nor are they to
be relied upon by any other person or for any other purpose or referred to in any public document
or filed with any government agency or other person without our prior express consent.
Yours truly,
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ANNEX V
Form of Letter of Independent Registered Public Accounting Firm
BMO Capital Markets Corp.
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx Xxxx
Xxxxxxx, XX 00000
(the “Agent”)
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx Xxxx
Xxxxxxx, XX 00000
(the “Agent”)
The Board of Directors of Bank of Montreal
January [ ], 2010
Dear Sirs/Mesdames:
This letter is written to you at the request of management of Bank of Montreal (the “Bank”)
pursuant to the terms of the distribution agreement dated January 25, 2010 between the Bank and the
Agent (the “Distribution Agreement”) and in connection with the registration statement (File No.
333-148054) on Form F-3 (the “Registration Statement”) filed by the Bank under the U.S. Securities
Act of 1933 (the “Act”) and the Prospectus Supplement of the Bank dated January 25, 2010 to the
Base Prospectus of the Bank dated May 16, 2008, relating to the offering of up to US$5 billion of
Bank of Montreal Senior Medium-Term Notes, Series A (collectively the “Prospectus”).
We have audited the consolidated balance sheets of the Bank as at October 31, 2009 and 2008 and the
consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash
flows for each of the years in the three-year period ended October 31, 2009 (the “Consolidated
Financial Statements”), and the effectiveness of internal control over financial reporting of the
Bank as of October 31, 2009. The Consolidated Financial Statements and management’s assessment of
the effectiveness of internal control over financial reporting are incorporated by reference in the
Prospectus and the Registration Statement. Our reports on the Consolidated Financial Statements
and the effectiveness of internal control over financial reporting dated November 24, 2009 are
incorporated by reference in the Prospectus and the Registration Statement.
In connection with the Prospectus and the Registration Statement:
| 1. | We are the auditors of the Bank and are independent within the meaning of the Rules of Professional Conduct/Code of Ethics of the various Canadian provincial institutes/ordre and independent with respect to the Bank within the meaning of the Act and the applicable rules and regulations thereunder. | |
| 2. | In our opinion, the Consolidated Financial Statements audited by us and incorporated by reference in the Prospectus and the Registration Statement comply as to form in all material respects with: |
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| (a) | the applicable accounting requirements of the Act and the related rules and regulations adopted by the United States Securities and Exchange Commission (the “SEC”) as they are applicable to the Bank of Montreal; | ||
| (b) | the published accounting requirements of the Securities Acts of the various provinces and territories and the related regulations; and | ||
| (c) | with Section 308(4) of the Bank Act (Canada). |
| 3. | We have not audited any financial statements of the Bank or the effectiveness of internal control over financial reporting as of any date or for any period subsequent to October 31, 2009. Although we have performed an audit of the Consolidated Financial Statements for the year ended October 31, 2009, and an audit of the effectiveness of internal control over financial reporting as of October 31, 2009, the purpose and therefore the scope of the audit was to enable us to express our opinion on the Consolidated Financial Statements as at October 31, 2009 and for the year then ended and our opinion on the effectiveness of internal control over financial reporting as of October 31, 2009, but not on the financial statements or the effectiveness of internal control over financial reporting for any interim period within that year. Therefore, we are unable to and do not express any opinion on the financial position, results of operations, or cash flows or the effectiveness of internal control over financial reporting as of any date or for any interim period within that year or subsequent to October 31, 2009. | |
| 4. | At your request, we have read the minutes of the meetings of the Shareholders, the Board of Directors, the Governance and Nominating Committee, the Risk Review Committee, the Human Resource and Management Compensation Committee and the Audit Committee of the Bank as set out in the minute books to January 21, 2010 (our work did not extend to the period from January 22, 2010 to January 25, 2010 inclusive), officials of the Bank having advised us that the minutes of all such meetings through that date were set out therein except for the minutes of the meetings of the Board of Directors held on November 23, 2009, November 24, 2009, December 10, 2009 and December 14, 2009, the minutes of the meetings of the Governance and Nominating Committee held on November 23, 2009, the minutes of the meetings of the Audit Committee held on November 23, 2009, the minutes of the meetings of the Risk Review Committee held on November 23, 2009, and the minutes of the meetings of the Human Resources and Management Compensation Committee held on December 1, 2009 and December 10, 2009, which have not been finalized. However, members of the Bank’s Corporate Secretary’s Department have presented to us the draft minutes or agendas of those meetings or otherwise communicated the agenda of those meetings with us with the exception of the Human Resources and Management Compensation Committee, of which the draft minutes or agendas of this Committee were presented to us by the Secretary of that Committee. | |
| 5. | Also, we have performed other procedures to January 21, 2010 (our work did not extend to the period from January 22, 2010 to January 25, 2010, inclusive) as follows: |
| (a) | For the period from November 1, 2009 to December 31, 2009, we have: |
| (i.) | read unaudited, consolidated summary financial information of the Bank as at |
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| and for the two-month periods ended December 31, 2009 and 2008 provided to us by the Bank. Officials of the Bank have advised us that no such unaudited, consolidated summary financial information as at any date or for any period subsequent to December 31, 2009 is available; and | |||
| (ii.) | made enquires of certain officials of the Bank who have responsibility for financial and accounting matters concerning whether the unaudited, consolidated summary financial information referred to under item 5(a)(i) is stated on a basis consistent in all material respects with that of the Consolidated Financial Statements. |
| The foregoing procedures do not constitute an audit performed in accordance with Canadian generally accepted auditing standards nor would they necessarily reveal matters of significance with respect to the comments in the following paragraph. We make no representations regarding the sufficiency of the foregoing procedures for your purposes. | ||
| 6. | Based on the results of the foregoing procedures: |
| (a) | (i.) | as at December 31, 2009 the consolidated net assets of the Bank decreased by approximately $100 million as compared with amounts shown in the audited consolidated balance sheet of the Bank as at October 31, 2009 incorporated by reference in the Prospectus and the Registration Statement; and |
| (ii.) | for the period from November 1, 2009 to December 31, 2009 there has been no decrease in the amount of the consolidated revenue (which is comprised of net interest income and non-interest revenue) as compared to the corresponding period in the preceding year. |
| 7. | Bank officials have advised us that no unaudited, consolidated summary financial information as at any date or for any period subsequent to December 31, 2009 is available; accordingly, the procedures performed by us with respect to changes in financial statement items after December 31, 2009 have, of necessity, been even more limited than those with respect to the periods referred to in item 5. We have made enquiries of certain Bank officials who have responsibility for financial and accounting matters as to whether: |
| (a) | transactions occurring in the period subsequent to December 31, 2009 have been accounted for on a basis consistent in all material respects with that of the Consolidated Financial Statements; | ||
| (b) | there was any change at January 21, 2010 in authorized or issued share capital or consolidated subordinated debt or decrease at January 21, 2010 in the consolidated net assets of the Bank as compared with amounts shown in the October 31, 2009 consolidated balance sheet of the Bank incorporated by reference in the Prospectus and the Registration Statement; and | ||
| (c) | for the period from December 31, 2009 to January 21, 2010 there was any decrease, as compared with the corresponding period in the preceding year, in the amount of consolidated revenue (which is comprised of net interest income and non-interest revenue). |
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| On the basis of these enquiries and our reading of the minutes as described in item 4, we: |
| (i) | were informed by management that transactions occurring subsequent to October 31, 2009 were accounted for on a basis consistent in all material respects with that of the Consolidated Financial Statements; | ||
| (ii) | did not find any change as at January 21, 2010 (our work did not extend to the period from January 22, 2010 to January 25, 2010, inclusive) in the authorized or issued share capital or consolidated subordinated debt of the Bank as compared to the amounts shown in the October 31, 2009 consolidated balance sheet of the Bank, except for the net impact of changes in foreign exchange rates, shares issued pursuant to the Bank’s Shareholder Dividend Reinvestment and Share Purchase Plan, the Bank’s Stock Option Plan, and shares issued in exchange for subsidiary corporation shares, and the Bank’s normal course issuer bid, and the redemption of $500 million 4.00% Debentures, Series C MTN First Tranche, due 2015; | ||
| (iii) | have been advised by management that they cannot comment on the balance of consolidated net assets at January 21, 2010, as this information is not available; and | ||
| (iv) | have been advised by management that they cannot comment on the change in the amount of consolidated revenue (which is comprised of net interest income and non-interest revenue) for the period January 1, 2010 to January 21, 2010 as compared with the corresponding period in the preceding year, as this information is not available. |
| 8. | For the purposes of this letter, we have also read the items identified by you on the attached copies of pages 1 to 28 of the Bank’s 2009 Annual Report, “Management’s Discussion and Analysis” (“MD&A”), as extracted from pages 27 to 107 of the Bank’s 2009 Annual Report and the earnings to fixed charges ratios, and capitalization section set out in Exhibits 99.1, 99.2 and 99.3 in the Form 6K and have performed the following additional procedures, which were applied to those items as indicated by the symbols explained below. With respect to the disclosure by the Bank of any non-GAAP financial measures as defined in CSA Staff Notice 52-306 (Revised), we make no comment as to whether such measures or the resulting disclosures comply with the staff’s expectations set forth in the notice. |
| A. | Compared the amounts to the corresponding amounts in the Consolidated Financial Statements and found the amounts to be in agreement, after rounding. | ||
| B. | Recalculated by reference to the amounts contained in the Consolidated Financial Statements and found the amount shown to be arithmetically correct, after rounding. | ||
| C. | Compared the amounts to the corresponding amounts in the unaudited interim consolidated financial statements for the quarter ended January 31, 2009 contained in the “First Quarter 2009 Report to Shareholders” news release dated March 3, 2009, or for the quarter ended April 30, 2009 contained in the “Second Quarter 2009 Report to Shareholders” news release dated May 26, 2009, or for the quarter ended July 31, 2009 contained in the “Third Quarter 2009 Report to Shareholders” news release dated August 25, 2009 (collectively, “2009 Unaudited Interim |
AV-4
| Consolidated Financial Statements”) and found the amounts to be in agreement, after rounding. | |||
| D. | Recalculated by reference to the amounts contained in the 2009 Unaudited Interim Consolidated Financial Statements and found the amount shown to be arithmetically correct, after rounding. | ||
| E. | Compared the amounts to the corresponding amounts in the consolidated balance sheets of the Bank as at October 31, 2008 and 2007 and the consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the two-year period then ended and found the amounts to be in agreement, after rounding. | ||
| F. | Recalculated by reference to the amounts contained in the Consolidated Financial Statements and the 2009 Unaudited Interim Consolidated Financial Statements and found the amount shown to be arithmetically correct, after rounding. | ||
| G. | Recalculated by reference to the amounts contained in the Consolidated Financial Statements in conjunction with schedules (unaudited) derived directly from the Bank’s general ledger and provided to us by the Bank and found the amount shown to be arithmetically correct, after rounding. However, we have not audited nor reviewed the schedules provided to us by the Bank. | ||
| H. | Recalculated the Bank’s consolidated ratios of earnings to fixed charges for the twelve months ended October 31, 2009, in conjunction with schedules (unaudited) derived directly from the Bank’s general ledger and provided to us by the Bank and found the amount shown to be arithmetically correct, after rounding. However, we have not audited nor reviewed the schedules provided to us by the Bank. In addition, the computation of the ratio of earnings to fixed charges includes an assumption on estimated interest within rental expense, we make no comment as to the reasonableness of the assumption used by the Bank in making the ratio calculations. |
| 9. | Our audit of the Consolidated Financial Statements for the periods referred to in the second paragraph of this letter comprised audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For neither the periods referred to therein nor any other period did we perform audit tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those enumerated in item 8 noted above, and, accordingly, we express no opinion thereon. | |
| 10. | We make no representations regarding questions of legal interpretation or regarding the sufficiency for your purposes of the procedures noted in item 8; also, such procedures would not necessarily reveal any material misstatement of the amounts or percentages noted above in item 8. Further, we have addressed ourselves solely to the foregoing data in the Prospectus as set out in item 8, and we make no representations regarding the adequacy of disclosures or regarding whether any material facts have been omitted. | |
| 11. | This letter is solely for the information of the addressees and to assist the Agent in conducting and documenting its investigation of the affairs of the Bank in connection with the offering of the securities covered by the Prospectus, and it is not to be used, circulated, quoted, or |
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| otherwise referred to within or without the Agent for any other purpose, including but not limited to the purchase or sale of securities, nor is it to be filed with or referred to in whole or in part in the Prospectus or any other document, except that reference may be made to it in the Distribution Agreement or in any list of closing documents pertaining to the offering of the securities covered by the Prospectus. |
Yours truly,
Chartered Accountants, Licensed Public Accountants
Toronto, Canada
January [ ], 2010
January [ ], 2010
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ANNEX VI
Agents
| Name: | Contact Information: | |
BMO Capital Markets Corp.
|
000 X XxXxxxx Xxxxxx, 00xx Xxxxx X | |
| Xxxxxxx, Xxxxxxxx 00000 | ||
| Attn: Xxx XxXxxxx |
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ATTACHMENT A
Bank of Montreal
Administrative Procedure
Administrative Procedure
This Administrative Procedure relates to the Securities defined in the Distribution Agreement,
dated January 25, 2010 (the “Distribution Agreement”), between Bank of Montreal (the “Bank”) and the
Agents listed in Annex VI thereto (individually, an “Agent” and, collectively, the “Agents”), to
which this Administrative Procedure is attached as Attachment A. Defined terms used herein
and not defined herein shall have the meanings given such terms in the Distribution Agreement, the
Prospectus as amended or supplemented or the Indenture.
The procedures to be followed with respect to the settlement of sales of Securities directly
by the Bank to purchasers solicited by an Agent, as agent, are set forth below. The terms and
settlement details related to a purchase of Securities by an Agent, as principal, from the Bank
will be set forth in a Terms Agreement pursuant to the Distribution Agreement, unless the Bank and
such Agent otherwise agree as provided in Section 2(b) of the Distribution Agreement, in which case
the procedures to be followed in respect of the settlement of such sale will be as set forth below.
An Agent, in relation to a purchase of a Security by a purchaser solicited by such Agent, is
referred to herein as the “Selling Agent” and, in relation to a purchase of a Security by such
Agent, as principal, other than pursuant to a Terms Agreement, as the “Purchasing Agent.”
The Bank will advise each Agent in writing of those persons with whom such Agent is to
communicate regarding offers to purchase Securities and the related settlement details.
Each Security will be issued only in fully registered form and will be represented by either a
global security (a “Global Security”) delivered to the Trustee, as agent for The Depository Trust
Company (the “Depositary”), and recorded in the book-entry system maintained by the Depositary (a
“Book-Entry Security”) or a certificate issued in definitive form (a “Certificated Security”)
delivered to a person designated by an Agent, as set forth in the applicable Prospectus Supplement.
An owner of a Book-Entry Security will not be entitled to receive a certificate representing such
a Security, except as provided in the Indenture.
Book-Entry Securities will be issued in accordance with the Administrative Procedure set forth
in Part I hereof, and Certificated Securities will be issued in accordance with the Administrative
Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for eligibility in the
book-entry system maintained by the Depositary, the Trustee will perform the custodial, document
control and administrative functions described below, in accordance with its respective obligations
under a Letter of Representations from the Bank and the Trustee to the Depositary, dated January 25, 2010,
and a Medium-Term Note Certificate Agreement between the Trustee and the Depositary, dated as of March 9, 1995
(the “Certificate Agreement”), and its obligations as a participant in the Depositary, including
the Depositary’s Same-Day Funds Settlement System (“SDFS”).
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Posting Rates by the Bank:
The Bank and the Agents will discuss from time to time the rates of interest per annum to be
borne by and the maturity of Book-Entry Securities that may be sold as a result of the solicitation
of offers by an Agent. The Bank may establish a fixed set of interest rates and maturities for an
offering period. If the Bank decides to change already posted rates, it will promptly advise the
Agents to suspend solicitation of offers until the new posted rates have been established with the
Agents.
Acceptance of Offers by the Bank:
Each Agent will promptly advise the Bank by telephone or other appropriate means of all
reasonable offers to purchase Book-Entry Securities, other than those rejected by such Agent. Each
Agent may, in its discretion reasonably exercised, reject any offer received by it in whole or in
part. Each Agent also may make offers to the Bank to purchase Book-Entry Securities as a
Purchasing Agent. The Bank will have the sole right to accept offers to purchase Book-Entry
Securities and may reject any such offer in whole or in part.
The Bank will promptly notify the Selling Agent or Purchasing Agent, as the case may be, of
its acceptance or rejection of an offer to purchase Book-Entry Securities. If the Bank accepts an
offer to purchase Book-Entry Securities, it will confirm such acceptance in writing to the Selling
Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Bank by Agent and Settlement Procedures:
A. After the acceptance of an offer by the Bank, the Selling Agent or Purchasing Agent, as the
case may be, will communicate promptly, but in no event later than the time set forth in the
“Settlement Procedure Timetable” below, the following details of the terms of such offer (the “Sale
Information”) to the Bank by telephone (confirmed in writing) or by facsimile transmission or other
acceptable written means:
| (1) | Principal Amount of Book-Entry Securities to be purchased; | ||
| (2) | If a Fixed Rate Book-Entry Security, the interest rate and initial interest payment date; | ||
| (3) | Trade Date; | ||
| (4) | Settlement Date; | ||
| (5) | Maturity Date; | ||
| (6) | Specified Currency and, if the Specified Currency is other than U.S. dollars, the applicable Exchange Rate for such Specified Currency; | ||
| (7) | Issue Price; | ||
| (8) | Selling Agent’s commission or Purchasing Agent’s commission, as the case may be; | ||
| (9) | Net Proceeds to the Bank; | ||
| (10) | If a redeemable Book-Entry Security, such of the following as are applicable: |
| (i) | Redemption Commencement Date, | ||
| (ii) | Initial Redemption Price (% of par), and |
A-2
| (iii) | Amount (% of par) that the Redemption Price shall decline (but not below par) on each anniversary of the Redemption Commencement Date; |
| (11) | If a Floating Rate Book-Entry Security, such of the following as are applicable: |
| (i) | Interest Rate Basis, | ||
| (ii) | Index Maturity, | ||
| (iii) | Spread or Spread Multiplier, | ||
| (iv) | Maximum Rate, | ||
| (v) | Minimum Rate, | ||
| (vi) | Initial Interest Rate, | ||
| (vii) | Interest Reset Dates, | ||
| (viii) | Interest Calculation Dates, | ||
| (ix) | Interest Determination Dates, | ||
| (x) | Interest Payment Dates, | ||
| (xi) | Regular Record Dates, and | ||
| (xii) | Calculation Agent; |
| (12) | Name, address and taxpayer identification number of the registered owner(s); | ||
| (13) | Denomination of certificates to be delivered at settlement; | ||
| (14) | Book-Entry Security or Certificated Security; and | ||
| (15) | Selling Agent or Purchasing Agent. |
B. After receiving the Sale Information from the Selling Agent or Purchasing Agent, as the
case may be, the Bank will communicate such Sale Information to the Trustee by facsimile
transmission or other acceptable written means. The Trustee will assign a CUSIP number to the
Global Security from a list of CUSIP numbers previously delivered to the Trustee by the Bank
representing such Book-Entry Security and then advise the Bank and the Selling Agent or Purchasing
Agent, as the case may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the Depositary’s Participant
Terminal System, providing the following settlement information to the Depositary, and the
Depositary shall forward such information to such Agent and Standard & Poor’s Ratings Group:
| (1) | The applicable Sale Information; | ||
| (2) | CUSIP number of the Global Security representing such Book-Entry Security; | ||
| (3) | Whether such Global Security will represent any other Book-Entry Security (to the extent known at such time); | ||
| (4) | Number of the participant account maintained by the Depositary on behalf of the Selling Agent or Purchasing Agent, as the case may be, which number will be supplied by such Selling Agent or Purchasing Agent; | ||
| (5) | The interest payment period; and | ||
| (6) | Initial Interest Payment Date for such Book-Entry Security, number of days by which such date succeeds the record date for the Depositary’s purposes (or, in the case of Floating Rate Securities which reset daily or weekly, the date five calendar days immediately preceding the applicable |
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| Interest Payment Date and, in the case of all other Book-Entry Securities, the Regular Record Date, as defined in the Security) and, if calculable at that time, the amount of interest payable on such Interest Payment Date. |
D. The Trustee will complete and authenticate the Global Security previously delivered by the
Bank representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee’s participant account at
the Depositary.
F. The Trustee will enter an SDFS deliver order through the Depositary’s Participant Terminal
System instructing the Depositary to (i) debit such Book-Entry Security to the Trustee’s
participant account and credit such Book-Entry Security to such Agent’s participant account and
(ii) debit such Agent’s settlement account and credit the Trustee’s settlement account for an
amount equal to the price of such Book-Entry Security less such Agent’s commission or discount, as
the case may be. The entry of such a delivery order shall constitute a representation and warranty
by the Trustee to the Depositary that (a) the Global Security representing such Book-Entry Security
has been authenticated and issued and (b) the Trustee is holding such Global Security pursuant to
the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary’s Participant Terminal
System instructing the Depositary (i) to debit such Book-Entry Security to such Agent’s participant
account and credit such Book-Entry Security to the participant accounts of the Participants with
respect to such Book-Entry Security and (ii) to debit the settlement accounts of such Participants
and credit the settlement account of such Agent for an amount equal to the price of such Book-Entry
Security.
H. Transfers of funds in accordance with SDFS deliver orders described in Settlement
Procedures “F” and “G” will be settled in accordance with SDFS operating procedures in effect on
the settlement date.
I. Upon
confirmation of receipt of funds, the Trustee will transfer to the
account of the Bank specified to
the Trustee, in funds available for immediate use in the amount transferred to the Trustee in
accordance with Settlement Procedure “F.”
J. Upon request, the Trustee will send to the Bank a statement setting forth the principal
amount of Book-Entry Securities outstanding as of that date under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to the purchaser either by
transmitting to the participants with respect to such Book-Entry Security a confirmation order or
orders through the Depositary’s institutional delivery system or by mailing a written confirmation
to such purchaser.
Preparation of Prospectus Supplement and, if Applicable, Term Sheet:
If the Bank accepts an offer to purchase a Book-Entry Security, it will prepare a Prospectus
Supplement reflecting the terms of such Book-Entry Security and arrange to have
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delivered to the Selling Agent or Purchasing Agent, as the case may be, at least 10 copies of
such Prospectus Supplement, with a copy to the Trustee, as provided under “Delivery of Confirmation
and Prospectus to Purchaser by Selling Agent” below. If applicable, the Term Sheet reflecting the
terms of such Security will be prepared by such Agent and at least 10 copies will be delivered by
such Agent to the Bank, with a copy to the Trustee, as provided under “Delivery of Confirmation and
Prospectus to Purchaser by Selling Agent” below. The Bank will arrange to have the Prospectus
Supplement filed with, or transmitted by a means reasonably calculated to result in filing with,
the Commission via the Commission’s XXXXX System pursuant to Rule 424 under the Act and, if
applicable, will file the Term Sheet in accordance with Rule 433 under the Act.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a written
confirmation of the sale and delivery and payment instructions. In addition, the Selling Agent
will deliver to such purchaser or its agent the Prospectus as amended or supplemented (including
the Prospectus Supplement) and, if applicable, the Term Sheet in relation to such Book-Entry
Security prior to the first contract for sale of the Book-Entry Security.
Date of Settlement:
The receipt by the Bank of immediately available funds in payment for a Book-Entry Security
and the authentication and issuance of the Global Security representing such Book-Entry Security
shall constitute “settlement” with respect to such Book-Entry Security. All orders of Book-Entry
Securities solicited by a Selling Agent or made by a Purchasing Agent and accepted by the Bank on a
particular date (the “Trade Date”) will be settled on a date (the “Settlement Date”) which is the
third Business Day after the Trade Date pursuant to the “Settlement Procedure Timetable” set forth
below, unless the Bank and the purchaser agree to settlement on another Business Day which shall be
no earlier than the next Business Day after the Trade Date.
Trustee Not Required to Risk Its Own Funds:
Nothing herein shall be deemed to require the Trustee to risk or expend its own funds in
connection with any payments to the Bank, the Agents or the Depositary or any purchaser, it being
understood by all parties that payments made by the Trustee to the Bank, the Agents, the
Depositary, or any purchaser shall be made only to the extent that funds are provided to the
Trustee for such purpose.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by a Selling Agent and accepted by the Bank for
settlement on the third Business Day after the Trade Date, Settlement Procedures “A” through “I”
set forth above shall be completed as soon as possible but not later than the respective times (New
York City time) set forth below:
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| Settlement | ||||
| Procedure | Time | |||
A
|
5:00 p.m. | on the Business Day following the Trade Date or 10:00 a.m. on the Business Day prior to the Settlement Date, whichever is earlier | ||
B
|
12:00 noon | on the second Business Day immediately preceding the Settlement Date | ||
C
|
2:00 p.m. | on the second Business Day immediately preceding the Settlement Date | ||
D
|
9:00 a.m. | on the Settlement Date | ||
E
|
10:00 a.m. | on the Settlement Date | ||
F-G
|
2:15 p.m. | on the Settlement Date | ||
H
|
4:45 p.m. | on the Settlement Date | ||
I
|
5:00 p.m. | on the Settlement Date |
If the initial interest rate for a Floating Rate Book-Entry Security has not been determined
at the time that Settlement Procedure “A” is completed, Settlement Procedures “B” and “C” shall be
completed as soon as such rate has been determined but no later than 2:00 p.m. on the second
Business Day immediately preceding the Settlement Date. Settlement Procedure “H” is subject to
extension in accordance with any extension of Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on the Settlement Date.
If settlement of a Book-Entry Security is rescheduled or canceled, the Trustee, upon obtaining
knowledge thereof, will deliver to the Depositary, through the Depositary’s Participant Terminal
System, a cancellation message to such effect by no later than 2:00 p.m. on the Business Day
immediately preceding the scheduled Settlement Date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a Book-Entry Security
pursuant to Settlement Procedure “F,” the Trustee may deliver to the Depositary, through the
Depositary’s Participant Terminal System, as soon as practicable a withdrawal message instructing
the Depositary to debit such Book-Entry Security to the Trustee’s participant account, provided
that the Trustee’s participant account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to the principal amount to be debited.
If a withdrawal message is processed with respect to all the Book-Entry Securities represented by
a Global Security, the Trustee will xxxx such Global Security “canceled,” make appropriate entries
in the Trustee’s records and send such canceled Global Security to the Bank. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP Service Bureau procedures, be
canceled and not immediately reassigned. If a withdrawal message is processed with respect to one
or more, but not all, of the Book-Entry Securities represented by a Global Security, the Trustee
will exchange such Global Security for two Global Securities, one of which shall represent such
Book-Entry Security or Securities and shall be canceled immediately after issuance and the other of
which shall represent the remaining Book-Entry Securities previously represented by the surrendered
Global Security and shall bear the CUSIP number of the surrendered Global Security.
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If the purchase price for any Book-Entry Security is not timely paid to the participants with
respect to such Book-Entry Security by the beneficial purchaser thereof (or a person, including an
indirect participant in the Depositary, acting on behalf of such purchaser), such participants and,
in turn, the Agent for such Book-Entry Security may enter delivery orders through the Depositary’s
Participant Terminal System debiting such Book-Entry Security to such participant’s account and
crediting such Book-Entry Security to such Agent’s account and then debiting such Book-Entry
Security to such Agent’s participant account and crediting such Book-Entry Security to the
Trustee’s participant account and shall notify the Bank and the Trustee thereof. Thereafter, the
Trustee will (i) promptly notify the Bank of such order, and the Bank shall transfer to such Agent
funds available for immediate use in an amount equal to the price of such Book-Entry Security which
was credited to the account of the Bank maintained at the Trustee in accordance with Settlement
Procedure “I,” and (ii) deliver the withdrawal message and take the related actions described in
the preceding paragraph. If such failure shall have occurred for any reason other than default by
the applicable Agent to perform its obligations hereunder or under the Distribution Agreement, the
Bank will reimburse such Agent on an equitable basis for the loss of its use of funds during the
period when the funds were credited to the account of the Bank.
Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry
Security, the Depositary may take any actions in accordance with its SDFS operating procedures then
in effect. In the event of a failure to settle with respect to one or more, but not all, of the
Book-Entry Securities to have been represented by a Global Security, the Trustee will provide, in
accordance with Settlement Procedure “D,” for the authentication and issuance of a Global Security
representing the other Book-Entry Securities to have been represented by such Global Security and
will make appropriate entries in its records. The Bank will, from time to time, furnish the
Trustee with a sufficient quantity of Securities.
PART II: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Bank:
The Bank and the Agents will discuss from time to time the rates of interest per annum to be
borne by and the maturity of Certificated Securities that may be sold as a result of the
solicitation of offers by an Agent. The Bank may establish a fixed set of interest rates and
maturities for an offering period. If the Bank decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers until the new posted rates have been
established with the Agents.
Acceptance of Offers by Bank:
Each Agent will promptly advise the Bank by telephone or other appropriate means of all
reasonable offers to purchase Certificated Securities, other than those rejected by such Agent.
Each Agent may, in its discretion reasonably exercised, reject any offer received by it in whole or
in part. Each Agent also may make offers to the Bank to purchase Certificated Securities as a
Purchasing Agent. The Bank will have the sole right to accept offers to purchase Certificated
Securities and may reject any such offer in whole or in part.
The Bank will promptly notify the Selling Agent or Purchasing Agent, as the case may be, of
its acceptance or rejection of an offer to purchase Certificated Securities. If the Bank
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accepts an offer to purchase Certificated Securities, it will confirm such acceptance in
writing to the Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to Bank by Agent:
After the acceptance of an offer by the Bank, the Selling Agent or Purchasing Agent, as the
case may be, will communicate the following details of the terms of such offer (the “Sale
Information”) to the Bank by telephone (confirmed in writing) or by facsimile transmission or other
acceptable written means:
| (1) | Principal Amount of Certificated Securities to be purchased; | ||
| (2) | If a Fixed Rate Certificated Security, the interest rate and initial interest payment date; | ||
| (3) | Trade Date; | ||
| (4) | Settlement Date; | ||
| (5) | Maturity Date; | ||
| (6) | Specified Currency and, if the Specified Currency is other than U.S. dollars, the applicable Exchange Rate for such Specified Currency; | ||
| (7) | Issue Price; | ||
| (8) | Selling Agent’s commission or Purchasing Agent’s commission, as the case may be; | ||
| (9) | Net Proceeds to the Bank; | ||
| (10) | If a redeemable Certificated Security, such of the following as are applicable: |
| (i) | Redemption Commencement Date, | ||
| (ii) | Initial Redemption Price (% of par), and | ||
| (iii) | Amount (% of par) that the Redemption Price shall decline (but not below par) on each anniversary of the Redemption Commencement Date; |
| (11) | If a Floating Rate Certificated Security, such of the following as are applicable: |
| (i) | Interest Rate Basis, | ||
| (ii) | Index Maturity, | ||
| (iii) | Spread or Spread Multiplier, | ||
| (iv) | Maximum Rate, | ||
| (v) | Minimum Rate, | ||
| (vi) | Initial Interest Rate, | ||
| (vii) | Interest Reset Dates, | ||
| (viii) | Interest Calculation Dates, | ||
| (ix) | Interest Determination Dates, | ||
| (x) | Interest Payment Dates, | ||
| (xi) | Regular Record Dates, and | ||
| (xii) | Calculation Agent; |
| (12) | Name, address and taxpayer identification number of the registered owner(s); | ||
| (13) | Denomination of certificates to be delivered at settlement; | ||
| (14) | Book-Entry Security or Certificated Security; and | ||
| (15) | Selling Agent or Purchasing Agent. |
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Preparation of Prospectus Supplement and, if Applicable, Term Sheet:
If the Bank accepts an offer to purchase a Certificated Security, it will prepare a Prospectus
Supplement reflecting the terms of such Certificated Security and arrange to have delivered to the
Selling Agent or Purchasing Agent, with a copy to the Trustee, as the case may be, at least ten
copies of such Prospectus Supplement, as provided under “Delivery of Confirmation and Prospectus to
Purchaser by Selling Agent” below. If applicable, the Term Sheet reflecting the terms of such
Security will be prepared by such Agent and at least 10 copies will be delivered by such Agent to
the Bank, with a copy to the Trustee, as provided under “Delivery of Confirmation and Prospectus to
Purchaser by Selling Agent” below. The Bank will arrange to have the Prospectus Supplement filed
with, or transmitted by a means reasonably calculated to result in filing with, the Commission via
the Commission’s XXXXX System pursuant to Rule 424 under the Act and, if applicable, will file the
Term Sheet in accordance with Rule 433 under the Act.
Delivery of Confirmation and Prospectus to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated Security a written
confirmation of the sale and delivery and payment instructions. In addition, the Selling Agent
will deliver to such purchaser or its agent the Prospectus as amended or supplemented (including
the Prospectus Supplement) and, if applicable, the Term Sheet in relation to such Certificated
Security prior to or together with the earlier of the delivery to such purchaser or its agent of
(a) the confirmation of sale or (b) the Certificated Security.
Date of Settlement:
All offers of Certificated Securities solicited by a Selling Agent or made by a Purchasing
Agent and accepted by the Bank will be settled on a date (the “Settlement Date”) which is the third
Business Day after the date of acceptance of such offer, unless the Bank and the purchaser agree to
settlement (a) on another Business Day after the acceptance of such offer or (b) with respect to an
offer accepted by the Bank prior to 10:00 a.m., New York City time, on the date of such acceptance.
Trustee Not Required to Risk Its Own Funds:
Nothing herein shall be deemed to require the Trustee to risk or expend its own funds in
connection with any payments to the Bank, the Agents or any purchaser, it being understood by all
parties that payments made by the Trustee to the Bank, the Agents, or any purchaser shall be made
only to the extent that funds are provided to the Trustee for such purpose.
Instruction from Bank to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or Purchasing Agent, as the case
may be, the Bank will communicate such Sale Information to the Trustee by telephone (confirmed in
writing), by facsimile transmission or by other acceptable written means.
The Bank will instruct the Trustee by facsimile transmission or other acceptable written means
to authenticate and deliver the Certificated Securities no later than 2:15 p.m., New York City
time, on the Settlement Date. Such instruction will be given by the Bank prior to 3:00 p.m.,
X-0
Xxx Xxxx Xxxx time, on the Business Day immediately preceding the Settlement Date unless the
Settlement Date is the date of acceptance by the Bank of the offer to purchase Certificated
Securities in which case such instruction will be given by the Bank by 11:00 a.m., New York City
time.
Preparation and Delivery of Certificated Securities by Trustee and Receipt of Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate receipts that will serve
as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited by a Selling Agent,
the Trustee will, by 2:15 p.m., New York City time, on the Settlement Date, make available for
delivery the Certificated Securities to the Selling Agent for the benefit of the purchaser of such
Certificated Securities against delivery by the Selling Agent of a receipt therefor. On the
Settlement Date the Selling Agent will deliver payment for such Certificated Securities in
immediately available funds to the Bank in an amount equal to the issue price of the Certificated
Securities less the Selling Agent’s commission; provided that the Selling Agent reserves the right
to withhold payment for which it has not received funds from the purchaser. The Bank shall not use
any proceeds advanced by a Selling Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent, the Trustee will, by
2:15 p.m., New York City time, on the Settlement Date, make available for delivery the Certificated
Securities to the Purchasing Agent against delivery of payment for such Certificated Securities in
immediately available funds to the Bank in an amount equal to the issue price of the Certificated
Securities less the Purchasing Agent’s commission.
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to the Selling Agent for
a Certificated Security, the Selling Agent will promptly notify the Trustee and the Bank thereof by
telephone (confirmed in writing), by facsimile transmission or by other acceptable written means.
The Selling Agent will immediately return the Certificated Security to the Trustee. Immediately
upon receipt of such Certificated Security by the Trustee, the Bank will return to the Selling
Agent an amount equal to the amount previously paid, if any, to the Bank in respect of such
Certificated Security. The Bank will reimburse the Selling Agent on an equitable basis for its
loss of the use of funds during the period when they were credited to the account of the Bank.
The Trustee will cancel the Certificated Security in respect of which the failure occurred and
make appropriate entries in its records.
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