Royal Bank Of Canada 6-K, filed Nov 4, 2024
Royal Bank Of Canada (RY)
About this 6-K
Royal Bank Of Canada filed this 6-K on November 4, 2024.
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of a Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of November, 2024
Commission File Number: 001-13928
Royal Bank of Canada
(Name of registrant)
| 200 Bay Street Royal Bank Plaza Toronto, Ontario Canada M5J 2J5 Attention: Senior Vice-President, Deputy General Counsel & Secretary |
1 Place Ville Marie Montreal, Quebec Canada H3B 3A9 Attention: Senior Vice-President, Deputy General Counsel & Secretary |
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
THIS REPORT ON FORM 6-K AND THE EXHIBITS HERETO SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE AS EXHIBITS TO ROYAL BANK OF CANADA’S REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-275898) AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
Exhibits are filed herewith in connection with the issuance of the 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC) (Subordinated Indebtedness), due November 24, 2084 (the “Notes”) and Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) by Royal Bank of Canada (the “Bank”) on the date of this report on Form 6-K, pursuant to the Bank’s shelf registration statement on Form F-3 (File No. 333-275898):
EXHIBITS
| Exhibit |
Description of Exhibit | |
| 1.1 | Underwriting Agreement, dated as of October 17, 2024, among Royal Bank of Canada, RBC Capital Markets, LLC, BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and HSBC Securities (USA) Inc., as representatives of the several Underwriters named therein. | |
| 4.1 | Third Supplemental Indenture, dated as of November 1, 2024, between the Bank and the Bank of New York Mellon, as Trustee. | |
| 5.1 | Opinion of Sullivan & Cromwell LLP, U.S. counsel for the Bank, as to the validity of the Notes under New York law. | |
| 5.2 | Opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel for the Bank, as to certain matters under Canadian, Ontario and Québec law. | |
| 8.1 | Opinion of Sullivan & Cromwell LLP, U.S. counsel for the Bank, as to certain matters of United States federal income taxation. | |
| 8.2 | Opinion of Osler, Hoskin & Harcourt LLP, Canadian counsel for the Bank, as to certain matters of Canadian federal income taxation. | |
| 23.1 | Consent of Sullivan & Cromwell LLP (included in Exhibits 5.1 and 8.1 above). | |
| 23.2 | Consent of Osler, Hoskin & Harcourt LLP (included in Exhibits 5.2 and 8.2 above). | |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ROYAL BANK OF CANADA | ||
| By: | /S/ JASON DRYSDALE | |
| Name: | Jason Drysdale | |
| Title: | Executive Vice-President and Treasurer | |
| Date: November 1, 2024 | ||
Exhibit 1.1
NOTICE REGARDING UNDERWRITING AGREEMENT
The attached Underwriting Agreement is a contractual document that establishes and governs the legal relations among the parties with respect to the transactions described therein. The Underwriting Agreement is not intended to be a source for investors of factual, business, or operational information about the Bank. The representations and warranties, covenants and agreements contained in the Underwriting Agreement were made only for purposes of the Underwriting Agreement, were solely for the benefit of the parties to the Underwriting Agreement, and may be subject to limitations agreed among those parties. Accordingly, investors and security holders should not rely on representations or warranties, covenants and agreements as characterizations of the actual state of facts or condition of the Bank.
ROYAL BANK OF CANADA
$1,000,000,000
6.350% Limited Recourse Capital Notes, Series 5
(Non-Viability Contingent Capital (NVCC))
(Subordinated Indebtedness)
Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX
(Non-Viability Contingent Capital (NVCC))
Underwriting Agreement
| October 17, 2024 |
RBC Capital Markets, LLC
BofA Securities, Inc.
Citigroup Global Markets Inc.
J. P. Morgan Securities LLC
Morgan Stanley & Co. LLC
HSBC Securities (USA) Inc.
c/o RBC Capital Markets, LLC
Brookfield Place
200 Vesey Street, 8th Floor
New York, New York 10281
c/o BofA Securities, Inc.
114 West 47th Street
NY8-114-07-01
New York, New York 10036
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
c/o J.P. Morgan Securities LLC
383 Madison Avenue
New York, New York 10179
c/o Morgan Stanley & Co. LLC
1585 Broadway
New York, New York 10036
c/o HSBC Securities (USA) Inc.
66 Hudson Boulevard
New York, New York 10001
As Representatives of the several Underwriters (as defined below) named in Schedule I hereto
Ladies and Gentlemen:
Royal Bank of Canada, a Canadian chartered Bank (the “Bank”), proposes to issue and sell to the several underwriters listed in Schedule I hereto (the “Underwriters”), for whom RBC Capital Markets, LLC, BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and HSBC Securities (USA) Inc. are acting as representatives (collectively, the “Representatives”), $1,000,000,000 aggregate principal amount of the Bank’s 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “Notes”). The Notes will be issued pursuant to the Indenture (the “Base Indenture”), dated as of January 27, 2016, between the Bank and The Bank of New York Mellon, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture to be dated as of the Closing Date (as defined below) (the “Third Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between the Bank and the Trustee. The obligations of the Underwriters under this Agreement shall be several and not joint.
In addition, the Bank will create, authorize and issue to Computershare Trust Company of Canada (the “Limited Recourse Trustee”), in its capacity as trustee of Leo LRCN Limited Recourse Trust (the “Limited Recourse Trust”), 1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares of the Bank (Non-Viability Contingent Capital (NVCC)) (the “Series BX Shares” and, together with the Notes, the “Securities”) and authorize and reserve for issuance a number of common shares of the Bank (the “Common Shares”) equal to the number of Common Shares into which the Series BX Shares will be converted upon a Trigger Event (as defined in the Indenture). The Common Shares into which the Series BX Shares may be converted are referred to herein as the “Conversion Shares.”
The Bank acknowledges and agrees that the Representatives may use the Prospectus (as defined below) in connection with offers and sales of the Notes in market-making transactions as contemplated in the Basic Prospectus (as defined below) under the caption “Plan of Distribution” and in the Prospectus (as defined below) under the caption “Supplemental Plan of Distribution” (“Secondary Market Transactions”). The Bank further acknowledges and agrees that the Representatives are under no obligation to effect any Secondary Market Transactions, and, if they do so, they may discontinue effecting such transactions at any time without providing any notice to the Bank.
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1. Representations and Warranties of the Bank. The Bank represents and warrants to, and agrees with, each of the Underwriters that:
(a) the Bank meets the requirements for use of Form F-3 (“Form F-3”) under the Securities Act of 1933, as amended, and the rules and regulations of the United States Securities and Exchange Commission (the “Commission”) thereunder (collectively, the “Act”), and has filed with the Commission a registration statement including a prospectus on Form F-3 (File No. 333-275898) in respect of securities (the “Shelf Securities”), including the Securities and the Conversion Shares; the various parts of such registration statement as amended to the date of this Agreement, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective and including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A or Rule 430B under the Act, are hereinafter called the “Registration Statement;” such Registration Statement (including any pre-effective amendment thereto) and any post-effective amendment thereto, each in the form heretofore delivered to the Representatives, excluding exhibits to such Registration Statement, but including all documents incorporated by reference in the prospectus contained therein as of the date of such prospectus, have been declared effective by the Commission in such form; no other document with respect to such Registration Statement or document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission, except for any documents filed with the Commission subsequent to the date of such effectiveness in the form heretofore delivered to the Representatives for each of the Underwriters; and no stop order suspending the effectiveness of such Registration Statement or any post-effective amendment thereto has been issued, and no proceeding for that purpose or pursuant to Section 8A of the Act against the Bank or related to the offering of the Shelf Securities (including the Securities and the Conversion Shares) has been initiated or, to the knowledge of the Bank, contemplated or threatened by the Commission.
The prospectus covering the Shelf Securities dated December 20, 2023, included in such Registration Statement, in the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by the Bank to meet requests of purchasers pursuant to Rule 173 under the Act) is hereinafter referred to as the “Basic Prospectus.” The Basic Prospectus, as supplemented by the prospectus supplement dated October 17, 2024 (the “Prospectus Supplement”) specifically relating to the offering of the Securities, in the form first used to confirm sales of the Notes (or in the form first made available to the Underwriters by the Bank to meet requests of purchasers pursuant to Rule 173 under the Act) is hereinafter called the “Prospectus;” the term “Preliminary Prospectus” means any preliminary form of the Prospectus; any reference herein to any Preliminary Prospectus or Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Exchange Act”) that are deemed to be incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the offering of the Securities, in the form in which it is
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filed with the Commission in accordance with Section 6(a) hereof, including any documents incorporated by reference therein as of the date of such filing.
At or prior to the time when sales of the Notes were first confirmed (the “Time of Sale”), the Bank had prepared the following information (collectively with the information referred to in the next succeeding sentence, the “Time of Sale Information”): the Preliminary Prospectus, and each free-writing prospectus (as defined pursuant to Rule 405 under the Act) relating to the Securities. In addition, you have informed us that the Underwriters may orally provide the pricing information set out in Schedule III hereto to prospective purchasers prior to confirming sales. The term, “broadly available road show” means a “bona fide electronic road show” as defined in Rule 433(h)(5) under the Act that has been made available without restriction to any person. If, subsequent to the date hereof, the Bank and the Underwriters have determined that such Time of Sale Information included an untrue statement of material fact or omitted a statement of material fact necessary to make the information therein, in the light of the circumstances under which it was made, not misleading and have agreed to provide an opportunity to purchasers of the Notes to terminate their old purchase contracts and enter into new purchase contracts, then “Time of Sale Information” will refer to the information available to purchasers at the time of entry into the first such new purchase contract.
(b) (i) each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Time of Sale Information or the Prospectus complied or will comply when so filed in all material respects with the requirements of the Act and the Exchange Act, as applicable, and the applicable 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, if applicable, 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, (iii) the Registration Statement does not contain and, as amended or supplemented, if applicable, 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, (iv) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Act and the applicable rules and regulations of the Commission thereunder, (v) the Time of Sale Information does not, and at the time of each sale of Notes in connection with the offering thereof when the Prospectus is not yet available to prospective purchasers and at the Closing Date (as defined in Section 5) 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, (vi) each broadly available road show, if any, when considered together with the applicable Time of Sale Information, does 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, (vii) the Prospectus does not contain and, as amended or supplemented, if applicable, 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, (viii) any interactive data expressly included or incorporated by reference in the Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto; and (ix) any applicable issuer free writing prospectus, as defined in Rule 433(h), complies in all
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material respects with the Act and has been filed in accordance with the Act (to the extent required thereby), except that the representations and warranties set forth in this paragraph do not apply to (1) statements or omissions in the Registration Statement, the Time of Sale Information, or the Prospectus based upon information furnished to the Bank by any Underwriter expressly for use therein or (2) those parts of the Registration Statement that constitute the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), of the Trustee;
(c) other than the Preliminary Prospectus and the Prospectus, the Bank (including its agents and representatives, other than the Underwriters in their capacity as such) has not made, used, prepared, authorized, approved or referred to and will not prepare, make, use, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act) that constitutes an offer to sell or solicitation of an offer to buy the Securities (each such communication by the Bank or its agents and representatives (other than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Act or Rule 134 under the Act or (ii) the documents listed in Schedule II hereto and other written communications (including any broadly available road show) approved in writing in advance by the Representatives. Each such Issuer Free Writing Prospectus complied in all material respects with the Act, has been filed in accordance with the Act (to the extent required thereby) and, when taken together with the Preliminary Prospectus filed immediately prior to first use of such Issuer Free Writing Prospectus, did not, and at the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance upon and in conformity with information relating to any Underwriter furnished in writing to the Bank by or on behalf of an Underwriter of Notes through the Representatives expressly for use in any Issuer Free Writing Prospectus;
(d) the Bank (A) validly exists as a Schedule I bank under the Bank Act (Canada); (B) has the requisite corporate power and authority to execute and deliver this Agreement; (C) has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Time of Sale Information and the Prospectus in all material respects; and (D) has duly authorized, executed and delivered this Agreement, and this Agreement constitutes the valid and legally binding agreement of the Bank enforceable in accordance with its terms, except as rights to indemnity or contribution may be limited by applicable law and subject as to enforcement to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights generally and to general equity principles;
(e) 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 Time of Sale Information 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 (collectively, “Investment Company Act”);
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(f) any auditors who audited the financial statements incorporated by reference into the Registration Statement (any such auditor, in addition to the statutory auditor of the Bank, an “Auditor”) were independent registered public accountants or chartered professional accountants, licensed public accountants, as applicable, for the period covered by such financial statements as required by the Act, the Exchange Act, and the regulations thereunder, and the Bank Act (Canada);
(g) the Bank’s consolidated financial statements incorporated by reference in the Registration Statement (and any amendments or supplements thereto), the Time of Sale Information and the Prospectus, together with related schedules and notes, comply in all material respects with the applicable requirements of the Act and the Exchange Act, as applicable, and present fairly, in all material respects, the consolidated financial position, results of operations and changes in financial position of the Bank and its subsidiaries on the basis stated therein at the respective dates or for the respective periods to which they apply; such statements and related notes have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, consistently applied throughout the periods involved, except as disclosed therein;
(h) the form of the Notes has been duly authorized and established in conformity with the provisions of the Indenture and, when the Notes have been executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Underwriters pursuant to this Agreement, the Notes will constitute valid and legally binding obligations of the Bank, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability, and will be entitled to the benefits provided by the Indenture; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act, and, when duly executed and delivered by the Bank, will constitute a valid and legally binding instrument of the Bank, enforceable in accordance with its terms against the Bank, subject, as to enforcement, bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles; and the Indenture conforms, and the Notes will conform, to the descriptions thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus, in each case, as amended or supplemented;
(i) the Bank had, at the date indicated, the duly allotted and issued share capital as set forth in the consolidated financial statements included or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus; all of the issued share capital of the Bank has been duly and validly allotted and issued and is fully paid and non-assessable and any Conversion Shares issuable upon a conversion of the Series BX Shares upon a Trigger Event (as defined in the Indenture) will conform, when issued, in all material respects to the description thereof contained in the Prospectus, as amended or supplemented to such date;
(j) the Bank has taken all necessary action to approve and authorize the Series BX Shares and when issued and delivered to the Limited Recourse Trustee, the Series BX Shares will be validly issued, fully paid and non-assessable; and the Series BX Shares will conform in all material respects to the description thereof contained in the Time of Sale Information and the Prospectus;
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(k) The Bank has taken all necessary action to approve and to reserve for issuance the Conversion Shares issuable upon conversion of the Series BX Shares, and any Conversion Shares issuable upon a conversion of the Series BX Shares upon a Trigger Event (as defined in the Indenture) will be duly and validly authorized, issued and fully paid and would not be subject to calls for further funds or preemptive rights, and conform to the descriptions thereof contained in the Registration Statement, the Time of Sale Information and the Prospectus in all material respects;
(l) the execution and delivery of this Agreement, the creation and issuance of the Securities, the authentication, sale and delivery of the Notes and the issuance of the Conversion Shares into which the Series BX Shares may be converted upon the occurrence of a Trigger Event, and the compliance by the Bank with the respective terms thereof, and the consummation of the transactions contemplated thereby and by this Agreement will not contravene any material contract, material indenture or other material agreement to which the Bank is bound, nor will such action result in the creation or imposition of any lien, charge or encumbrance upon any material property or assets of the Bank, nor will such action result in any material violation of the provisions of the Bank Act (Canada) or by-laws of the Bank or any law, statute, judgment, order, rule or regulation of any court, arbitrator, governmental authority or regulatory authority of the United States or Canada or any political subdivision thereof;
(m) no consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the issuance, offer and sale of the Notes by the Bank to the Underwriters, the authorization and issuance of the Series BX Shares, or the authorization and reservation for issuance of the Conversion Shares in accordance with the terms of this Agreement or the Indenture or for the consummation of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations, orders and registrations or qualifications (i) as have been obtained under the Act and the Trust Indenture Act, (ii) as may be required under applicable state securities laws in connection with the purchase and distribution of the Notes by the Underwriters, and (iii) as may be required by the Office of the Superintendent of Financial Institutions (Canada) or any successor thereto;
(n) there has not occurred any material adverse change in the financial condition, earnings, business or operations of the Bank and its subsidiaries, taken as a whole, from that set forth in the Prospectus as amended or supplemented and the Time of Sale Information;
(o) there are no legal or governmental proceedings known to be pending or threatened to which the Bank or any of its subsidiaries is a party or to which any of the properties of the Bank or any of its subsidiaries is subject that are required to be described in the Registration Statement, the Time of Sale Information or the Prospectus as amended or supplemented, and are not so described; and
(p) the Bank acknowledges and agrees that the Underwriters are acting solely in the capacity of an arm’s length contractual counterparty to the Bank with respect to the offering of Notes contemplated hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the Bank or any other person. No Underwriter has assumed an advisory or fiduciary responsibility in favor of the Bank or any
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other person with respect to the offering of Notes or the process leading thereto (irrespective of whether such Underwriter 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. The Bank shall consult with its own legal, tax, investment, accounting and/or regulatory advisors concerning such matters and shall be responsible for making their own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or liability to the Bank with respect thereto. Any review by the Underwriters of the Bank, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be on behalf of the Bank.
2. Representations and Warranties of the Underwriters. Each Underwriter represents that it has not offered or sold, and agrees that it will not offer or sell, the Notes purchased by it hereunder, directly or indirectly, in Canada or to any resident of Canada without the consent of the Bank, and that any offer or sale of the Notes purchased by it hereunder in Canada or to any resident of Canada shall be effected on a private placement basis in accordance with applicable exemptions under the applicable securities laws in the relevant jurisdiction, including any requirement that such Underwriter (i) not offer or sell the Notes purchased by it hereunder except in accordance with applicable securities laws in the relevant jurisdiction; (ii) with respect to Canada, represent and agree that (A) it has not offered, sold, distributed or delivered, and that such Underwriter will not offer, sell, distribute or deliver, any Notes purchased by it hereunder, directly or indirectly in Canada or to any person that is resident in any province or territory of Canada for the purposes of securities laws applicable therein (including any corporation or other entity organized under the laws of any jurisdiction in Canada), except pursuant to an available exemption from the prospectus requirements and registration requirements of, or otherwise in compliance with, the securities laws applicable in any of the provinces or territories of Canada; (B) it will not distribute or deliver the Prospectus or Prospectus Supplement or any other offering material relating to Notes purchased by it hereunder in Canada in contravention of the securities laws or regulations of any province or territory of Canada; and (C) that it will deliver to any purchaser who purchases from it any Notes purchased by it hereunder a notice stating that, by purchasing such Notes, such purchaser represents and agrees that it has not offered or sold, and until forty (40) days after any closing date, will not offer or sell, directly or indirectly, any of such Notes in Canada or to, or for the benefit of, any resident thereof, except pursuant to available exemptions from applicable Canadian provincial or territorial securities laws and will deliver to any other purchaser to whom it sells any of such Notes a notice containing substantially the same statement as in this sentence. Each Underwriter represents and warrants that any commissions, fees or compensation payable or creditable to an Underwriter that is not resident in Canada for purposes of the Income Tax Act (Canada) will not be in respect of services rendered in Canada.
3. Each Underwriter 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 Notes that may be entered into by such Underwriter.
4. Agreements to Sell and Purchase. The Bank hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to
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purchase from the Bank the respective principal amounts of Notes set forth in Schedule I hereto opposite its name at the purchase price set forth in Schedule I hereto.
5. Payment and Delivery. Payment for the Notes shall be made to the Bank in Federal or other funds immediately available in New York City on the closing date and time set forth in Schedule III hereto, or at such other time on the same or such other date, not later than the fifth business day thereafter, as may be designated in writing by the Representatives. The time and date of such payment are hereinafter referred to as the “Closing Date”.
Payment for the Notes shall be made against delivery to the Underwriters on the Closing Date for the respective accounts of the several Underwriters of the Notes registered in such names and in such denominations as the Representatives shall request in writing not later than one full business day prior to the Closing Date, with any transfer taxes payable in connection with the transfer of the Notes to the Underwriters duly paid.
6. Certain Agreements of the Bank. The Bank agrees with each of the Underwriters:
(a) the Bank has filed or will file the Preliminary Prospectus and the Prospectus, each as amended and supplemented in a form approved by the Representatives, with the Commission within the time periods specified by the Act, will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the Act and will file promptly all reports and other information 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 subsequent to the date of the Preliminary Prospectus or the Prospectus, as the case may be, and for so long as the delivery of a prospectus (or, in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required in connection with the offering or sale of the Notes;
(b) that prior to the termination of the offering of the Securities pursuant to this Agreement, the Bank will not file any prospectus supplement relating to the offering of the Securities or any amendment to the Registration Statement relating to the Securities or the Prospectus (A) unless the Bank has previously furnished to you a copy thereof for your review and will not file any such proposed supplement or amendment to which you reasonably and promptly object, or (B) during the period beginning on the Closing Date and continuing for as long as may be required under applicable law, in the reasonable judgment of the Representatives after consultation with the Bank, in order to offer and sell any Notes in Secondary Market Transactions as contemplated by the Prospectus (the “Secondary Transactions Period”), unless the Bank has previously furnished to you a copy thereof for your review and will not file any such proposed supplement or amendment to which you reasonably and promptly object; provided, however, that the foregoing requirement shall not apply to any of the Bank’s periodic filings with the Commission required to be filed pursuant to Section 13(a), 13(c), 13(f), 14 or 15(d) of the Exchange Act, copies of which filings the Bank will cause to be delivered to you promptly after being transmitted for filing with the Commission. Subject to the foregoing sentence, the Bank will promptly cause each supplement to the Prospectus relating to the Securities to be filed with or transmitted for filing to the Commission in accordance with Rule 424(b) under the Act. The Bank will promptly advise you (i) of the filing of any amendment or supplement to the Prospectus, (ii) of the filing and effectiveness of any amendment to the Registration Statement, (iii) of any request by the Commission for any amendment to the
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Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (v) of the receipt by the Bank of any notification with respect to the suspension of the qualification of the Notes or the Series BX Shares for sale in any state of the United States or the initiation or threatening of any proceeding for such purpose. The Bank will use its best efforts to prevent the issuance of any such stop order or notice of suspension of qualification and, if issued, to obtain as soon as possible the withdrawal thereof. If the Prospectus is amended or supplemented as a result of the filing under the Exchange Act of any document incorporated by reference in the Prospectus, you shall not be obligated to solicit offers to purchase Notes so long as you are not reasonably satisfied with such document;
(c) the Bank will furnish to you a copy of each proposed free writing prospectus to be prepared by or on behalf of, used by, or referred to by the Bank relating to the offering of the Securities and the Bank will not use or refer to any proposed free writing prospectus to which you reasonably object;
(d) the Bank will not take any action that would result in an Underwriter or the Bank being required to file with the Commission pursuant to Rule 433(d) under the Act a free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder;
(e) that if the Time of Sale Information is being used to solicit offers to buy Notes at a time when the Prospectus is not yet available to prospective purchasers and any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Time of Sale Information in order to make the statements therein, in the light of the circumstances, not misleading, or if any event shall occur or condition exist as a result of which the Time of Sale Information conflicts with the information contained in the Registration Statement and Prospectus (as amended and supplemented) then on file, or if, in the opinion of your counsel, it is necessary to amend or supplement the Time of Sale Information to comply with applicable law, the Bank will forthwith prepare, file with the Commission and furnish, at the Bank’s own expense, to you either amendments or supplements to the Time of Sale Information so that the statements in the Time of Sale Information as so amended or supplemented will not, in the light of the circumstances when delivered to a prospective purchaser, be misleading or so that the Time of Sale Information, as amended or supplemented, will no longer conflict with the Registration Statement or Prospectus, or so that the Time of Sale Information, as amended or supplemented, will comply with applicable law;
(f) that if, at any time when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Act) relating to the Notes is required to be delivered under the Act or made available to purchasers of the Notes (including, in the case of the Representatives, in any Secondary Market Transaction during the Secondary Transactions Period), any event occurs or condition exists 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 to make the statements therein, in the light of the circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a) under the Act), as then amended or supplemented, is delivered to a purchaser, not misleading, or if, in your opinion or in the opinion of the Bank, it is
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necessary at any time to amend or supplement the Prospectus, as then amended or supplemented, to comply with applicable law, the Bank will immediately notify you by telephone (with confirmation in writing) to suspend solicitation of offers to purchase the Notes and, if so notified by the Bank, you shall forthwith suspend such solicitation and cease using the Prospectus, as then amended or supplemented. If the Bank shall decide to amend or supplement the Registration Statement or Prospectus, as then amended or supplemented, it shall so advise you promptly by telephone (with confirmation in writing) and, at its expense, shall prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or Prospectus, as then amended or supplemented, that will correct such statement or omission or effect such compliance and will supply such amended or supplemented Prospectus to you in such quantities as you may reasonably request;
(g) [Reserved];
(h) from time to time to take such action as the Representatives may reasonably request to qualify the Notes for offering and sale under the securities laws of such states of the United States of America as the Representatives may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings in such jurisdictions for as long as may be necessary to complete the distribution of the Notes (including, in the case of the Representatives, in any Secondary Market Transactions during the Secondary Transactions Period), provided that in connection therewith the Bank shall not be required to file a prospectus or equivalent document or to qualify as a foreign corporation or to subject itself to taxation as doing business or to file a general consent to service of process in any jurisdiction;
(i) the Bank will make generally available to its security holders and the Representatives as soon as practicable an earnings statement that satisfies the provisions of Section 11(a) of the Act and Rule 158 of the Commission promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Bank occurring after the “effective date” (as defined in Rule 158) of the Registration Statement;
(j) that from the date of this Agreement and continuing to and including the Closing Date, the Bank will not, without the prior written consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any debt securities of the Bank which are substantially similar to the Notes except pursuant to this Agreement, or except in an offering of Notes that is not and is not required to be registered under the Act (other than in Secondary Market Transactions);
(k) the Bank will prepare a final term sheet relating to the offering of the Securities, containing only information that describes the final terms of the Notes or the offering in a form consented to by the Representatives, and to file such final term sheet within the period required by Rule 433(d)(5)(ii) under the Act following the date the final terms have been established for the offering of the Securities;
(l) the Bank will use its commercially reasonable efforts to list, or obtain approval for listing, within 30 days from the Closing Date, subject to notice of issuance if applicable, the Conversion Shares into which the Series BX Shares may be converted upon the occurrence of a Trigger Event, on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange
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(the “NYSE”). The Bank will use its commercially reasonable efforts to maintain the listing of such Conversion Shares on the TSX and the NYSE; and
(m) the Bank will at all times reserve and keep available enough Common Shares for the purpose of enabling the Bank to satisfy its obligations to issue the Conversion Shares upon conversion of the Series BX Shares.
7. Certain Agreements of the Underwriters. Each Underwriter hereby represents and agrees that:
(a) unless it has obtained the prior consent of the Bank, it has not made and will not make any offer relating to the Notes that constitutes a free writing prospectus other than a free writing prospectus that contains only information substantively consistent (without any addition thereto) with information contained in a preliminary prospectus, the Prospectus or an Issuer Free Writing Prospectus previously filed with the Commission by the Bank. Each Underwriter will comply in all material respects with the applicable requirements of the Act and the rules and regulations thereunder in connection with the use of each free writing prospectus for any offer and sale of Notes, including, without limitation, Rule 164(e) for so long as the Bank is an ineligible issuer (as defined in Rule 405);
(b) it has not used and will not, without the prior written consent of the Bank, use any free writing prospectus or term sheet that contains the final terms of the Securities unless such terms have previously been included in a free writing prospectus filed with the Commission; provided that without the consent of the Bank, and notwithstanding paragraph (a) above, the Underwriters may use a term sheet substantially in the form of Schedule III hereto, and a Bloomberg term sheet that contains some or all of the information in Schedule III to this Agreement, so long as (i) any such term sheet does not contain any information not included in Schedule III to this Agreement and (ii) any such term sheet is filed with the Commission by the Underwriters if required by Rule 433 under the Act; and
(c) it will, pursuant to reasonable procedures developed in good faith, retain copies of each free writing prospectus used or referred to by it, in accordance with Rule 433 under the Act.
8. Payment of Certain Expenses. The Bank covenants and agrees with the several Underwriters 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, any Issuer Free Writing Prospectus, any Time of Sale Information and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing this Agreement, any Preliminary Prospectus, the Time of Sale Information, the Prospectus, the Indenture, any blue sky memorandum, broadly disseminated road shows, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 6(h) hereof, including the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with any
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blue sky memorandum; (iv) any fees charged by securities rating services for rating the Securities; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the Financial Industry Regulatory Authority, Inc. of the terms of the sale of the Notes; (vi) the cost of preparing the Securities; (vii) the fees and expenses of the Trustee and any agent of the Trustee and any transfer or paying agent of the Bank and the fees and disbursements of counsel for the Trustee or such agent in connection with the Indenture, the Securities; and (viii) all other costs and expenses incident to the performance of its obligations hereunder that are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 10 and 13 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Notes by them, and any advertising expenses connected with any offers of the Notes they may make.
9. Conditions to the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Notes are subject to the following conditions:
(a) (i) The Registration Statement (or if a post-effective amendment thereto is required to be filed under the Act, such post-effective amendment) shall have become effective; no stop order suspending the effectiveness of the Registration Statement shall be in effect, and no proceeding for such purpose or pursuant to Section 8A under the Act shall be pending before or threatened by the Commission; the Preliminary Prospectus, the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Act (in the case of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Act) and in accordance with Section 6(a) hereof; (ii) all representations and warranties of the Bank contained in this Agreement relating to the Securities and the Conversion Shares are, at and as of the Closing Date, true and correct and the statements of the Bank and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date; (iii) the Bank shall have performed all of its obligations hereunder required to be performed; (iv) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any debt securities of the Bank by Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc. or DBRS limited and (v) there shall have been no material adverse change in the financial condition, earnings, business or operations of the Bank and its subsidiaries, taken as a whole, from that set forth in the Registration Statement, the Time of Sale Information (excluding any amendment or supplement thereto) and the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date hereof), which, in the judgment of the Underwriters, makes it impracticable to market the Notes on the terms and in the manner contemplated in this Agreement, the Registration Statement, the Time of Sale Information and the Prospectus.
(b) Osler, Hoskin & Harcourt LLP, Canadian counsel for the Bank, shall have furnished to the Representatives its opinion, dated the Closing Date, subject to such exceptions and qualifications as would be customary, to the effect that:
(i) the Bank validly exists as a Schedule I bank under the Bank Act (Canada) and has the corporate power to create, issue and sell the Securities;
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(ii) the issuance, sale and delivery of the Securities have been duly authorized by the Bank and all necessary corporate action has been taken by the Bank to validly issue the Securities; all necessary corporate action has been taken by the Bank to authorize the issuance of the Conversion Shares issuable upon conversion of the Series BX Shares pursuant to their terms and upon the conversion of the Series BX Shares in accordance with their terms, the Conversion Shares will be validly issued as fully paid and non-assessable common shares of the Bank;
(iii) the Notes are direct unsecured debt obligations constituting bank subordinated indebtedness within the meaning of the Bank Act and, in the event of the insolvency or winding-up of the Bank, the Indebtedness (as defined in the Indenture) evidenced by the Notes shall rank, in right of payment: (a) subordinate to the prior payment in full of all Indebtedness of the Bank then outstanding (including all Subordinated Indebtedness (as defined in the Indenture) of the Bank then outstanding other than Junior Subordinated Indebtedness); (b) equally with and not prior to the Junior Subordinated Indebtedness (as defined in the Indenture) (other than the Junior Subordinated Indebtedness which by its terms ranks subordinate to the Notes) of the Bank then outstanding; and (c) subordinate to certain other obligations that in the event of the Bank’s insolvency are granted preferential treatment under Canadian law, in each case, whether now outstanding or hereafter incurred; provided that, in the event of the occurrence of a Recourse Event (as defined in the Indenture), including an Event of Default (as defined in the Indenture), the sole remedy of the holders of the Notes shall be recourse to the applicable Limited Recourse Trust Assets (as defined in the Indenture);
(iv) this 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;
(v) 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, to the extent validity thereof is a matter governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein, is valid 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, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights, to general equity principles and to limitations under the Currency Act (Canada);
(vi) the execution and delivery by the Bank of, and the performance by the Bank of its obligations under this Agreement, the Indenture and the Securities do not contravene any existing provision of applicable laws of the Province of Ontario or result in a breach (whether after notice or lapse of time or both) of any
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of the terms, conditions or provisions of the Bank Act (Canada) or the by-laws of the Bank;
(vii) the statements in the Prospectus Supplement under the caption “Canadian Federal Income Tax Considerations” insofar as such statements constitute a summary of the Canadian tax laws referred to therein, are accurate and fairly summarize in all material respects the Canadian tax laws referred to therein;
(viii) no registration, filing or recording of the Indenture under the laws of the Province of Québec or Ontario and the federal laws of Canada applicable therein is necessary in order to preserve or protect the validity or enforceability of the Indenture or the Notes;
(ix) no consent, approval or authorization of, or registration, recordation or filing with, any governmental body or agency in Canada is required on the part of the Bank pursuant to the laws of the Province of Québec and the federal laws of Canada applicable therein for the issuance and sale by the Bank of the Notes to the Underwriters pursuant to this Agreement and the Indenture or the issuance and sale of the Series BX Shares, except such as have been obtained under the Bank Act (Canada) and the Québec securities laws;
(x) there are no documents required to be filed with the Autorité des marchés financiers (the “AMF”) in connection with the Registration Statement or the Prospectus, except such as have been filed;
(xi) In any proceeding in a court of competent jurisdiction in the Province of Ontario (an “Ontario Court”) for the enforcement of this Agreement, the Notes and the Indenture, an Ontario Court would apply the laws of the State of New York (“New York Law”), in accordance with the parties’ choice of New York Law as the law governing this Agreement, the Notes and the Indenture, to all issues which, under the laws of the Province of Ontario and the federal laws of Canada applicable therein (“Ontario Law”), are to be determined in accordance with the chosen law of the contract, provided that: (A) the parties’ choice of New York Law is bona fide and legal and is not contrary to public policy, as such term is interpreted under Ontario Law (“Public Policy”); (B) in any such proceeding, an Ontario Court: (i) 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; (ii) will apply Ontario Law to matters which would be characterized as procedural under Ontario Law; (iii) will apply provisions of Ontario Law that have overriding effect; (iv) will not apply any New York Law if its application would be contrary to Public Policy; (v) will not apply any New York Law if such application would be characterized under Ontario Law as the direct or indirect enforcement of a foreign revenue, expropriatory, penal or other public law; and (vi) 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; and (C) an Ontario Court has discretion to decline to hear an action if: (i) it is contrary to
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Public Policy; (ii) it is not the proper forum to hear such an action; or (iii) another action is properly pending before, or a decision has been rendered by, a foreign authority relating to the same cause of action;
(xii) An Ontario Court would give a judgment based upon a final and conclusive in personam judgment of a court of competent jurisdiction in New York (a “New York Court”) for a sum certain, obtained against the Bank with respect to a claim arising out of this Agreement, the Notes or the Indenture (a “New York Judgment”) without reconsideration of the merits, provided that: (A) an action to enforce the New York Judgment must be commenced in an Ontario Court within any applicable limitation period; (B) an Ontario Court has discretion to stay or decline to hear an action on the New York Judgment if such judgment is under appeal, or there is another subsisting judgment in any jurisdiction relating to the same cause of action; (C) an Ontario Court will render judgment only in Canadian dollars; and (D) an action in an Ontario Court on the New York Judgment may be affected by bankruptcy, insolvency or laws affecting the enforcement of creditors’ rights generally; further, an Ontario Court will not give such judgment if: (1) the New York Judgment was obtained by fraud or in a manner contrary to the principles of natural justice; (2) the New York Judgment is for a claim which would be characterized as based on foreign revenue, expropriatory, or penal, or other public law under Ontario Law; (3) the New York 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 in such statutes; or (4) the New York Judgment has been satisfied or is void or voidable under New York Law; and
(xiii) The submission by the Bank to the non-exclusive jurisdiction of the New York Courts in each of Section 17 of this Agreement and Section 1701 of the Base Indenture would be recognized and given effect by an Ontario Court as a valid submission to the New York Courts, provided that the provisions of this Agreement and the Base Indenture, as applicable, dealing with service of process on the Bank are duly complied with.
(c) Norton Rose Fulbright LLP, Canadian counsel for the Bank, shall have furnished to the Representatives its opinion, dated the Closing Date, subject to such exceptions and qualifications as would be customary, to the effect that:
(i) the Canadian disclosure documents that are 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 such counsel expresses no opinion), when they were filed with the AMF under Québec securities laws, appear on their face to have been appropriately responsive in all material respects to the requirements of Québec securities laws as interpreted and applied by the AMF; and
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(ii) such counsel’s opinion as summarized in the Prospectus under the heading “Limitations on Enforcement of U.S. Laws Against the Bank, our Management and Others” regarding enforceability of U.S. securities laws is true and correct.
(d) Sullivan & Cromwell LLP, United States counsel for the Bank, shall have furnished to the Representatives its opinion, dated the Closing Date, subject to such exceptions and qualifications as would be customary, to the effect that:
(i) assuming this Agreement has been duly authorized, executed and delivered by the Bank insofar as the laws of Canada and Ontario are concerned, this Agreement has been duly executed and delivered by the Bank;
(ii) all regulatory consents, authorizations, approvals and filings required to be obtained or made by the Bank under the Covered Laws for the issuance, sale and delivery of the Notes by the Bank to the Underwriters have been obtained or made;
(iii) assuming that the Indenture has been duly authorized, executed and delivered by the Bank insofar as the laws of Canada, Québec and Ontario are concerned, the Indenture has been duly executed and delivered by the Bank and duly qualified under the Trust Indenture Act of 1939; assuming the Notes have been duly authorized, executed, issued and delivered by the Bank insofar as the laws of Canada, Québec and Ontario are concerned, the Notes have been duly executed, authenticated, issued and delivered by the Bank; and, subject to the assumptions in this paragraph (iii), the Indenture and the Notes constitute valid and legally binding obligations of the Bank enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; provided, however, that such counsel shall not be required to express any opinion with respect to Article 15 and Section 1601 of the Base Indenture or Sections 901, 902, 903, 906, 907, 1103 and 1202 of the Supplemental Indenture, and the corresponding provisions in the Notes, which are governed by the laws of the Province of Ontario and the Federal laws of Canada applicable therein;
(iv) assuming the validity of such action under the laws of Canada, Québec and Ontario, under the laws of the State of New York relating to submission of 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 Cogency Global Inc. as its authorized agent for the purposes described in Section 17 of this Agreement; and
(v) the Bank is not an “investment company” as defined in the Investment Company Act of 1940.
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Such counsel shall not be required to express any opinion for the purposes of paragraph (ii) above, insofar as performance by the Bank of its obligations under the Indenture, the Underwriting Agreement or the Securities is concerned, as to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights. Also, for purposes of the opinion in paragraph (ii) above, “Covered Laws” means the federal laws of the United States and the laws of the State of New York (including the published rules or regulations thereunder) that in such counsel’s experience normally are applicable to general business corporations and transactions such as those contemplated by the Underwriting Agreement; provided, however, that such term does not include Federal or state securities laws, other antifraud laws and fraudulent transfer laws, tax laws, the Employee Retirement Income Security Act of 1974, antitrust laws or any law that is applicable to the Bank, the Terms Agreement or the transactions contemplated thereby solely as part of a regulatory regime applicable to the Bank or its affiliates due to its or their status, business or assets.
Such counsel shall also furnish a letter stating that they have reviewed the Registration Statement, the Basic Prospectus, the Prospectus Supplement and the pricing information listed on Schedule III of this Agreement and participated in discussions with representatives of the Underwriters and those of the Bank and its accountants. Such letter shall also state that, between the date of the Prospectus Supplement and the time of delivery of such letter, they have participated in further discussions with the representatives of the Underwriters and those of the Bank, its Canadian counsel and its accountants concerning certain matters relating to the Bank and reviewed certificates of certain officers of the Bank, a letter addressed to the Underwriters from the Bank’s accountants and the opinion of Norton Rose Fulbright Canada LLP referred to in Section 9(c) of this Agreement. Such letter shall state that, on the basis of the information such counsel gained in the course of the performance of such services, considered in the light of their understanding of the applicable law (including the requirements of Form F-3 and the character of the prospectus contemplated thereby) and the experience they have gained through their practice under the Act, such counsel confirms to the Underwriters that the Registration Statement, as of the date of the Prospectus Supplement, 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 such counsel expresses no opinion on compliance as to form in respect of those parts of the Report on Form 40-F and the Reports on Form 6-K 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 (the Underwriters are receiving an opinion of Norton Rose Fulbright Canada LLP in respect of such matters); that the statements contained in the Registration Statement and the Basic Prospectus under the captions “Description of Debt Securities,” “Description of First Preferred Shares,” “Tax Consequences—United States Taxation” and “Plan of Distribution” and in the Prospectus Supplement, under the captions “Description of the Notes,” “U.S. Federal Income Tax Considerations” and “Supplemental Plan of Distribution” insofar as they relate to provisions of the Notes, the Indenture or this Agreement or of United States Federal tax law therein described, constitute a fair and accurate summary of such provisions in all material respects (the “Covered Statements”).
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Such letter shall also state that nothing that came to the attention of such counsel in the course of their review has caused them to believe that the Registration Statement, as of the date of the Prospectus Supplement, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, that the Time of Sale Information, at the Time of Sale 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, or that 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; and that nothing that came to such counsel’s attention in the course of the procedures described in the second sentence of the preceding paragraph has caused such counsel to believe that the Basic Prospectus, as supplemented by the Prospectus Supplement, as of the time of delivery of this letter, 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.
Such opinions and letter may state (1) that the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement, the Basic Prospectus or the Prospectus Supplement except for the Covered Statements, (2) that they 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 Prospectus or the Time of Sale Information, or 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, the Prospectus Supplement or the Time of Sale Information, or as to the statement of the eligibility of the Trustee under the Indenture under which the Notes are being issued, or as to any statement of the Bank or its Canadian counsel with respect to the laws of Canada, Québec and Ontario, in each case, in the Registration Statement, the Basic Prospectus, as supplemented by the Prospectus Supplement, or in the documents incorporated by reference therein, (3) that they are passing only upon matters of United States federal and New York law and that they understand that the Bank is relying on the opinions of Osler, Hoskin & Harcourt LLP and Norton Rose Fulbright Canada LLP, Canadian counsels for the Bank, with respect to matters of the laws of Canada, Québec and Ontario (including compliance with all legal requirements as interpreted and applied by the AMF), (4) that their opinion or opinions are subject to any assumptions, qualifications and limitations with respect to such matters as are contained in the opinions of such Canadian counsels for the Bank, and (5) such other exceptions and qualifications as would be customary.
(e) The Representatives shall have received at the Closing Date an opinion of Davis Polk & Wardwell LLP, counsel for the Underwriters, dated the Closing Date, in form and substance satisfactory to the Underwriters with respect to the Registration Statement, the Prospectus, the Securities and such other matters that the Representatives may reasonably request.
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(f) The Representatives shall have received on the Closing Date, in form and substance reasonably satisfactory to the Representatives, from the Auditor(s), letters dated the date of the Prospectus Supplement and the Closing Date constituting statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference in the Registration Statement, the Time of Sale Information and the Prospectus.
(g) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Bank, to the effect set forth in Section 9(a)(i) and (iv) above and to the effect that the representations and warranties of the Bank contained in this Agreement are true and correct as of the Closing Date and that the Bank has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date.
10. Indemnification and Contribution. (a) The Bank agrees to indemnify and hold harmless each Underwriter, its affiliates, directors and officers and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities caused by (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus or the Prospectus as amended or supplemented, any Issuer Free Writing Prospectus or any Time of Sale Information, or caused by any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Bank by any Underwriter expressly for use therein.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Bank, its directors, its officers, its authorized representative or representatives in the United States, and each person, if any, who controls the Bank within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Bank to each Underwriter, but only with reference to information relating to such Underwriter furnished in writing by such Underwriter expressly for use in the Registration Statement, the Time of Sale Information, any Issuer Free Writing Prospectus, the Prospectus or any Preliminary Prospectus, in each case as amended or supplemented.
(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the “indemnified party”) shall promptly notify the person against whom such indemnity may be sought (the “indemnifying party”) in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding; provided, however, that the failure to
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notify promptly the indemnifying party will not relieve it from liability unless and to the extent that such failure results in the forfeiture by the indemnifying party of substantial rights or defenses. 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 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 and that such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the Underwriters in the case of parties indemnified pursuant to Section 10(a) and by the Bank in the case of parties indemnified pursuant to Section 10(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, 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 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 Sections 10(a) and 10(b) hereof is unavailable as a matter of law to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under either such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Bank on the one hand, and the Underwriters on the other, from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Bank on the one hand, and of the Underwriters on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Bank on the one hand, and the Underwriters on the other, shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Bank bear to the total underwriting commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Bank and of the Underwriters 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 relates to information supplied by the Bank or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
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(e) The Bank and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 10(c). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, 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 Section 10, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Notes underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter 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) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 10 are several in proportion to their respective underwriting commitments. The remedies provided for in this Section 10 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.
11. Default of Underwriters. (a) If any Underwriter shall default in its obligation to purchase the Notes that it has agreed to purchase hereunder, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Notes on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Notes, then the Bank shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Notes on such terms. In the event that, within the respective prescribed period, the Representatives notify the Bank that they have so arranged for the purchase of such Notes, or the Bank notifies the Representatives that it has so arranged for the purchase of such Notes, the Representatives or the Bank shall have the right to postpone the Closing Date for such Notes 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 Time of Sale Information 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 Time of Sale Information or the Prospectus that in the opinion of the Representatives may thereby be made necessary. The term “Underwriter” as used herein shall include any person substituted under this Section 11 with like effect as if such person had originally been a party to this Agreement.
(b) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting Underwriter or Underwriters by the Representatives and the Bank as provided in subsection (a) above, the aggregate principal amount of such Notes that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Notes, then the Bank shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Notes that such Underwriter agreed to purchase hereunder and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Notes that such Underwriter agreed to purchase hereunder) of the Notes of such defaulting
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Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting Underwriter or Underwriters by the Representatives and the Bank as provided in subsection (a) above, the aggregate principal amount of Notes that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Notes, as referred to in subsection (b) above, or if the Bank shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Notes of a defaulting Underwriter or Underwriters, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Bank, except for the expenses to be borne by the Bank and the Underwriters as provided in Section 8 hereof and the indemnity and contribution agreements in Section 10 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
12. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Bank and the several Underwriters, as set forth hereunder or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any (i) termination of this Agreement or (ii) investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Bank, or any officer or director or controlling person of the Bank, and shall survive delivery of and payment for the Notes.
13. Termination. (a) If this Agreement is terminated pursuant to Section 11 hereof, the Bank shall not then be under any liability to any Underwriter with respect to the Notes except as provided in Sections 8 and 10 hereof; but, if for any other reason the Notes are not delivered by or on behalf of the Bank as provided herein, the Bank will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Notes, but the Bank shall then be under no further liability to any Underwriter with respect to the Notes except as provided in Sections 8 and 10 hereof.
(b) This Agreement shall be subject to termination by the Underwriters by giving prompt notice to the Bank, if prior to the Closing Date, there shall have occurred: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or the Toronto Stock Exchange; (ii) a material disruption in securities settlement, payment or clearance services in the United States; (iii) a general moratorium on commercial banking activities in the City of New York or the City of Toronto, declared by either United States federal, New York State, Canadian federal or Ontario provincial authorities, as the case may be; (iv) an outbreak or escalation of hostilities or other calamity or crisis having an adverse effect on the financial markets of the United States of America, which, in the judgment of the Underwriters, makes it impracticable to market the Notes on the terms and in the manner contemplated by this Agreement, the Time of Sale Information and the Prospectus or (v) the representation in Section 1(c) is incorrect in any respect.
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(c) If this Agreement is terminated pursuant to Section 13(b) hereof, such termination shall be without liability of any party to any other party except as provided in Sections 8, 10 and 12 hereof.
14. Authority; Notices. In all dealings hereunder, the Representatives of the Underwriters of the Notes shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose under the terms of this Agreement.
All statements, requests, notices, including notice of a change of legal entity name, change of address, or of a successor entity to an Underwriter, and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by electronic communication or mailed to the address of the Representatives as set forth on page 1 of this agreement; and if to the Bank shall be delivered to the address of the Bank set forth in the Registration Statement: Attention: Executive Vice-President, RBC Corporate Treasury; provided, however, that any notice to an Underwriter pursuant to Section 13(c) hereof shall be delivered or sent by electronic communication or mailed to such Underwriter at its address set forth in its Underwriters’ questionnaire, which address will be supplied to the Bank by the Underwriters upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
15. Patriot Act. In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Bank, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.
16. Successors. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Bank and, to the extent provided in Sections 10 and 12 hereof, affiliates of the several Underwriters, the officers and directors of the Bank and the several Underwriters and each person who controls the Bank or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Notes from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. Notice of a successor entity to an Underwriter shall be provided by the applicable Underwriter as promptly as reasonably practicable pursuant to Section 14 hereof.
17. Jurisdiction. The Bank irrevocably (i) agrees that any legal suit, action or proceeding against the Bank brought by any Underwriter or by any person who controls any Underwriter arising out of or based upon this Agreement or the transactions contemplated hereby 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 sovereign immunity, immunity to pre-judgment attachment, post-judgment attachment and
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execution) in any legal suit, action or proceeding against it arising out of or based on this Agreement or the transactions contemplated hereby that is instituted in any New York Court. The Bank has appointed Cogency Global Inc., 122 E 42nd Street, 18th Floor, New York, New York 10168, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated hereby that may be instituted in any New York Court by any Underwriter or by any person who controls any Underwriter, expressly consents to the jurisdiction of any such court 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 that 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.
18. Business Day. Time shall be of the essence of this Agreement. As used herein, “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.
19. Judgment Currency. 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 Underwriters 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 Underwriter or any person controlling any Underwriter shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day following receipt by such Underwriter or controlling person of any sum in such other currency, and only to the extent that such Underwriter 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 Underwriter or controlling person hereunder, the Bank agrees as a separate obligation and notwithstanding any such judgment, to indemnify such Underwriter or controlling person against such loss. If the United States dollars so purchased are greater than the sum originally due to such Underwriter or controlling person hereunder, such Underwriter 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 Underwriter or controlling person hereunder.
20. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
21. U.S. Special Resolution Regime. In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States. In the event that any
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Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.
For purposes of the preceding paragraph:
“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k);
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b), (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b), or (iii) a “Covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b);
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable; and
“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.
22. International Regulations.
Notwithstanding and to the exclusion of any other term of this Agreement or any other agreements, arrangements, or understanding between the Bank and any BRRD Party, the Bank acknowledges and accepts that a BRRD Liability arising under this Agreement may be subject to the exercise of EU Bail-in Powers by the Relevant Resolution Authority, and acknowledges, accepts, and agrees to be bound by: (a) the effect of the exercise of EU Bail-in Powers by the Relevant Resolution Authority in relation to any BRRD Liability of such BRRD Party to the Bank under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof: (i) the reduction of all, or a portion, of the BRRD Liability or outstanding amounts due thereon; (ii) the conversion of all, or a portion, of the BRRD Liability into shares, other securities or other obligations of such BRRD Party or another person (and the issue to or conferral on the Bank of such shares, securities or obligations); (iii) the cancellation of the BRRD Liability; (iv) the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period; and (b) the variation of the terms of this Agreement, as deemed necessary by the Relevant Resolution Authority, to give effect to the exercise of EU Bail-in Powers by the Relevant Resolution Authority.
For purposes of the preceding paragraph:
“EU Bail-in Legislation” means in relation to a member state of the European Economic Area which has implemented, or which at any time implements, the BRRD, the
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relevant implementing law, regulation, rule or requirement as described in the EU Bail-in Legislation Schedule from time to time;
“EU Bail-in Powers” means any Write-down and Conversion Powers as defined in the EU Bail-in Legislation Schedule, in relation to the relevant EU Bail-in Legislation;
“BRRD” means Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms;
“BRRD Liability” means a liability in respect of which the relevant Write Down and Conversion Powers in the applicable EU Bail-in Legislation may be exercised;
“EU Bail-in Legislation Schedule” means the document described as such, then in effect, and published by the Loan Market Association (or any successor person) from time to time at http://www.lma.eu.com/pages.aspx?p=499 (or any such successor webpage); and
“Relevant Resolution Authority” means the resolution authority with the ability to exercise any EU Bail-in Powers in relation to a BRRD Party.
“BRRD Party” means any Underwriter subject to EU Bail-in Powers.
Notwithstanding and to the exclusion of any other term of this Agreement or any other agreements, arrangements or understanding among the Bank or two or more of the Underwriters, the Bank and each Underwriter acknowledges and accepts that a UK Bail-in Liability arising under this Agreement or any Terms Agreement may be subject to the exercise of UK Bail-in Powers by the relevant UK resolution authority, and acknowledges, accepts and agrees to be bound by:
| a. | the effect of the exercise of UK Bail-in Powers by the relevant UK resolution authority in relation to any UK Bail-in Liability of any Underwriter to the Bank or one or more other Underwriters under this Agreement, that (without limitation) may include and result in any of the following, or some combination thereof: |
| i. | The reduction of all, or a portion, of the UK Bail-in Liability or outstanding amounts due thereon; |
| ii. | the conversion of all, or a portion, of the UK Bail-in Liability into shares, other securities or other obligations of such Underwriter or another person, and the issue to or conferral on one or more of the Bank or another Underwriter of such shares, securities or obligations; |
| iii. | the cancellation of the UK Bail-in Liability; |
| iv. | the amendment or alteration of any interest, if applicable, thereon, the maturity or the dates on which any payments are due, including by suspending payment for a temporary period; |
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| b. | the variation of the terms of this Agreement, as deemed necessary by the relevant UK resolution authority, to give effect to the exercise of UK Bail-in Powers by the relevant UK resolution authority. |
For purposes of the preceding paragraph:
“UK Bail-in Legislation” means Part I of the UK Banking Act 2009 and any other law or regulation applicable in the UK relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).
“UK Bail-in Liability” means a liability in respect of which the UK Bail-in Powers may be exercised.
“UK Bail-in Powers” means the powers under the UK Bail-in Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or affiliate of a bank or investment firm, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability.
23. Counterparts. This 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 such respective counterparts shall together constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
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| Very truly yours,
ROYAL BANK OF CANADA | ||||
| By: | /s/ Jason Drysdale | |||
| Name: | Jason Drysdale | |||
| Title: | Executive Vice-President and Treasurer | |||
| By: | /s/ Rajneesh Sharma | |||
| Name: | Rajneesh Sharma | |||
| Title: | Vice-President & Head, Term Funding and Capital Management | |||
[Signature Page to Underwriting Agreement]
Accepted as of the date hereof, as Representatives on behalf of the Underwriters set forth in Schedule I hereto
| RBC CAPITAL MARKETS, LLC | ||||
| By: | /s/ Scott G. Primrose | |||
| Name: | Scott G. Primrose | |||
| Title: | Authorized Signatory | |||
| BOFA SECURITIES, INC. | ||||
| By: | /s/ Randolph B. Randolph | |||
| Name: | Randolph B. Randolph | |||
| Title: | Managing Director | |||
| CITIGROUP GLOBAL MARKETS INC. | ||||
| By: | /s/ Adam D. Bordner | |||
| Name: | Adam D. Bordner | |||
| Title: | Managing Director | |||
| J.P. MORGAN SECURITIES LLC | ||||
| By: | /s/ Stephen L. Sheiner | |||
| Name: | Stephen L. Sheiner | |||
| Title: | Executive Director | |||
| MORGAN STANLEY & CO. LLC | ||||
| By: | /s/ Howard Brocklehurst | |||
| Name: | Howard Brocklehurst | |||
| Title: | Managing Director | |||
[Signature Page to Underwriting Agreement]
| HSBC SECURITIES (USA) INC. | ||||
| By: | /s/ Patrice Altongy | |||
| Name: | Patrice Altongy | |||
| Title: | Managing Director | |||
[Signature Page to Underwriting Agreement]
SCHEDULE I
| Underwriter |
Principal Amount of Notes To Be Purchased |
|||
| RBC Capital Markets, LLC |
$ | 165,000,000 | ||
| BofA Securities, Inc. |
$ | 125,000,000 | ||
| Citigroup Global Markets Inc. |
$ | 125,000,000 | ||
| J.P. Morgan Securities LLC |
$ | 125,000,000 | ||
| Morgan Stanley & Co. LLC |
$ | 125,000,000 | ||
| HSBC Securities (USA) Inc. |
$ | 75,000,000 | ||
| Fifth Third Securities, Inc. |
$ | 50,000,000 | ||
| NatWest Markets Securities Inc. |
$ | 50,000,000 | ||
| SG Americas Securities, LLC |
$ | 50,000,000 | ||
| U.S. Bancorp Investments, Inc. |
$ | 50,000,000 | ||
| ANZ Securities, Inc. |
$ | 3,000,000 | ||
| BNY Mellon Capital Markets, LLC |
$ | 3,000,000 | ||
| CaixaBank S.A. |
$ | 3,000,000 | ||
| Capital One Securities, Inc. |
$ | 3,000,000 | ||
| Comerica Securities, Inc. |
$ | 3,000,000 | ||
| Commonwealth Bank of Australia |
$ | 3,000,000 | ||
| Credit Agricole Securities (USA) Inc. |
$ | 3,000,000 | ||
| Desjardins Securities Inc. |
$ | 3,000,000 | ||
| Huntington Securities, Inc. |
$ | 3,000,000 | ||
| KeyBanc Capital Markets Inc. |
$ | 3,000,000 | ||
| M&T Securities, Inc. |
$ | 3,000,000 | ||
| MUFG Securities Americas Inc. |
$ | 3,000,000 | ||
| nabSecurities, LLC |
$ | 3,000,000 | ||
| National Bank of Canada Financial Inc. |
$ | 3,000,000 | ||
| Rabo Securities USA, Inc. |
$ | 3,000,000 | ||
| Regions Securities LLC |
$ | 3,000,000 | ||
| UBS Securities LLC |
$ | 3,000,000 | ||
| Westpac Banking Corporation |
$ | 3,000,000 | ||
| Independence Point Securities LLC |
$ | 3,000,000 | ||
| Penserra Securities LLC |
$ | 3,000,000 | ||
| Total |
$ | 1,000,000,000 | ||
|
|
|
Price to Public: 100.000%
Underwriters’ Discount: 1.000% of the principal amount of the Notes
Underwriters’ Purchase Price: 99.000%
SCHEDULE II
Free Writing Prospectus(es):
The term sheet attached as Schedule III hereto.
SCHEDULE III
ROYAL BANK OF CANADA
6.350% Limited Recourse Capital Notes, Series 5
(Non-Viability Contingent Capital (NVCC))
(Subordinated Indebtedness)
FINAL TERM SHEET
DATED OCTOBER 17, 2024
This Final Term Sheet supplements the information set forth under the captions “Description of the Notes” in the Preliminary Prospectus Supplement dated October 17, 2024 relating to the Notes (as defined below) and “Description of the Debt Securities” in the Prospectus dated December 20, 2023. Capitalized terms used in this Final Term Sheet but not defined have the meanings given to them in the Preliminary Prospectus Supplement.
| Issuer: | Royal Bank of Canada (the “Bank”) | |
| Title of the Series: | 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “Notes”) | |
| Principal Amount: | $1,000,000,000.00 | |
| Issue Price: | 100.00% | |
| Trade Date: | October 17, 2024 | |
| Settlement Date (T+11)1: | November 1, 2024 | |
| Initial Interest Reset Date: | November 24, 2034 | |
| Maturity Date: | November 24, 2084
On the Maturity Date, the Bank will repay to holders of the Notes (the “Noteholders”) the principal amount, plus accrued and unpaid interest to, but excluding, the Maturity Date. See also under “Limited Recourse” below. | |
| Minimum Denomination: | $200,000 and multiples of $1,000 | |
| 1 | Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle no later than one business day after the trade date, unless the parties to such trade expressly agree otherwise at the time of the trade. Accordingly, purchasers who wish to trade on any date more than one business day prior to delivery of the Notes will be required, by virtue of the fact that the Notes initially will settle in eleven business days (T+11), to specify alternative settlement arrangements to prevent a failed settlement. |
| Interest Rate: | From and including the date of the issuance of the Notes to, but excluding, November 24, 2034, interest will accrue on the Notes at a rate equal to 6.350% per annum. Starting on November 24, 2034 and on every fifth anniversary of such date thereafter until November 24, 2079 (each such date, an “Interest Reset Date”), the interest rate on the Notes will be reset at a rate per annum equal to the sum, as determined by the Calculation Agent, of (i) the then-prevailing U.S. Treasury Rate (as defined below) on the relevant Interest Rate Calculation Date (as defined below) and (ii) 2.257%.
“Interest Rate Calculation Date” means the business day prior to each Interest Reset Date. | |
| Interest Payment Dates: | Quarterly on February 24, May 24, August 24, and November 24 of each year, beginning February 24, 2025 (long first coupon). | |
| U.S. Treasury Rate and Fallbacks: | “U.S. Treasury Rate” means, as at an Interest Rate Calculation Date, the rate per annum equal to: the average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities, for the five business days immediately preceding the applicable Interest Rate Calculation Date appearing under the caption “Treasury Constant Maturities” in the most recently published statistical release designated H.15 Daily Update or any successor publication which is published by the Federal Reserve Board, as determined by the Calculation Agent in its sole discretion.
If no calculation is provided as described above, then the Calculation Agent, after consulting such sources as it deems comparable to the foregoing calculation, or any such source as it deems reasonable from which to estimate the five-year treasury rate, shall determine the U.S. Treasury Rate in its sole discretion, provided that if the Calculation Agent determines there is an industry-accepted successor five-year treasury rate, then the Calculation Agent shall use such successor rate. If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine the business day convention, the definition of business day and the Interest Rate Calculation Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the five-year treasury rate, in a manner that is consistent with industry-accepted practices for such substitute or successor base rate.
If such rate cannot be determined as described above, then (i) the U.S. Treasury Rate will be determined by the Bank or our designee by interpolation between the most recent weekly average yield to maturity for two series of U.S. treasury securities trading in the public securities market, (1) one maturing as close as possible to, but earlier than, the Interest Reset Date following the next following Interest Rate Calculation Date, and (2) the other maturing as close as possible to, but later than, the Interest Reset Date following the next following Interest Rate Calculation Date, in each case, appearing under the caption “Treasury Constant Maturities” in the most recent published statistical release designated H.15 Daily Update or any successor publication which is published by the U.S. Federal Reserve Board of Governors; or (ii) if the calculation described in clause (i) cannot be determined, then the U.S. Treasury Rate will be the same rate as determined for the prior Interest Rate Calculation Date, provided, however, that in the case of the Initial Reset Date, the interest rate on the Notes will be 6.350%. | |
| Interest Deferability: | Interest payments are non-deferrable.
If there is non-payment by the Bank of interest on the Notes when due and the Bank has not cured such non-payment by subsequently paying such interest prior to the fifth business day immediately following the applicable interest payment date, a Recourse Event (as defined below) will have occurred and, on a Failed Coupon Payment Date (as defined below), the Notes will automatically and immediately be redeemed for the Redemption Price (as defined below). From and after a Failed Coupon Payment Date, all Notes shall cease to be outstanding, each Noteholder shall cease to be entitled to interest thereon, and any certificates representing the Notes shall represent only the right to receive upon surrender thereof the Redemption Price.
If the Bank does not pay the applicable Redemption Price in cash under such circumstances, its obligation to pay the Redemption Price will be satisfied by the Bank’s delivery of the Trust Assets (as defined below) to which the recourse of the Noteholders will be limited. The Trust Assets will consist of Preferred Shares (as defined below) except under certain circumstances, as described below, where the Trust Assets may consist of the Bank’s common shares (“Common Shares”) or cash. See “Limited Recourse” below.
“Failed Coupon Payment Date” means the fifth business day immediately following an interest payment date upon which the Bank does not pay interest on the Notes and has not cured such non-payment by subsequently paying such interest prior to such fifth business day.
The Bank will not redeem the Notes under any circumstances if such redemption would, directly or indirectly, result in the Bank’s breach of any provision of the Bank Act (Canada) or the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”) Capital Adequacy Requirements (CAR) Guideline. | |
| Initial Treasury Benchmark: | 3.875% UST due August 15, 2034 | |
| Initial Treasury Benchmark Price: | 98-08 | |
| Initial Treasury Yield: | 4.093% | |
| Initial Re-Offer Spread to Treasury Benchmark: | T + 225.7bps | |
| Interest to Initial Interest Reset Date: | 6.350% | |
| Yield to Initial Interest Reset Date: | 6.350% | |
| Fees: | 1.000% | |
| Redemption: | The Notes shall be redeemable by the Bank on the Initial Interest Reset Date and on each February 24, May 24, August 24, and November 24 thereafter, in whole but not in part on not less than 10 nor more than 60 days’ prior notice at the Redemption Price, only upon the redemption by the Bank of the Preferred Shares held by the LRT Trustee (as defined below) in the Limited Recourse Trust (as defined below) in accordance with the terms of such shares and with the prior written approval of the Superintendent of Financial Institutions (Canada) (the “Superintendent”).
Upon redemption by the Bank of the Preferred Shares held by the LRT Trustee as described above prior to the Maturity Date (such redemption will be subject to the prior written approval of the Superintendent), outstanding Notes with an aggregate principal amount equal to the | |
| aggregate face amount of Preferred Shares redeemed by the Bank shall automatically and immediately be redeemed, for a cash amount equal to the Redemption Price thereof, without the consent of the Noteholders.
Subject to the provisions of the Bank Act (Canada), the consent of the Superintendent and various restrictions on the retirement of the Preferred Shares, the Preferred Shares are redeemable at the option of the Bank on November 24, 2034 (the Initial Interest Reset Date for the Notes) and on each February 24, May 24, August 24, and November 24 thereafter and in certain other circumstances. See the Final Term Sheet for the Preferred Shares attached as Annex A (the “Preferred Shares Final Term Sheet”) for circumstances under which the Preferred Shares may be redeemed by the Bank. For certainty, to the extent that the Bank has immediately prior to or concurrently with such Preferred Share redemption redeemed or purchased for cancellation a corresponding number of Notes in accordance with the terms of the Indenture, such requirement to redeem a corresponding number of Notes shall be deemed satisfied.
The Bank may also, at its option, with the prior written approval of the Superintendent, redeem the Notes, in whole but not in part, at any time on or within 90 days following a Special Event Date (as defined below) and on not less than 10 nor more than 60 days’ prior notice, at the Redemption Price.
Any Notes redeemed by the Bank shall be cancelled and may not be reissued.
“Redemption Price” of the Notes means the aggregate of (i) the principal amount of the Notes, and (ii) any accrued and unpaid interest on the Notes up to, but excluding, the date of redemption.
“Regulatory Event Date” means the date specified in a letter from the Superintendent to the Bank on which the Notes will no longer be recognized in full as eligible “Additional Tier 1 Capital” or will no longer be eligible to be included in full as risk-based “Total Capital” on a consolidated basis under the guidelines for capital adequacy requirements for banks as interpreted by the Superintendent.
“Special Event Date” means a date that is a Regulatory Event Date or a Tax Event Date.
“Tax Event Date” means the date on which the Bank has received an opinion of independent counsel of a nationally recognized law firm in Canada (who may be counsel to the Bank) to the effect that, (A) as a result of, (i) any amendment to, clarification of, or change (including any announced prospective change) in, the laws, or any regulations thereunder, or any application or interpretation thereof, of Canada, or any political subdivision or taxing authority thereof or therein, affecting taxation; (ii) any judicial decision, administrative pronouncement, published or private ruling, regulatory procedure, rule, notice, announcement, assessment or reassessment (including any notice or announcement of intent to adopt or issue such decision, pronouncement, ruling, procedure, rule, notice, announcement, assessment or reassessment) (collectively, an “administrative action”); or (iii) any amendment to, clarification of, or change in, the official position with respect to or the interpretation of any administrative action or any interpretation or pronouncement that provides for a position with respect to such administrative action that differs from the theretofore generally accepted position, in each case (i), (ii) or (iii), by any legislative body, court, governmental authority or agency, regulatory body or taxing authority, irrespective of the manner in which such amendment, clarification, change, administrative action, interpretation or |
| pronouncement is made known, which amendment, clarification, change or administrative action is effective or which interpretation, pronouncement or administrative action is announced on or after the date of the issue of the Notes, there is more than an insubstantial risk (assuming any proposed or announced amendment, clarification, change, interpretation, pronouncement or administrative action is effective and applicable) that the Bank or the Limited Recourse Trust is, or may be, subject to more than a de minimis amount of additional taxes, duties or other governmental charges or civil liabilities because the treatment of any of its items of income, taxable income, expense, taxable capital or taxable paid-up capital with respect to the Notes (including the treatment by the Bank of interest on the Notes) or the treatment of the Notes or the Preferred Shares (including dividends thereon) or other Trust Assets or the Limited Recourse Trust, as or as would be reflected in any tax return or form filed, to be filed, or otherwise could have been filed, will not be respected by a taxing authority; or (B) as a result of, (i) any change (including any announced prospective change) in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Canada (or the jurisdiction of organization of the successor to the Bank) or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes effective on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), the Bank (or its successor) has become or would become obligated to pay (assuming, in the case of any announced prospective change, that such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, additional amounts with respect to the Notes; or (ii) on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), any action having been taken by any taxing authority of, or any decision having been rendered by a court of competent jurisdiction in, Canada (or the jurisdiction of organization of the successor to the Bank) or any political subdivision or taxing authority thereof or therein, including any of those actions specified in (B)(i) above, whether or not such action was taken or decision was rendered with respect to the Bank (or its successor), or any change, amendment, application or interpretation having been officially proposed, the Bank (or its successor) would become obligated to pay (assuming that such change, amendment, application, interpretation or action is applied to the Notes by the taxing authority and that, in the case of any announced prospective change, such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, additional amounts with respect to the Notes; provided that in any such case of (B)(i) or (ii), the Bank (or its successor), in its business judgment, determines that such obligation cannot be avoided by the use of reasonable measures available to it (or its successor). | ||
| Limited Recourse: | If (i) there is non-payment by the Bank of the principal amount of the Notes, together with any accrued and unpaid interest, on the Maturity Date, (ii) a Failed Coupon Payment Date occurs, (iii) the Bank does not pay the Redemption Price in connection with a redemption of the Notes in cash, (iv) an event of default under the Notes occurs or (v) a Trigger Event (as defined below) occurs (each such event, a “Recourse Event”), the recourse of each Noteholder will be limited to that Noteholder’s proportionate share of the assets (the “Trust Assets”) held by a third party trustee (the “LRT Trustee”) in respect of the Notes in Leo LRCN Limited Recourse Trust (the “Limited Recourse Trust”). The LRT Trustee will hold assets in the Limited Recourse Trust in respect of more than one series of limited recourse capital notes, and the assets (including | |
| the Bank’s preferred shares) for each such series will be held separate from the assets for other series. Computershare Trust Company of Canada is the LRT Trustee.
Initially, at the time of issuance of the Notes, the Trust Assets will consist of the Bank’s Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (the “Preferred Shares”) issued at an issue price of $1,000 per Preferred Share. The Trust Assets may alternatively consist of (i) Preferred Shares, (ii) cash if the Preferred Shares are redeemed for cash by the Bank with the prior written approval of the Superintendent, (iii) Common Shares upon the conversion of the Preferred Shares into Common Shares as a result of a Trigger Event or (iv) any combination thereof, depending on the circumstances.
The number of Preferred Shares issued at the time of issuance of the Notes will be equal to the total principal amount of the Notes divided by $1,000. If the Trust Assets consist of Preferred Shares at the time a Recourse Event occurs, the Bank will deliver, or cause the LRT Trustee to deliver, to each Noteholder one Preferred Share for each $1,000 principal amount of Notes held, which shall be applied to the payment of the principal amount of the Notes, and such delivery of Preferred Shares will be each Noteholder’s sole remedy against the Bank for repayment of the principal amount of the Notes and any accrued but unpaid interest thereon then due and payable.
Upon the occurrence of a Recourse Event that is a Trigger Event, the Bank will deliver, or cause the LRT Trustee to deliver, to each Noteholder that Noteholder’s proportionate share of the Common Shares issued in connection with the Trigger Event. The number of Common Shares issuable in connection with the Trigger Event will be calculated based on a Share Value (as defined below in the Preferred Shares Final Term Sheet) of $1,000. Such Common Shares shall be applied to the payment of the principal amount of the Notes, and such delivery of Common Shares will be each Noteholder’s sole remedy against the Bank for repayment of the principal amount of the Notes and any accrued but unpaid interest thereon then due and payable. See “NVCC Automatic Conversion” below.
The receipt by a Noteholder of its proportionate share of the Trust Assets upon the occurrence of a Recourse Event shall exhaust the remedies of the Noteholders under the Notes. If a Noteholder does not receive its proportionate share of the Trust Assets under such circumstances, the sole remedy of the Noteholder for any claims against the Bank shall be limited to a claim for the delivery of such Trust Assets.
In case of any shortfall resulting from the value of the Trust Assets being less than the principal amount of and any accrued and unpaid interest on the Notes, all losses arising from such shortfall shall be borne by the Noteholders.
All claims of Noteholders against the Bank under the Notes will be extinguished upon receipt of the Trust Assets. | ||
| Purchase for Cancellation: | The Bank may, at its option and at any time, with the prior written approval of the Superintendent, purchase the Notes in the market, by tender (available to all holders of Notes) or by private contract at any price. | |
| Conversion: | The Notes are not convertible into any other property except as described herein. | |
| NVCC Automatic Conversion: | Upon the occurrence of a Trigger Event, each Preferred Share held in the Limited Recourse Trust will be automatically converted, without the consent of the Noteholders, the LRT Trustee or the Indenture Trustee, into the number of fully-paid and freely-tradeable Common Shares of the | |
| Bank based on the Conversion Price (as defined below in the Preferred Shares Final Term Sheet) (a “Trigger Event Conversion”). See “NVCC Automatic Conversion” in the Preferred Shares Final Term Sheet for more details.
Immediately following such Trigger Event Conversion, each Note will be automatically redeemed, without the consent of Noteholders, for the number of Common Shares into which each Preferred Share was converted.
“Trigger Event” has the meaning set out in the OSFI Capital Adequacy Requirements (CAR) Guideline, Chapter 2 - Definition of Capital, effective November 2023, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:
(a) the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion or write-off, as applicable, of all contingent instruments and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or
(b) a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. | ||
| Events of Default: | The only events of default under the Notes shall be the bankruptcy, insolvency, or liquidation of the Bank.
An event of default under the Notes will not include any non-payment by the Bank of the principal amount of or interest on the Notes, the non-performance by the Bank of any other covenant of the Bank in the Indenture, or the occurrence of a Trigger Event.
The occurrence of an event of default is a Recourse Event for which the sole remedy of the Noteholders shall be the delivery of the Trust Assets. In case of an event of default, the delivery of the Trust Assets to the Noteholders will exhaust all remedies of such Noteholders in connection with such event of default.
See “Limited Recourse” above. | |
| Voting Rights: | None, other than in certain limited circumstances to be described in the Indenture. | |
| Status and Subordination: | The Notes will be direct unsecured subordinated indebtedness of the Bank and will rank subordinate to all of the Bank’s deposit liabilities and all of the Bank’s other indebtedness (including all of the Bank’s other unsecured and subordinated indebtedness) from time to time issued and outstanding, except for such indebtedness which by its terms ranks equally in right of payment with, or is subordinate to, the Notes.
Upon the occurrence of a Recourse Event, including if the Bank becomes insolvent or is wound-up (prior to the occurrence of a Trigger Event), the recourse of each Noteholder will be limited to such Noteholder’s proportionate share of the Trust Assets. As mentioned above, the receipt by a Noteholder of its proportionate share of the Trust Assets upon the | |
| occurrence of a Recourse Event shall exhaust the remedies of such Noteholder under the Notes. If a Noteholder does not receive its proportionate share of the Trust Assets under such circumstances, the sole remedy of the Noteholder for any claims against the Bank shall be limited to a claim for the delivery of such Trust Assets. If the Trust Assets that are delivered to the Noteholders under such circumstances comprise Preferred Shares or Common Shares, such Preferred Shares or Common Shares will rank on parity with the Bank’s other first preferred shares or Common Shares, as applicable.
The Notes will be direct unsecured obligations of the Bank constituting subordinated indebtedness for the purposes of the Bank Act (Canada) and will not constitute savings accounts, deposits or other obligations that are insured by the United States Federal Deposit Insurance Corporation, the Deposit Insurance Fund, the Canada Deposit Insurance Corporation or any other governmental agency or under the Canada Deposit Insurance Corporation Act (Canada), the Bank Act (Canada) or any other deposit insurance regime designed to ensure the payment of all or a portion of a deposit upon the insolvency of a deposit taking financial institution. | ||
| Prohibited Owners: | The terms and conditions of the Notes will include mechanics to allow the Bank to attempt to facilitate a sale of Preferred Shares or Common Shares (issued upon a Recourse Event) on behalf of those Noteholders who are Ineligible Persons (as defined below) or who, by virtue of that delivery, would become Significant Shareholders (as defined below). The net proceeds received by the Bank from the sale of any such Preferred Shares or Common Shares will be divided among the applicable persons in proportion to the number of Preferred Shares or Common Shares that would otherwise have been delivered to them after deducting the costs of sale and any applicable withholding taxes.
“Ineligible Person” means (i) any person whose address is in, or whom the Bank or its transfer agent has reason to believe is a resident of, any jurisdiction outside Canada or the United States of America to the extent that the issuance by the Bank or delivery by its transfer agent to that person, of Preferred Shares or, pursuant to an NVCC Automatic Conversion, of Common Shares would require the Bank to take any action to comply with securities, banking or analogous laws of that jurisdiction, and (ii) any person to the extent that the issuance by the Bank or delivery by its transfer agent to that person, of Preferred Shares or, pursuant to an NVCC Automatic Conversion, of Common Shares would cause the Bank to be in violation of any law to which the Bank is subject.
“Significant Shareholder” means any person who beneficially owns directly, or indirectly through entities controlled by such person or persons associated with or acting jointly or in concert with such person, a percentage of the total number of outstanding shares of a class of the Bank that is in excess of that permitted by the Bank Act (Canada).
“person”, for the purposes of the definitions of Ineligible Person and Significant Shareholder, has the meaning given to it in the Bank Act (Canada). | |
| Use of Proceeds: | The net proceeds of this offering will be used for general business purposes. | |
| Payment Convention: | Following business day convention, unadjusted. | |
| Business Days: | New York, Toronto | |
| Day Count Fraction: | 30/360 | |
| Listing: | None | |
| Canadian Bail-in Powers Acknowledgment: | The Notes are not subject to bail-in conversion under the Canadian bail-in regime. | |
| CUSIP / ISIN: | 780082 AT0 / US780082AT05 | |
| Lead Managers and Joint Book Runners: | RBC Capital Markets, LLC Citigroup Global Markets Inc. J.P. Morgan Securities LLC Morgan Stanley & Co. LLC HSBC Securities (USA) Inc. | |
| Passive Book Runners: | Fifth Third Securities, Inc. NatWest Markets Securities Inc. SG Americas Securities, LLC U.S. Bancorp Investments, Inc. | |
| Co-Managers: | ANZ Securities, Inc. BNY Mellon Capital Markets, LLC CaixaBank S.A. Capital One Securities, Inc. Comerica Securities, Inc. Commonwealth Bank of Australia Credit Agricole Securities (USA) Inc. Desjardins Securities Inc. Huntington Securities, Inc. KeyBanc Capital Markets Inc. M&T Securities, Inc. MUFG Securities Americas Inc. nabSecurities, LLC National Bank of Canada Financial Inc. Rabo Securities USA, Inc. Regions Securities LLC UBS Securities LLC Westpac Banking Corporation Independence Point Securities LLC Penserra Securities LLC | |
The Bank has filed a registration statement (including a preliminary prospectus supplement and a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read those documents and the other documents that the Issuer has filed with the SEC for more complete information about the Issuer and this offering. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the lead managers will arrange to send you the prospectus supplement, when available, and the prospectus if you request them by contacting RBC Capital Markets, LLC toll free at 1-866-375-6829, BofA Securities, Inc. toll free at 1-800-294-1322, Citigroup Global Markets Inc. toll free at 1-800-831-9146, J.P. Morgan Securities LLC toll free at 1-212-834-4533, Morgan Stanley & Co. LLC toll free at 1-866-718-1649 or HSBC Securities (USA) Inc. toll free at 1-866-811-8049.
ROYAL BANK OF CANADA
1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX
(Non-Viability Contingent Capital (NVCC))
FINAL TERM SHEET
DATED OCTOBER 17, 2024
Capitalized terms used in this document but not defined have the meaning given to them in the Final Term Sheet for 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) to which this Final Term Sheet is attached, or in the Preliminary Prospectus Supplement dated October 17, 2024 relating to the Notes to the Prospectus dated December 20, 2023.
Terms and Conditions
| Issuer: | Royal Bank of Canada (the “Bank”) | |
| Issue: | Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares”).
The Preferred Shares will be issued to the LRT Trustee who will hold legal title to the Preferred Shares in trust as trustee for the benefit of the Bank to satisfy the Bank’s obligations under the Indenture for the benefit of the Noteholders. | |
| Principal Amount: | $1,000,000,000.00 | |
| Issue Price: | $1,000 per Preferred Share, to be satisfied by the payment of the Canadian Dollar Equivalent thereof. | |
| Trade Date: | October 17, 2024 | |
| Settlement Date (T+11)1 | November 1, 2024 | |
| Maturity: | Perpetual | |
| Dividends: | Prior to the date that the Preferred Shares are delivered to Noteholders (the “Transfer Date”), the holders of the Preferred Shares shall not be entitled to receive dividends.
Following the Transfer Date, during the Initial Fixed Rate Period (as defined below), the holders of the Preferred Shares will be entitled to receive fixed rate non-cumulative preferential cash dividends, as and when declared by the board of directors, subject to the provisions of the Bank Act (Canada), payable quarterly on February 24, May 24, August 24, and November 24 in each year, in | |
| 1 | Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle no later than one business day after the trade date, unless the parties to such trade expressly agree otherwise at the time of the trade. Accordingly, purchasers who wish to trade on any date more than one business day prior to delivery of the Notes will be required, by virtue of the fact that the Notes initially will settle in eleven business days (T+11), to specify alternative settlement arrangements to prevent a failed settlement. |
| an amount per share per annum determined by multiplying the Initial Annual Fixed Dividend Rate (as defined below) by $1,000; provided that, whenever it is necessary to compute any dividend amount in respect of the Preferred Shares for a period of less than one full quarterly dividend period, such dividend amount shall be calculated on the basis of the actual number of days in the period and a year of 365 days.
During each Subsequent Fixed Rate Period (as defined below), the holders of the Preferred Shares will be entitled to receive fixed rate non-cumulative preferential cash dividends, as and when declared by the board of directors, subject to the provisions of the Bank Act (Canada), payable quarterly on February 24, May 24, August 24, and November 24 in each year, in an amount per share per annum determined by multiplying the Annual Fixed Dividend Rate (as defined below) applicable to such Subsequent Fixed Rate Period by $1,000.
“Annual Fixed Dividend Rate” means, for any Subsequent Fixed Rate Period, the rate (expressed as a percentage rounded to the nearest one hundred–thousandth of one percent (with 0.000005% being rounded up)) equal to the sum of the U.S. Treasury Rate on the applicable Fixed Rate Calculation Date plus 2.257%.
“Canadian Dollar Equivalent” means the Canadian dollar equivalent of U.S. dollars using the spot exchange rate as of 4:30 p.m. New York City time on October 30, 2024.
“Fixed Period End Date” means November 24, 2034 and each November 24 every fifth year thereafter.
“Fixed Rate Calculation Date” means, for any Subsequent Fixed Rate Period, the business day prior to the first day of such Subsequent Fixed Rate Period.
“Initial Annual Fixed Dividend Rate” means, for the Initial Fixed Rate Period, the rate equal to the interest rate per annum on the Notes in effect as of the Transfer Date, provided that if the Transfer Date is on or after the Maturity Date, it means the rate (expressed as a percentage rounded to the nearest one hundredth-thousandth of one percent (with 0.000005% being rounded up)) equal to the U.S. Treasury Rate on the business day prior to the Maturity Date (and in such case, for purposes of the definition of the U.S. Treasury Rate, such day shall be deemed to be a “Fixed Rate Calculation Date” and such Initial Fixed Rate Period shall be deemed to be a “Subsequent Fixed Rate Period”), plus 2.257%.
“Initial Fixed Rate Period” means, (i) if the Transfer Date is prior to November 24, 2034, the period from and including the Transfer Date to, but excluding, November 24, 2034 and (ii) if the Transfer Date is on or after November 24, 2034, the period from and including the Transfer Date, to, but excluding, the first Fixed Period End Date following the Transfer Date.
“Initial Reset Date” means, (i) if the Transfer Date is prior to November 24, 2034, November 24, 2034, and (ii) if the Transfer Date is on or after November 24, 2034, the first Fixed Period End Date following the Transfer Date.
“Subsequent Fixed Rate Period” means the period from and including the Initial Reset Date to, but excluding, the next Fixed Period End Date and each five-year period thereafter from and including such Fixed Period End Date to, but excluding, the next Fixed Period End Date.
| ||
| “U.S. Treasury Rate” means, as at a Fixed Rate Calculation Date, the rate per annum equal to: the average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities, for the five |
| business days immediately preceding the applicable Fixed Rate Calculation Date appearing under the caption “Treasury Constant Maturities” in the most recently published statistical release designated H.15 Daily Update or any successor publication which is published by the Federal Reserve Board, as determined by the Calculation Agent in its sole discretion.
If no calculation is provided as described above, then the Calculation Agent, after consulting such sources as it deems comparable to the foregoing calculation, or any such source as it deems reasonable from which to estimate the five-year treasury rate, shall determine the U.S. Treasury Rate in its sole discretion, provided that if the Calculation Agent determines there is an industry-accepted successor five-year treasury rate, then the Calculation Agent shall use such successor rate. If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine the business day convention, the definition of business day and the Fixed Rate Calculation Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the five-year treasury rate, in a manner that is consistent with industry-accepted practices for such substitute or successor base rate.
If such rate cannot be determined as described above, then (i) the U.S. Treasury Rate will be determined by the Bank or our designee by interpolation between the most recent weekly average yield to maturity for two series of U.S. treasury securities trading in the public securities market, (1) one maturing as close as possible to, but earlier than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, and (2) the other maturing as close as possible to, but later than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, in each case, appearing under the caption “Treasury Constant Maturities” in the most recent published statistical release designated H.15 Daily Update or any successor publication which is published by the U.S. Federal Reserve Board of Governors; or (ii) if the calculation described in clause (i) cannot be determined, then the U.S. Treasury Rate will be the same rate as determined for the prior Fixed Rate Calculation Date, provided, however, that in the case of the Initial Reset Date, the dividend rate on the Preferred Shares will be the Initial Annual Fixed Dividend Rate or in the case of a determination of the Initial Annual Fixed Dividend Rate if the Transfer Date is on or after the Maturity Date, the dividend rate on the Preferred Shares will be the interest rate per annum on the Notes in effect as of the business day prior to the Maturity Date. | ||
| Dividend Deferability: | If the board of directors does not declare a dividend, or any part thereof, on the Preferred Shares, then the rights of the holders of the Preferred Shares to such dividend, or to any part thereof, will be extinguished.
The Bank may also be restricted under the Bank Act (Canada) from paying dividends on the Preferred Shares in certain circumstances. | |
| Dividend Stopper: | The Bank will not pay any dividends on any second preferred shares, any Common Shares or any other shares ranking junior to the Preferred Shares (other than stock dividends in any shares ranking junior to the relevant series); or redeem, purchase or otherwise retire any second preferred shares, any Common Shares or any other shares ranking junior to the Preferred Shares (except out of the net cash proceeds of a substantially concurrent issue of shares ranking junior to the relevant series); or redeem, purchase or otherwise retire less than all of the Preferred Shares; or except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provision attaching to any series of preferred shares, redeem, purchase, or otherwise retire any other shares ranking on a parity with the Preferred Shares, unless in each case all dividends up to and including the dividend payment date for the last completed period for which dividends are payable, have been declared and paid, or set apart for payment, in respect of the Bank’s first preferred shares. | |
| Redemption: | Except as noted below, the Preferred Shares will not be redeemable prior to November 24, 2034.
Subject to the provisions of the Bank Act (Canada) and the consent of the Superintendent, on November 24, 2034 (the Initial Interest Reset Date for the Notes) and on each February 24, May 24, August 24, and November 24 thereafter, the Bank may redeem all (or, if on or after the Transfer Date, all or any part) of the outstanding Preferred Shares. If the Preferred Shares are redeemed before the Transfer Date, the redemption price per share will be equal to the Canadian Dollar Equivalent of $1,000). If the Preferred Shares are redeemed on or after the Transfer Date, the redemption price per share will be equal to $1,000, plus any declared and unpaid dividends up to, but excluding, the date fixed for redemption.
Upon the occurrence of a Special Event Date before the Transfer Date, the Bank may also, at its option, with the prior written approval of the Superintendent, redeem the Preferred Shares, in whole but not in part, at any time on or within 90 days following a Special Event Date in respect of the Notes, at a redemption price per share which is equal to the Canadian Dollar Equivalent of $1,000 (a “Special Event Redemption”).
If at any time the Bank, with the prior written approval of the Superintendent, purchases Notes, in whole or in part, by tender offer, open market purchases, negotiated transactions or otherwise, for cancellation, then the Bank shall, with the prior written approval of the Superintendent, redeem such number of Preferred Shares with an aggregate face amount equal to the aggregate principal amount of Notes purchased for cancellation by the Bank, by the payment of an amount in cash for each share redeemed of $1,000 (or if then held in the Limited Recourse Trust, the Canadian Dollar Equivalent of $1,000).
Concurrently with or upon the maturity of the Notes, with the prior written approval of the Superintendent, the Bank may redeem all but not less than all of the outstanding Preferred Shares by the payment of an amount in cash for each share redeemed of the Canadian Dollar Equivalent of $1,000 and apply, or cause the LRT Trustee to apply, the proceeds of such redemption towards the repayment of the aggregate principal amount of and any accrued and unpaid interest on the Notes.
Notice of any redemption other than a Special Event Redemption will be given by the Bank to registered holders not more than 60 days and not less than 10 days prior to the redemption date. Notice of any Special Event Redemption will be given by the Bank to registered holders not more than 60 days and not less than 10 days prior to the redemption date. | |
| Purchase for Cancellation: | Subject to the provisions of the Bank Act (Canada) and the prior written approval of the Superintendent, from and after the Transfer Date, the Bank may at any time, by private contract or in the market or by tender, purchase for cancellation any Preferred Shares at the lowest price or prices at which in the opinion of the board of directors such shares are obtainable. | |
| NVCC Automatic Conversion: | Upon the occurrence of a Trigger Event, each outstanding Preferred Share will automatically and immediately be converted, on a full and permanent basis, into a number of Common Shares equal to (Multiplier x Share Value) ÷ Conversion Price (an “NVCC Automatic Conversion”). | |
| Trigger Event: | As set out in the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”) Capital Adequacy Requirements (CAR) Guideline, Chapter 2 – Definition of Capital, effective November 2023, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:
• the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion or write-off, as applicable, of all contingent instruments and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or
• a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. | |
| Multiplier: | 1.0 | |
| Share Value: | $1,000 plus declared and unpaid dividends as at the date of the Trigger Event, expressed in Canadian dollars. In determining the Share Value of any Preferred Share, the face amount thereof and any declared and unpaid dividends thereon shall be converted from U.S. dollars into Canadian dollars on the basis of the closing exchange rate between Canadian dollars and U.S. dollars (in Canadian dollars per U.S. dollar) reported by the Bank of Canada on the date immediately preceding the date of the Trigger Event (or if not available on such date, the date on which such closing rate was last available prior to such date). If such exchange rate is no longer reported by the Bank of Canada, the relevant exchange rate for calculating the Share Value in Canadian dollars shall be the simple average of the closing exchange rates between Canadian dollars and U.S. dollars (in Canadian dollars per U.S. dollar) quoted at approximately 4:00 p.m., New York City time, on such date by three major banks selected by the Bank. | |
| Conversion Price: | The greater of (i) C$5.00, and (ii) the Current Market Price (as defined below) of the Common Shares. The floor price of C$5.00 is subject to adjustment in the event of (i) the issuance of Common Shares or securities exchangeable for or convertible into Common Shares to all holders of Common Shares as a stock dividend, (ii) the subdivision, redivision or change of the Common Shares into a greater number of Common Shares, or (iii) the reduction, combination or consolidation of the Common Shares into a lesser number of Common Shares. The adjustment shall be computed to the nearest one-tenth of one cent provided that no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of the Conversion Price then in effect.
“Current Market Price” of the Common Shares, in connection with a Trigger Event, means the volume weighted average trading price in Canadian dollars of the Common Shares on the Toronto Stock Exchange, if such shares are then listed on the Toronto Stock Exchange, for the 10 consecutive trading days ending on the trading day preceding the date of the Trigger Event. If the Common Shares are not then listed on the Toronto Stock Exchange, for the purpose of the foregoing calculation reference shall be made to the principal securities exchange or market on which the Common Shares are then listed or quoted or, if no such trading prices are available, “Current Market Price” shall be the fair value of the Common Shares as reasonably determined by the board of directors of the Bank, expressed in Canadian dollars. If the Common Shares on such principal securities exchange or market are only traded in U.S. dollars or another foreign currency, for the purpose of the foregoing calculation, the trading price shall be converted into Canadian dollars on the basis of the closing exchange rate between Canadian dollars and U.S. dollars or the relevant foreign currency (in Canadian dollars per U.S. dollar or relevant foreign currency) reported by the Bank of Canada on the date immediately preceding the date of the Trigger Event (or if not available on such date, the date on which such closing rate was last available prior to such date). If such exchange rate is no longer reported by the Bank of Canada, the relevant exchange rate for calculating the trading price in Canadian dollars shall be the simple average of the closing exchange rates between Canadian dollars and U.S. dollars or the relevant foreign currency (in Canadian dollars per U.S. dollar or relevant foreign currency) quoted at approximately 4:00 p.m., New York City time, on such date by three major banks selected by the Bank. | |
| Common Share Corporate Event: | In the event of a capital reorganization, consolidation, merger or amalgamation of the Bank or comparable transaction affecting the Common Shares, the Bank will take necessary action to ensure that holders of Preferred Shares receive, pursuant to an NVCC Automatic Conversion, the number of Common Shares or other securities that such holders would have received if the NVCC Automatic Conversion had occurred immediately prior to the record date for such event. | |
| Rights on Liquidation: | At any time after the Preferred Shares have been delivered to the Noteholders but prior to a Trigger Event, in the event of the Bank’s liquidation, dissolution or winding-up, holders of the Preferred Shares will be entitled to receive $1,000 per share, together with all dividends declared and unpaid to the date of payment, before any amount may be paid or any of the Bank’s assets distributed to the registered holders of any shares ranking junior to the Preferred Shares. The holders of Preferred Shares will not be entitled to share in any further distribution of assets.
If a Trigger Event has occurred, all Preferred Shares shall have been converted into Common Shares which will rank on parity with all other Common Shares. | |
| Voting Rights: | Except as otherwise required under the Bank Act (Canada) or the Bank’s by-laws, the holders of the Preferred Shares will not be entitled to receive notice of or to attend or to vote at any meetings of the shareholders of the Bank until the first time at which the rights of such holders to any undeclared dividends have been extinguished as described under “Dividends” above (for clarity, such time may not occur before the Transfer Date because, prior to the Transfer Date, the holders of any Preferred Shares shall not be entitled to receive dividends). The voting rights of holders of Preferred Shares will forthwith cease upon payment by the Bank of a dividend on the Preferred Shares to which the holders are entitled subsequent to the time such voting rights first arose. | |
| CUSIP / ISIN: | 780082 AU7 / US780082AU77 | |
The Bank has filed a registration statement (including a preliminary prospectus supplement and a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read those documents and the other documents that the Issuer has filed with the SEC for more complete information about the Issuer and this offering. You may obtain these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the lead managers will arrange to send you the prospectus supplement, when available, and the prospectus if you request them by contacting RBC Capital Markets, LLC toll free at 1-866-375-6829, BofA Securities, Inc. toll free at 1-800-294-1322, Citigroup Global Markets Inc. toll free at 1-800-831-9146, J.P. Morgan Securities LLC toll free at 1-212-834-4533, Morgan Stanley & Co. LLC toll free at 1-866-718-1649 or HSBC Securities (USA) Inc. toll free at 1-866-811-8049.
Exhibit 4.1
ROYAL BANK OF CANADA
TO
THE BANK OF NEW YORK MELLON
Trustee
Third Supplemental Indenture
Dated as of November 1, 2024
to
Indenture
Dated as of January 27, 2016
Subordinated Debt Securities
6.350% Limited Recourse Capital Notes, Series 5
(Non-Viability Contingent Capital (NVCC))
(Subordinated Indebtedness) due 2084
TABLE OF CONTENTS
| Page | ||||||
| PARTIES | 1 | |||||
| RECITALS OF THE BANK | 1 | |||||
| ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION | 2 | |||||
| Section 101. | Relation to Base Indenture | 2 | ||||
| Section 102. | Definitions | 2 | ||||
| Section 103. | Acts of Holders; Record Dates | 9 | ||||
| Section 104. | Notice to Holders; Waiver | 11 | ||||
| Section 105. | Conflict with Trust Indenture Act | 12 | ||||
| Section 106. | Separability Clause | 12 | ||||
| Section 107. | Effect of Headings and Table of Contents | 12 | ||||
| Section 108. | Benefits of Third Supplemental Indenture | 12 | ||||
| Section 109. | Governing Law | 12 | ||||
| ARTICLE TWO FORM OF NOTES | 12 | |||||
| Section 201. | Form of Notes | 12 | ||||
| ARTICLE THREE THE NOTES | 13 | |||||
| Section 301. | Designation and Principal Amount | 13 | ||||
| Section 302. | Maturity | 13 | ||||
| Section 303. | Form, Payment and Appointment | 13 | ||||
| Section 304. | Global Note | 14 | ||||
| Section 305. | Interest | 14 | ||||
| Section 306. | Payment of Interest; Interest Rights Preserved | 14 | ||||
| Section 307. | Payment at Maturity | 15 | ||||
| Section 308. | No Repayment at the Option of Holders | 15 | ||||
| Section 309. | No Sinking Fund | 15 | ||||
| Section 310. | Defeasance and Covenant Defeasance | 15 | ||||
| Section 311. | NVCC Automatic Conversion | 15 | ||||
| ARTICLE FOUR ISSUE OF NOTES | 15 | |||||
| Section 401. | Issue of Notes | 15 | ||||
| ARTICLE FIVE SATISFACTION AND DISCHARGE | 15 | |||||
| Section 501. | Applicability of Article Four of the Base Indenture | 15 | ||||
| Section 502. | Satisfaction and Discharge of the Indenture | 16 | ||||
| Section 503. | Application of Trust Money or Limited Recourse Trust Assets | 16 | ||||
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| ARTICLE SIX REMEDIES | 17 | |||||
| Section 601. | Applicability of Article Five of the Base Indenture | 17 | ||||
| Section 602. | Events of Default | 17 | ||||
| Section 603. | Recourse to Limited Recourse Trust Assets is Sole Remedy | 17 | ||||
| Section 604. | Suits for Enforcement by Trustee | 18 | ||||
| Section 605. | Application of Money or Limited Recourse Trust Assets Collected | 18 | ||||
| Section 606. | Limitation on Suits | 19 | ||||
| Section 607. | Rights of Holders to Receive Principal Amount and Interest or Redemption Price | 19 | ||||
| Section 608. | Delay or Omission Not Waiver | 20 | ||||
| Section 609. | Waiver of Past Defaults | 20 | ||||
| Section 610. | Waiver of Claims Relating to a Trigger Event Redemption | 20 | ||||
| ARTICLE SEVEN THE TRUSTEE | 21 | |||||
| Section 701. | Applicability of Article Six of the Base Indenture | 21 | ||||
| Section 702. | Notice of Defaults | 21 | ||||
| Section 703. | Money or Limited Recourse Trust Assets Held in Trust | 21 | ||||
| Section 704. | Compensation and Reimbursement | 21 | ||||
| Section 705. | Conflicting Interests | 22 | ||||
| Section 706. | Trustee to Provide Instructions upon Request of the LRT Trustee | 22 | ||||
| Section 707. | FATCA | 23 | ||||
| ARTICLE EIGHT COVENANTS | 23 | |||||
| Section 801. | Additional Amounts | 23 | ||||
| Section 802. | No Restriction on Other Indebtedness | 25 | ||||
| Section 803. | Money or Limited Recourse Trust Assets for Notes Payments to Be Held in Trust | 25 | ||||
| Section 804. | Waiver of Certain Covenants | 26 | ||||
| ARTICLE NINE DELIVERY OF COMMON SHARES UPON A TRIGGER EVENT | 27 | |||||
| Section 901. | Trigger Event | 27 | ||||
| Section 902. | Conversion Rate | 27 | ||||
| Section 903. | Time of Trigger Event Redemption | 27 | ||||
| Section 904. | Trigger Event Redemption Procedure | 28 | ||||
| Section 905. | Duties of Trustee upon Trigger Event Redemption | 28 | ||||
| Section 906. | General | 28 | ||||
| Section 907. | Agreement of Holders and Beneficial Owners of the Notes | 29 | ||||
| ARTICLE TEN REDEMPTION OF NOTES | 30 | |||||
| Section 1001. | Applicability of Article Eleven of the Base Indenture | 30 | ||||
| Section 1002. | Cash Redemption | 30 | ||||
| Section 1003. | Special Event Redemption | 30 | ||||
| Section 1004. | Failed Coupon Redemption | 31 | ||||
| Section 1005. | Mandatory Redemption; Open Market Purchases | 31 | ||||
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| Section 1006. | Election to Redeem; Notice to Trustee | 32 | ||||
| Section 1007. | Notice of Redemption | 32 | ||||
| Section 1008. | Deposit of Redemption Price | 33 | ||||
| Section 1009. | Notes Payable on Redemption Date | 33 | ||||
| Section 1010. | Agreement of Holders and Beneficial Owners of the Notes | 34 | ||||
| ARTICLE ELEVEN LIMITED RECOURSE TRUST AND SUPPLEMENTAL INDENTURE | 34 | |||||
| Section 1101. | Satisfaction of Payment Obligations with Limited Recourse Trust Assets | 34 | ||||
| Section 1102. | Limited Recourse Trust Assets | 34 | ||||
| Section 1103. | Right Not to Deliver Common Shares or Preferred Shares | 35 | ||||
| Section 1104. | Amendments to LRT Declaration of Trust; Termination of LRT Declaration of Trust | 35 | ||||
| Section 1105. | Supplemental Indentures Without Consent of Holders | 36 | ||||
| Section 1106. | Supplemental Indentures With Consent of Holders | 37 | ||||
| ARTICLE TWELVE SUBORDINATION OF NOTES | 37 | |||||
| Section 1201. | Applicability of Article Fifteen of the Base Indenture | 37 | ||||
| Section 1202. | Notes Subordinate to Deposit Liabilities and Other Indebtedness | 37 | ||||
| Section 1203. | Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice | 38 | ||||
| Section 1204. | No Fiduciary Duty of Trustee to Holders of Higher Ranked Indebtedness of the Bank | 38 | ||||
| ARTICLE THIRTEEN MISCELLANEOUS | 39 | |||||
| Section 1301. | Ratification of Base Indenture | 39 | ||||
| Section 1302. | Conflict with Base Indenture | 39 | ||||
| Section 1303. | Execution in Counterparts | 39 | ||||
| Section 1304. | Indenture and Notes Solely Corporate Obligations | 39 | ||||
| Section 1305. | Agreement of Subsequent Investors | 39 | ||||
| Section 1306. | Waiver of Jury Trial | 40 | ||||
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THIRD SUPPLEMENTAL INDENTURE, dated as of November 1, 2024 (this “Third Supplemental Indenture”) among Royal Bank of Canada, a Canadian chartered bank (the “Bank”), having its corporate headquarters located at Royal Bank Plaza, 200 Bay Street, Toronto, Ontario, Canada M5J 2J5 and its head office located at 1 Place Ville-Marie, Montreal, Quebec, Canada H3C 3A9 and The Bank of New York Mellon, as Trustee (the “Trustee”).
RECITALS OF THE BANK
WHEREAS, the Bank and the Trustee have entered into the Indenture, dated as of January 27, 2016 (the “Base Indenture” and, as hereby supplemented and amended, the “Indenture”) providing for the issuance from time to time of series of the Bank’s unsecured subordinated indebtedness (the “Securities”);
WHEREAS, Section 901(7) of the Base Indenture provides, among other things, that the Bank and the Trustee (and any successor Trustee) may enter into an indenture supplemental to the Base Indenture to establish the form or terms of Securities of any series as permitted by the Base Indenture;
WHEREAS, pursuant to Section 301 of the Base Indenture, the Bank wishes to provide for the issuance of $1,000,000,000 aggregate principal amount of a new series of Securities to be known as its 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 (the “Notes”), the form and terms of such Notes and the terms, provisions and conditions thereof to be set forth as provided in this Third Supplemental Indenture;
WHEREAS, the Bank has established Leo LRCN Limited Recourse Trust, a trust established under the laws of Manitoba (the “Limited Recourse Trust”), which is governed by an amended and restated declaration of trust dated as of July 28, 2020, as amended by a first amendment to the amended and restated declaration of trust, dated as of April 15, 2024, as may be further amended or restated from time to time (the “LRT Declaration of Trust”) between the Bank and the LRT Trustee (as defined herein);
WHEREAS, in accordance with the terms of the LRT Declaration of Trust, the LRT Trustee is directed to hold assets in the Limited Recourse Trust for the Bank for the purpose of satisfying the obligations of the Bank under this Indenture for the benefit of the Holders of the Notes under this Third Supplemental Indenture; and
WHEREAS, the Bank has requested and hereby requests that the Trustee execute and deliver this Third Supplemental Indenture; and all requirements necessary to make this Third Supplemental Indenture a valid, binding and enforceable instrument in accordance with its terms, and to make the Notes, when executed by the Bank and authenticated and delivered by the Trustee, the valid, binding and enforceable obligations of the Bank, have been satisfied and complied with; and the execution and delivery of this Third Supplemental Indenture has been duly authorized in all respects.
NOW, THEREFORE, in consideration of the foregoing recitals and other valuable consideration, the receipt whereof is hereby acknowledged, the Bank agrees with the Trustee, for the equal and proportionate benefit of the Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Relation to Base Indenture
This Third Supplemental Indenture constitutes an integral part of the Indenture.
Section 102. Definitions
For all purposes of this Third Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Base Indenture or in the U.S. Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in Canada, including the accounting requirements of the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”), and, except as otherwise herein expressly provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation;
(4) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Third Supplemental Indenture;
(5) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Third Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision; and
(6) all references to dollars and $ shall mean U.S. dollars unless otherwise indicated.
“Additional Amounts” has the meaning specified in Section 801.
“Administrative Action” means any judicial decision, administrative pronouncement, published or private ruling, regulatory procedure, rule, notice, announcement, assessment or reassessment (including any notice or announcement of intent to adopt or issue such decision, pronouncement, ruling, procedure, rule, notice, announcement, assessment or reassessment).
“Applicable Law” has the meaning specified in Section 707.
“Bank Act” means the Bank Act (Canada) as may be amended from time to time.
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“Bank Request” or “Bank Order” means a written request or order signed in the name of the Bank by any one of the Chief Executive Officer, the President, a Group Head, the Chief Financial Officer, the Chief Administrative Officer, the Chief Risk Officer, the Chief Human Resources Officer, the Chief Legal Officer, a Senior Executive Vice-President, the Chief Audit Executive, an Executive Vice-President or a Senior Vice-President or by any two of its Vice-Presidents, acting together for such purpose (or any Person designated by one of them, or in the case of any two Vice-Presidents acting together, both of them, in writing as authorized to sign and deliver such written request or order, or any Person designated by the Board of Directors as authorized to sign and deliver such written request or order), and delivered to the Trustee.
“Base Indenture” has the meaning specified in the Recitals.
“Beneficial Owners” means (a) with respect to Global Notes, the beneficial owners of the Notes and (b) with respect to Definitive Notes, the Holders in whose names the Notes are registered.
“Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of New York and the City of Toronto are authorized or required by law or executive order to close.
“Calculation Agent” means the Bank or its designee.
“Canadian Taxes” has the meaning specified in Section 801.
“Cash Redemption” has the meaning specified in Section 1002.
“Cash Redemption Date” has the meaning specified in Section 1002.
“Code” means the U.S. Internal Revenue Code of 1986, and any statute hereafter enacted in substitution therefor, as such Code, or substituted statute, may be amended from time to time.
“Consent Event” has the meaning specified in Section 706.
“Corporate Trust Office”, with respect to the Trustee, means the principal corporate trust office of the Trustee in New York, New York at which at any particular time its corporate trust business shall be administered, which office at the date of the execution of this instrument is located at 240 Greenwich Street, Floor 7E, New York, New York 10286, or such other address as the Trustee may designate from time to time by notice to the Holders and the Bank.
“Date of Issue” means November 1, 2024.
“Definitive Note” means a certificated Note (other than a Global Note) registered in the name of the Holder thereof and issued in accordance with the terms of this Indenture.
“DTC” means The Depository Trust Company (and any successor thereto).
“Event of Default” has the meaning specified in Section 602.
“Excluded Holder” has the meaning specified in Section 801.
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“Failed Coupon Payment Date” means the fifth Business Day immediately following an Interest Payment Date upon which the Bank does not pay interest on the Notes, and has not cured such non-payment by subsequently paying such interest prior to such fifth Business Day.
“Failed Coupon Redemption” has the meaning specified in Section 1004.
“FATCA Withholding Tax” has the meaning specified in Section 801.
“Fixed Rate Calculation Date” means, for any Subsequent Fixed Rate Period, the Business Day prior to the first day of such Subsequent Fixed Rate Period.
“Global Note” has the meaning specified in Section 304.
“H.15 Daily Update” means the daily update of H.15 available through the worldwide website of the Board of Governors of the Federal Reserve System, at http://www.federalreserve.gov/releases/h15, or any successor site or publication.
“Higher Ranked Indebtedness” has the meaning specified in Section 1202.
“Ineligible Person” means (i) any person whose address is in, or whom the Bank or its transfer agent has reason to believe is a resident of, any jurisdiction outside Canada or the United States of America to the extent that the issuance by the Bank or delivery by its transfer agent to that person of Common Shares or Preferred Shares would require the Bank to take any action to comply with securities, banking or analogous laws of that jurisdiction, and (ii) any person to the extent that the issuance by the Bank or delivery by its transfer agent to that person of Common Shares or Preferred Shares would cause the Bank to be in violation of any law to which the Bank is subject.
“Initial Fixed Rate Period” means the period from and including the Date of Issue to, but excluding, November 24, 2034.
“Interest Payment Date” has the meaning specified in Section 305.
“Junior Subordinated Indebtedness” means Indebtedness of the Bank which by its terms ranks equally in right of payment with, or is subordinate to, the Notes.
“Limited Recourse Trust” has the meaning stated in the fourth recital of this Indenture.
“Limited Recourse Trust Assets” means the assets held by the Limited Recourse Trust from time to time in respect of the Notes, which may only be comprised of (i) Preferred Shares, (ii) Common Shares issued upon an NVCC Automatic Conversion, (iii) cash from the redemption of the Preferred Shares, or (iv) any combination thereof, depending on the circumstances.
“LRT Declaration of Trust” has the meaning stated in the fourth recital of this Indenture.
“LRT Trustee” means Computershare Trust Company of Canada until a successor LRT Trustee shall have become such pursuant to the applicable provisions of the LRT Declaration of Trust, and thereafter “LRT Trustee” shall mean or include each Person who is then an LRT Trustee thereunder.
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“Majority Holders” means the Holders of a majority in principal amount of the Outstanding Notes.
“Maturity Date” has the meaning specified in Section 302.
“Notes” has the meaning stated in the third recital of this Indenture and “Note” has the corresponding singular meaning and more particularly means any Note or Notes authenticated and delivered under this Indenture.
“NVCC Automatic Conversion” means, upon the occurrence of a Trigger Event, the automatic conversion of each outstanding Preferred Share into fully-paid and non-assessable Common Shares in accordance with the terms of the Preferred Shares.
“Officers’ Certificate” means a certificate signed by any one of the Bank’s Chief Executive Officer, the President, a Group Head, the Chief Financial Officer, the Chief Administrative Officer, the Chief Risk Officer, the Chief Human Resources Officer, a Senior Executive Vice-President, the Chief Audit Executive, an Executive Vice-President or a Senior Vice-President or by any two of its Vice-Presidents, acting together for such purpose (or any Person designated by one of them, or in the case of any two Vice-Presidents acting together, both of them, in writing as authorized to sign and deliver such certificate, or any Person designated by the Board of Directors as authorized to sign and deliver such certificate), and delivered to the Trustee.
“Payment Recipient” has the meaning specified in Section 801.
“person”, for the purposes of the definitions of Ineligible Person and Significant Shareholder, has the meaning given to it in the Bank Act (Canada). For the avoidance of confusion, “Person” has the meaning given in the Base Indenture.
“Place of Payment”, when used with respect to the Notes, means the place or places where the principal amount of, interest on and Redemption Price of the Notes are payable as specified as contemplated by Section 303.
“Preferred Share Redemption” means any redemption by the Bank of Preferred Shares held in the Limited Recourse Trust in accordance with the terms of such Preferred Shares.
“Preferred Share Voting Event” has the meaning specified in Section 706.
“Preferred Shares” means the Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) of the Bank and the terms and conditions applicable thereto as of the date hereof are attached as Exhibit A hereto.
“Record Date” when used with respect to the interest payable on any Interest Payment Date on the Notes, means the second calendar day, whether or not a Business Day, immediately preceding the related Interest Payment Date.
“Recourse Event” means any of the following: (a) on the Maturity Date, the Bank does not pay the aggregate principal amount of the Notes, together with any accrued and unpaid interest thereon, in cash; (b) the occurrence of a Failed Coupon Payment Date; (c) in connection
5
with the redemption of the Notes, on the Redemption Date for such redemption, the Bank does not pay the Redemption Price in cash; (d) the occurrence of an Event of Default; and (e) the occurrence of a Trigger Event.
“Redemption Date”, when used with respect to any Note to be redeemed, means (i) Cash Redemption Date, (ii) Special Event Redemption Date, or (iii) Failed Coupon Payment Date, as the case may be, but excluding the Trigger Event Redemption Date.
“Redemption Price”, when used with respect to any Note to be redeemed, means the aggregate of (i) the principal amount of the Note, and (ii) any accrued and unpaid interest on the Note up to, but excluding, the applicable Redemption Date.
“Regulatory Event Date” means the date specified in a letter from the Superintendent to the Bank on which the Notes will no longer be recognized in full as eligible “Additional Tier 1 capital” or will no longer be eligible to be included in full as risk-based “Total Capital” on a consolidated basis under the guidelines for capital adequacy requirements for banks in Canada as interpreted by the Superintendent.
“Responsible Officer” when used with respect to the Trustee, means any officer of the Trustee with direct responsibility for administration of this Indenture, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such person’s knowledge of and familiarity with the particular subject.
“Significant Shareholder” means any person who beneficially owns directly, or indirectly through entities controlled by such person or persons associated with or acting jointly or in concert with such person, a percentage of the total number of outstanding shares of a class of the Bank that is in excess of that permitted by the Bank Act (Canada).
“Special Event Date” means a date that is a Regulatory Event Date or a Tax Event Date.
“Special Event Redemption” has the meaning specified in Section 1003.
“Special Event Redemption Date” has the meaning specified in Section 1003.
“Subordinated Indebtedness” at any time means the Bank’s subordinated indebtedness within the meaning of the Bank Act.
“Subsequent Fixed Rate Period” means the period from and including November 24, 2034 to, but excluding, November 24, 2039 and each five-year period thereafter from and including the day immediately following the end of the immediately preceding Subsequent Fixed Rate Period to, but excluding, November 24 in the fifth year thereafter.
“Superintendent” means the Superintendent of Financial Institutions (Canada).
“surrender” or “delivery” of a Note by a Holder means delivery of the certificates representing such Notes, and the terms “surrendered” and “delivered” have meanings correlative to the foregoing.
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“Tax Event Date” means the date on which the Bank has received an opinion of independent counsel of a nationally recognized law firm in Canada (who may be counsel to the Bank) to the effect that:
(1) as a result of:
(A) any amendment to, clarification of, or change (including any announced prospective change) in, the laws, or any regulations thereunder, or any application or interpretation thereof, of Canada, or any political subdivision or taxing authority thereof or therein, affecting taxation;
(B) any Administrative Action; or
(C) any amendment to, clarification of, or change in, the official position with respect to or the interpretation of any Administrative Action or any interpretation or pronouncement that provides for a position with respect to such Administrative Action that differs from the theretofore generally accepted position,
in each case of clause (1)(A), (B) or (C), by any legislative body, court, governmental authority or agency, regulatory body or taxing authority, irrespective of the manner in which such amendment, clarification, change, Administrative Action, interpretation or pronouncement is made known, which amendment, clarification, change or Administrative Action is effective or which interpretation, pronouncement or Administrative Action is announced on or after the Date of Issue of the Notes, there is more than an insubstantial risk (assuming any proposed or announced amendment, clarification, change, interpretation, pronouncement or Administrative Action is effective and applicable) that the Bank or the Limited Recourse Trust is, or may be, subject to more than a de minimis amount of additional taxes, duties or other governmental charges or civil liabilities because the treatment of any of its items of income, taxable income, expense, taxable capital or taxable paid-up capital with respect to the Notes (including the treatment by the Bank of interest on the Notes) or the treatment of the Notes or the Preferred Shares (including dividends thereon) or other Limited Recourse Trust Assets or the Limited Recourse Trust, as or as would be reflected in any tax return or form filed, to be filed, or otherwise could have been filed, will not be respected by a taxing authority; or
(2) as a result of:
(A) any change (including any announced prospective change) in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Canada (or the jurisdiction of organization of the successor to the Bank) or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes effective on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), the Bank (or its successor) has become or would
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become obligated to pay (assuming, in the case of any announced prospective change, that such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, Additional Amounts with respect to the Notes; or
(B) on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), any action having been taken by any taxing authority of, or any decision having been rendered by a court of competent jurisdiction in, Canada (or the jurisdiction of organization of the successor to the Bank) or any political subdivision or taxing authority thereof or therein, including any of those actions specified in clause (2)(A) above, whether or not such action was taken or decision was rendered with respect to the Bank (or its successor), or any change, amendment, application or interpretation having been officially proposed, the Bank (or its successor) would become obligated to pay (assuming that such change, amendment, application, interpretation or action is applied to the Notes by the taxing authority and that, in the case of any announced prospective change, such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, Additional Amounts with respect to the Notes;
provided that in any such case of clause (2)(A) or (B), the Bank (or its successor), in its business judgment, determines that such obligation cannot be avoided by the use of reasonable measures available to it (or its successor).
“Trigger Event” has the meaning set out in the OSFI Capital Adequacy Requirements (CAR) Guideline, Chapter 2 — Definition of Capital, effective November 2023, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:
(1) the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion or write-off, as applicable, of all contingent instruments and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or
(2) a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable.
“Trigger Event Notice” has the meaning specified in Section 903.
“Trigger Event Redemption” has the meaning specified in Section 901.
“Trigger Event Redemption Date” has the meaning specified in Section 901.
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“U.S. Treasury Rate” means, as at a Fixed Rate Calculation Date, the rate per annum equal to: the average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities, for the five business days immediately preceding the applicable Fixed Rate Calculation Date appearing under the caption “Treasury Constant Maturities” in the most recently published statistical release designated H.15 Daily Update or any successor publication which is published by the Federal Reserve Board, as determined by the Calculation Agent in its sole discretion.
If no calculation is provided as described above, then the Calculation Agent, after consulting such sources as it deems comparable to the foregoing calculation, or any such source as it deems reasonable from which to estimate the five-year treasury rate, shall determine the U.S. Treasury Rate in its sole discretion, provided that if the Calculation Agent determines there is an industry-accepted successor five-year treasury rate, then the Calculation Agent shall use such successor rate. If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine the business day convention, the definition of business day and the Fixed Rate Calculation Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the five-year treasury rate, in a manner that is consistent with industry-accepted practices for such substitute or successor base rate.
If such rate cannot be determined as described above, then (i) the U.S. Treasury Rate will be determined by the Bank or our designee by interpolation between the most recent weekly average yield to maturity for two series of U.S. treasury securities trading in the public securities market, (1) one maturing as close as possible to, but earlier than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, and (2) the other maturing as close as possible to, but later than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, in each case, appearing under the caption “Treasury Constant Maturities” in the most recent published statistical release designated H.15 Daily Update or any successor publication which is published by the U.S. Federal Reserve Board of Governors; or (ii) if the calculation described in clause (i) cannot be determined, then the U.S. Treasury Rate will be the same rate as determined for the prior Fixed Rate Calculation Date, provided, however, that in the case of the first day of the first Subsequent Fixed Rate Period after the Initial Fixed Rate Period, the interest rate on the Notes will be 6.350%.
Section 103. Acts of Holders; Record Dates
For the purposes of these Notes, Section 104 of the Base Indenture is hereby replaced in its entirety as follows:
Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Bank. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent, shall be sufficient for any
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purpose of this Indenture and (subject to Section 601 of the Base Indenture) conclusive in favor of the Trustee and the Bank, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness to such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
For the purposes of this Indenture, the ownership of Notes shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Bank in reliance thereon, whether or not notation of such action is made upon such Note.
The Bank may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders, provided that the Bank may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Notes on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Bank from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Bank, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder in the manner set forth in Section 104.
The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to join in the giving or making of (i) any request to institute proceedings referred to in Section 606(2), (ii) any direction referred to in Section 512 of the Base Indenture, in each case with respect to the Notes, or (iii) any direction referred to in Section 706 in respect of a Preferred Share Voting Event or a Consent Event. If any record date is set pursuant to this paragraph, the Holders of Outstanding Notes on such record date, and no other Holders, shall be entitled to join in such request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on
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or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Bank’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Bank in writing and to each Holder in the manner set forth in Section 104.
With respect to any record date set pursuant to this Section, the party hereto that sets such record dates may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder in the manner set forth in Section 104, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount
Section 104. Notice to Holders; Waiver
For the purposes of these Notes, Section 106 of the Base Indenture is hereby replaced in its entirety as follows:
Where this Third Supplemental Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if provided in writing by electronic communication or mailed, first-class postage prepaid, to each Holder affected by such event, at his or her address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail or electronic communication, neither the failure to mail or provide such notice, nor any defect in any notice so mailed or provided, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
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Any notice so given by mail shall be deemed to have been given on the third Business Day after it is mailed. Any notice so provided by electronic communication shall be deemed to have been validly given on the Business Day received if it is received prior to 4:00 p.m. (New York time) on a Business Day, failing which it shall be deemed to have been given on the next Business Day.
Section 105. Conflict with Trust Indenture Act
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be a part of and govern the Indenture, the latter provision shall control. If any provision of this Third Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Third Supplemental Indenture as so modified or to be excluded, as the case may be.
Section 106. Separability Clause
In case any provision in this Third Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 107. Effect of Headings and Table of Contents
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
Section 108. Benefits of Third Supplemental Indenture
Nothing in this Third Supplemental Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders, any benefit or any legal or equitable right, remedy or claim under this Third Supplemental Indenture.
Section 109. Governing Law
This Third Supplemental Indenture shall be governed by and construed in accordance with the law of the State of New York, except for Sections 901, 902, 903, 906, 907, 1103 and 1202 which shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
ARTICLE TWO
FORM OF NOTES
Section 201. Form of Notes
The Notes and the Trustee’s certificate of authentication thereon are to be substantially in the form attached as Exhibit B hereto, with such changes therein as the officer of the Bank executing the Notes (by manual, facsimile or electronic format (i.e., “.pdf” or “.tif”) signature) may approve, such approval to be conclusively evidenced by such officer’s execution thereof.
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With respect to the Notes, the final paragraph of Section 303 of the Base Indenture shall be amended by adding the words “(or, solely in the case of a Global Note, by manual, facsimile or electronic signature in accordance with the Trustee’s applicable internal rules and procedures)” immediately after the words “executed by the Trustee by manual signature” and before the comma that follows such words.
ARTICLE THREE
THE NOTES
Section 301. Designation and Principal Amount
There is hereby authorized a series of Securities designated as the 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 (the “Notes”) having an aggregate principal amount of $1,000,000,000 (except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306, 906 or 1107 of the Base Indenture and except for Notes which, pursuant to Section 303 of the Base Indenture are deemed to never have been authenticated and delivered under the Base Indenture). The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is $1,000,000,000.
The Notes are unsecured Subordinated Indebtedness of the Bank.
All Notes shall be substantially identical except as to denomination.
Section 302. Maturity
The date upon which the Notes shall become due and payable at final maturity, together with any accrued and unpaid interest then owing, is November 24, 2084 (the “Maturity Date”).
Section 303. Form, Payment and Appointment
Except as provided in Section 305 of the Base Indenture, the Notes will be issued only in book-entry form and will be represented by one or more Global Notes (as defined below) registered in the name of or held by DTC or its nominee. Principal or, subject to Section 1009, the Redemption Price, if any, of a Note shall be payable to the Person in whose name that Note is registered on the Maturity Date or Redemption Date, as the case may be, provided that principal of, the Redemption Price, if any, of and interest on the Notes represented by one or more Global Notes registered in the name of or held by DTC or its nominee will be payable in immediately available funds to DTC or its nominee, as the case may be, as the registered holder of such Global Notes. The principal of any certificated Notes will be payable at the Place of Payment set forth below; provided, however, that payment of interest may be made at the option of the Bank by check mailed to the Person entitled thereto at such address as shall appear in the Security Register or by wire transfer to an account appropriately designated by the Person entitled to payment.
The Notes shall have such other terms as are set forth in the form thereof attached hereto as Exhibit B.
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The Security Registrar, Authenticating Agent and Paying Agent for the Notes shall be the Trustee.
The Place of Payment for the Notes shall initially be the Corporate Trust Office of the Trustee.
The Notes will be issuable and may be transferred only in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof. The amounts payable with respect to the Notes shall be payable in U.S. dollars.
Section 304. Global Note
The Notes shall be issued initially in the form of one or more fully registered global notes (each such global note, a “Global Note”) deposited with DTC or its designated custodian or such other Depositary as any officer of the Bank may from time to time designate. Unless and until a Global Note is exchanged for Definitive Notes, such Global Note may be transferred, in whole but not in part, and any payments on the Notes shall be made, only to DTC or a nominee of DTC, or to a successor Depositary selected or approved by the Bank or to a nominee of such successor Depositary.
Section 305. Interest
During the Initial Fixed Rate Period, the Notes shall bear interest on their principal amount at the rate of 6.350% per annum. During each Subsequent Fixed Rate Period until the Maturity Date, the Notes shall bear interest on their principal amount at a rate per annum equal to the U.S. Treasury Rate as determined on the relevant Fixed Rate Calculation Date plus 2.257%. The Notes will be payable quarterly in arrears on February 24, May 24, August 24 and November 24 of each year, commencing on February 24, 2025, or if any such day is not a Business Day, the next Business Day (but no interest will accrue as a result of that postponement) (each such date, an “Interest Payment Date”), to the Holders as of the Record Date.
Section 306. Payment of Interest; Interest Rights Preserved
Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or one or more Predecessor Notes) is registered at the close of business on the Record Date for such interest.
Subject to Section 1004, any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date may be paid by the Bank in any lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Bank to the Trustee of the proposed payment pursuant to this Section, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
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Section 307. Payment at Maturity
In connection with the maturity of the Notes on the Maturity Date, the Bank shall repay the aggregate principal amount of the Notes, together with any accrued and unpaid interest, in cash. In the event the Bank does not make such payment, the sole remedy of the Holders shall be recourse to the Limited Recourse Trust Assets.
Section 308. No Repayment at the Option of Holders
The provisions of Article Twelve of the Base Indenture relating to purchases or repayments of Securities by the Bank at the option of the Holder shall not be applicable to the Notes.
Section 309. No Sinking Fund
The provisions of Article Thirteen of the Base Indenture relating to sinking funds shall not be applicable to the Notes.
Section 310. Defeasance and Covenant Defeasance
The provisions of Article Fourteen of the Base Indenture relating to Defeasance and Covenant Defeasance shall not be applicable to the Notes.
Section 311. NVCC Automatic Conversion
The provisions of Article Sixteen of the Base Indenture relating to NVCC Automatic Conversion shall not be applicable to the Notes.
ARTICLE FOUR
ISSUE OF NOTES
Section 401. Issue of Notes
Notes having an aggregate principal amount of $1,000,000,000 may from time to time, upon execution of this Third Supplemental Indenture, be executed by the Bank and delivered to the Trustee for authentication, and upon Bank Order the Trustee shall thereupon authenticate and deliver said Notes in accordance with a Bank Order pursuant to Section 303 of the Base Indenture without any further action by the Bank (other than as required by the Base Indenture).
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 501. Applicability of Article Four of the Base Indenture
For purposes of the Notes, Article Four of the Base Indenture is hereby replaced in its entirety by this Article Five.
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Section 502. Satisfaction and Discharge of the Indenture
This Indenture shall upon Bank Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Notes herein expressly provided for), and the Trustee, at the expense of the Bank, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when:
(1) either:
(A) all Notes theretofore authenticated and delivered (other than (i) Notes which have been mutilated, destroyed, lost or stolen and which have been replaced or paid as provided in Section 306 of the Base Indenture and (ii) Notes for whose payment money or Limited Recourse Trust Assets have theretofore been deposited in trust or segregated and held in trust by the Bank and thereafter repaid to the Bank or discharged from such trust, as provided in Section 1003 of the Base Indenture or Section 703 as the case may be) have been delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for cancellation have become due and payable and the Bank has deposited or caused to be deposited with the Trustee in trust (i) funds in an amount sufficient to discharge the entire indebtedness on such Notes for principal amount and interest to the Maturity Date or to the Redemption Date, as the case may be, or (ii) in the event of a Recourse Event, all Limited Recourse Trust Assets which Holders of such Notes are entitled to receive under Section 1102;
(2) the Bank has paid or caused to be paid all other sums payable hereunder by the Bank; and
(3) the Bank has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Bank to the Trustee under Section 607 of the Base Indenture, and, if money or Limited Recourse Trust Assets shall have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of this Section, the obligations of the Trustee under Section 503 and the last paragraph of Section 1003 of the Base Indenture shall survive.
Section 503. Application of Trust Money or Limited Recourse Trust Assets
Subject to the provisions of the last paragraph of Section 1003 of the Base Indenture, all money or Limited Recourse Trust Assets deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Bank acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal amount and interest or the Redemption Price, as the case may be, for whose payment such money or Limited Recourse Trust Assets has been deposited with the Trustee.
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ARTICLE SIX
REMEDIES
Section 601. Applicability of Article Five of the Base Indenture
For the avoidance of doubt, except as set forth in this Article Six, Article Five of the Base Indenture applies to the Notes.
Section 602. Events of Default
For the purposes of these Notes, Section 501 of the Base Indenture is hereby replaced in its entirety as follows:
“Event of Default”, wherever used herein with respect to the Notes, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body); if the Bank shall become insolvent or bankrupt or subject to the provisions of the Winding-Up and Restructuring Act (Canada), or go into liquidation either voluntarily or under an order of a court of competent jurisdiction, or otherwise acknowledge its insolvency (provided that a resolution or order for winding-up the Bank, with a view to its consolidation, amalgamation or merger with another bank or the transfer of its assets as an entirety to such other bank, as provided in Article Eight of the Base Indenture, shall not constitute an Event of Default under this Section 602 if such last-mentioned bank shall, as a part of such consolidation, amalgamation, merger or transfer, and, within 90 days from the passing of the resolution or the date of the order for the winding-up or liquidation of the Bank or within such further period of time as may be allowed by the Trustee, comply with the conditions to that end stated in Article Eight of the Base Indenture).
Notwithstanding any other provisions of this Indenture, and for greater certainty, none of (i) the non-payment of principal or interest on the Notes, (ii) a default in the performance of any other covenant of the Bank in this Indenture or (iii) the occurrence of a Trigger Event (including an NVCC Automatic Conversion and Trigger Event Redemption) shall constitute an Event of Default under this Indenture or the Notes.
By acquiring any Note, each Holder and Beneficial Owner of such Note or any interest therein, including any person acquiring any such Note or interest therein after the date hereof, irrevocably acknowledges and agrees with and for the benefit of the Bank and the Trustee that a Trigger Event (including an NVCC Automatic Conversion and Trigger Event Redemption) shall not give rise to a default for purposes of Section 315(b) (Notice of Default) and Section 315(c) (Duties of the Trustee in Case of Default) of the Trust Indenture Act.
Section 603. Recourse to Limited Recourse Trust Assets is Sole Remedy
For purposes of the Notes, Section 502 of the Base Indenture is hereby replaced in its entirety as follows:
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Notwithstanding any other provision in this Indenture or the Notes, by acquiring any Note, each Holder and Beneficial Owner of such Note or any interest therein, including any person acquiring any such Note or interest therein after the date hereof, irrevocably acknowledges and agrees with and for the benefit of the Bank and the Trustee that the delivery of the applicable Limited Recourse Trust Assets to a Holder shall exhaust all remedies of such Holder under the Notes including in connection with any Event of Default. All claims of a Holder against the Bank shall be extinguished two Business Days following receipt by such Holder of the applicable Limited Recourse Trust Assets. If the Bank does not deliver, or fails to cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, the sole remedy of such Holder for any claims against the Bank shall be recourse to the applicable Limited Recourse Trust Assets.
For greater certainty, the delivery of Limited Recourse Trust Assets to the Holder shall be deemed to be in full satisfaction of the Notes and shall extinguish all claims of such Holder against the Bank. In case of any shortfall resulting from the value of the Limited Recourse Trust Assets being less than the principal amount of and any accrued and unpaid interest on, or the Redemption Price of, the Notes, all losses arising from such shortfall shall be borne by such Holder and no claim may be made against the Bank.
Section 604. Suits for Enforcement by Trustee
For purposes of the Notes, Section 503 of the Base Indenture is hereby replaced in its entirety as follows:
If an Event of Default or failure to pay the Redemption Price with respect to the Notes occurs and is continuing or the Bank does not deliver, or fails to cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, the Trustee may in its discretion or at the written direction of a majority of holders under Section 512 of the Base Indenture proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy, provided that, for greater certainty, any remedies and any claims against the Bank shall be subject to the limitations set out in Section 603.
Section 605. Application of Money or Limited Recourse Trust Assets Collected
For the purposes of the Notes, Section 506 of the Base Indenture is hereby replaced in its entirety as follows:
Any money or Limited Recourse Trust Assets collected by the Trustee pursuant to this Indenture shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or Limited Recourse Trust Assets on account of principal amount or interest or of the Redemption Price, as the case may be, upon presentation of the Notes and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due to the Trustee under Section 607 of the Base Indenture;
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SECOND: To the payment of the amounts then due and unpaid on account of the principal amount (including any portion of the Redemption Price representing principal) of the Notes in respect of which or for the benefit of which such money or Limited Recourse Trust Assets has been collected; and
THIRD: To the payment of the amounts then due and unpaid on account of interest (including any portion of the Redemption Price representing interest), on the Notes in respect of which or for the benefit of which such money or Limited Recourse Trust Assets has been collected.
Section 606. Limitation on Suits
For purposes of the Notes, Section 507 of the Base Indenture is hereby replaced in its entirety as follows:
No Holder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default or non-payment of the Redemption Price with respect to the Notes or failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder;
(2) the Holders of not less than 25% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default or failure to pay the Redemption Price or failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee full indemnity against reasonable costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 90 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 90-day period by the Majority Holders;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
Section 607. Rights of Holders to Receive Principal Amount and Interest or Redemption Price
For purposes of the Notes, Section 508 of the Base Indenture is hereby replaced in its entirety as follows:
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If a Trigger Event has not occurred, the Holder of any Note shall have the right to receive payment of: (i) the principal amount of and any accrued and unpaid interest on such Note on the Maturity Date, or (ii) in the case of a redemption, the Redemption Price on such Note on the Redemption Date (or such other date specified in this Indenture) and to institute suit for the enforcement of any such payment and such rights shall not be impaired without the consent of such Holder, provided, however, that the sole remedy of Holders if the Bank does not make such payment shall be recourse to the Limited Recourse Trust Assets.
Section 608. Delay or Omission Not Waiver
For purposes of the Notes, Section 511 of the Base Indenture is hereby replaced in its entirety as follows:
No delay or omission by the Trustee or by any Holder to exercise any right or remedy accruing upon any Event of Default, failure to pay the Redemption Price, or failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, shall impair any such right or remedy or constitute a waiver of any such Event of Default or failure or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 609. Waiver of Past Defaults
For purposes of the Notes, Section 513 of the Base Indenture is hereby replaced in its entirety as follows:
The Majority Holders may on behalf of the Holders of all the Notes waive any past default hereunder with respect to such Notes and its consequences, except a default:
| (1) | in the payment of the principal amount of, or interest on, any Note, or |
| (2) | in respect of a covenant or provision hereof which under Article Nine of the Base Indenture cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. |
Upon any such waiver, such default shall cease to exist for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 610. Waiver of Claims Relating to a Trigger Event Redemption
For the purposes of these Notes, Section 516 of the Base Indenture is hereby replaced in its entirety as follows:
To the extent permitted by the Trust Indenture Act, a Holder or Beneficial Owner waives any and all claims against the Trustee for, agrees not to initiate a suit against the Trustee in respect of, and agrees that the Trustee shall not be liable for, any action that the Trustee takes, or abstains from taking, in either case in connection with the redemption of such Notes for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then
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held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) upon a Trigger Event.
ARTICLE SEVEN
THE TRUSTEE
Section 701. Applicability of Article Six of the Base Indenture
For the avoidance of doubt, except as set forth in this Article Seven, Article Six of the Base Indenture applies to the Notes.
Section 702. Notice of Defaults
For the purposes of these Notes, Section 602 of the Base Indenture is hereby replaced in its entirety as follows:
If a default occurs hereunder with respect to the Notes, the Trustee shall give the Holders notice of such default within a reasonable time, but not exceeding 30 days after the Trustee becomes aware of such default (unless the Trustee in good faith determines that the withholding of such notice is in the best interests of the Holders and has so advised the Bank in writing) and as and to the extent provided by the Trust Indenture Act. For the purpose of this Section, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default or a failure to pay the Redemption Price with respect to the Notes or a failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder.
Where notice of a default is given under the preceding paragraph and such default is thereafter cured, the Trustee shall give the Holders notice of such fact that the default is no longer continuing, within a reasonable time, but not exceeding 30 days after the Trustee becomes aware that such default has been cured.
Section 703. Money or Limited Recourse Trust Assets Held in Trust
For the purposes of these Notes, Section 606 of the Base Indenture is hereby replaced in its entirety as follows:
Money or Limited Recourse Trust Assets held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money or Limited Recourse Trust Assets received by it hereunder except as otherwise agreed with the Bank.
Section 704. Compensation and Reimbursement
For the purposes of these Notes, Section 607(5) of the Base Indenture is hereby replaced in its entirety as follows:
(5) the obligations of the Bank under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of
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this Indenture or the earlier removal or resignation of the Trustee, and any Trigger Event Redemption. Such additional indebtedness shall be a senior claim and lien to that of the Notes upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Notes, and the Notes are hereby subordinated to such senior claim. In no event shall the lien granted hereunder attach to any assets of the Bank.
Section 705. Conflicting Interests
For the purposes of these Notes, Section 608 of the Base Indenture is hereby replaced in its entirety as follows:
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall, within ninety days after becoming aware of such conflict, either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under (i) any indenture in respect of debt of the Bank or any of its affiliates, as amended or supplemented or (ii) under the LRT Declaration of Trust.
Subject to the preceding paragraph, the same Person may be named as the Trustee and the LRT Trustee.
The Trustee and any related person to the Trustee shall not be appointed a receiver or receiver and manager or liquidator of the assets or undertaking of the Bank.
Notwithstanding any conflict of interest of the Trustee, this Indenture and the Notes shall remain valid.
Section 706. Trustee to Provide Instructions upon Request of the LRT Trustee
If at any time the LRT Trustee requests instructions from the Trustee as required under the LRT Declaration of Trust (i) in respect of statutory voting rights or voting rights conferred by the bylaws of the Bank in respect of Preferred Shares held in the Limited Recourse Trust and a meeting of holders of the Bank’s preferred shares, including the holders of Preferred Shares, has been called or a written consent is sought from the holders of the Bank’s preferred shares, including the holders of Preferred Shares (each a “Preferred Share Voting Event”), or (ii) in respect of any consent or approval of Holders required under the terms of the LRT Declaration of Trust and this Indenture in respect of an amendment or supplement to the LRT Declaration of Trust or the termination of the Limited Recourse Trust (each a “Consent Event”), the Trustee shall provide notice of such Preferred Share Voting Event or Consent Event, prepared by the Bank or the LRT Trustee, as applicable, to the Holders and solicit written voting instructions from such Holders in respect of such matters for the purpose of preserving the value of the Holders’ interest in the Notes. In respect of each Preferred Share Voting Event and Consent Event, each Holder shall be entitled to provide written instructions in proportion to the aggregate principal amount of Notes held by such Holder.
The Trustee shall deliver to the LRT Trustee the written voting instructions received from the Holders and direct the LRT Trustee to, and the Holders shall be deemed to have directed the LRT Trustee to, (i) vote the Preferred Shares, in respect of each Preferred Share Voting Event,
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then held in the Limited Recourse Trust in accordance with such voting instructions (it being understood that the LRT Trustee shall be directed to vote the Preferred Shares in favor of, against and abstain on, any matter in the same proportion as voted or abstained on by the Holders), or (ii) take such action, or abstain from taking such action, as the case may be, that is the subject matter of the applicable Consent Event and is approved by the consent of the Holders of the requisite principal amount of Outstanding Notes in accordance with Section 1104.
Section 707. FATCA
In order to comply with Sections 1471 through 1474 of the U.S. Internal Revenue Code and the rules and regulations thereunder (as in effect from time to time, collectively, the “Applicable Law”), the Bank agrees (i) to provide to the Trustee upon its request information in the Issuer’s possession about holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so the Trustee can determine whether it has tax related obligations under the Applicable Law, and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under this Indenture to the extent necessary to comply with the Applicable Law for which the Trustee shall not have any liability for its withholding or deduction from payment under this Third Supplemental Indenture to the extent necessary to comply with Applicable Law and (iii) to hold harmless the Trustee for any losses it may suffer due to the actions it takes to comply with such Applicable Law. The terms of this section shall survive the termination of this Third Supplemental Indenture.
ARTICLE EIGHT
COVENANTS
Section 801. Additional Amounts
The Bank will pay any amounts to be paid by it on the Notes without deduction or withholding for, or on account of, any and all present or future income, stamp and other taxes, levies, imposts, duties, charges, fees, deductions or withholdings (for the purpose of this Section 801, “Canadian Taxes”) now or hereafter imposed, levied, collected, withheld or assessed by or on behalf of Canada or any Canadian political subdivision or authority that has the power to tax, unless the deduction or withholding is required by law or by the interpretation or administration thereof by the relevant governmental authority. At any time a Canadian taxing jurisdiction requires the Bank to deduct or withhold for or on account of Canadian Taxes from any payment made under or in respect of the Notes, the Bank will pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amounts received by each Holder (including Additional Amounts), after such deduction or withholding, shall not be less than the amount the Holder would have received had no such deduction or withholding been required.
However, no Additional Amounts will be payable with respect to a payment made to a Holder of a Note, or of a right to receive payment in respect thereto (a “Payment Recipient”), which is herein referred to as an “Excluded Holder”, in respect of any Canadian Taxes imposed because the beneficial owner or Payment Recipient:
(1) is someone with whom the Bank does not deal at arm’s length (within the meaning of the Income Tax Act (Canada)) at the time of making such payment;
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(2) is subject to such Canadian Taxes by reason of its being connected presently or formerly with Canada or any province or territory thereof other than by reason of the Holder’s activity in connection with purchasing such Note, the holding of such Note or the receipt of payments thereunder;
(3) is, or does not deal at arm’s length with a person who is, a “specified shareholder” (as defined in subsection 18(5) of the Income Tax Act (Canada)) of the Bank;
(4) is subject to such Canadian Taxes by reason of its being an entity in respect of which the Bank is a “specified entity” (as defined in subsection 18.4(1) of the Income Tax Act (Canada));
(5) presents such Note for payment (where presentation is required) more than 30 days after the relevant date (except to the extent that the Holder thereof would have been entitled to such Additional Amounts on presenting a Note for payment on the last day of such 30 day period); for this purpose, the “relevant date” in relation to any payments on any Note means:
(A) the due date for payment thereof, or
(B) if the full amount of the monies payable on such date has not been received by the Trustee on or prior to such due date, the date on which the full amount of such monies has been received and notice to that effect is given to Holders of the Notes in accordance with this Indenture;
(6) could lawfully avoid (but has not so avoided) such withholding or deduction by complying, or requiring that any agent comply with, any statutory requirements necessary to establish qualification for an exemption from withholding or by making, or requiring that any agent make, a declaration of non-residence or other similar claim for exemption to any relevant tax authority; or
(7) is subject to deduction or withholding on account of any tax, assessment, or other governmental charge that is imposed or withheld by reason of the application of Sections 1471 through 1474 of the Code (or any successor provisions), any regulation, pronouncement, or agreement thereunder, official interpretations thereof, or any law implementing an intergovernmental approach thereto, whether currently in effect or as published and amended from time to time.
For the avoidance of doubt, the Bank will not have any obligation to pay any Holders Additional Amounts on any Canadian Tax which is payable otherwise than by deduction or withholding from payments made under or in respect of the Notes.
The Bank will also make such withholding or deduction and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The Bank will furnish to the Trustee, within 30 days after the date the payment of any Canadian Taxes is due pursuant to applicable law, certified copies of tax receipts evidencing that such payment has been made or other evidence of such payment satisfactory to the Trustee. The Bank will indemnify and hold harmless each Holder of the Notes (other than an Excluded Holder) and upon written request
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reimburse each such Holder for the amount of (i) any Canadian Taxes so levied or imposed and paid by such Holder as a result of payments made under or with respect to the Notes, and (ii) any Canadian Taxes levied or imposed and paid by such Holder with respect to any reimbursement under (i) above, but excluding any such Canadian Taxes on such Holder’s net income or capital.
Wherever in this Indenture there is mentioned, in any context, the payment of principal, interest or any other amount payable under or with respect to the Notes, such mention shall be deemed to include mention of the payment of Additional Amounts provided for in this Section to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to the provisions of this Section.
Notwithstanding the provisions of this Section 801, all payments shall be made net of any deduction or withholding imposed or collected pursuant to Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (or any law implementing such an intergovernmental agreement) (any such withholding, a “FATCA Withholding Tax”), and no Additional Amounts shall be payable as a result of any such FATCA Withholding Tax.
Section 802. No Restriction on Other Indebtedness
For the purposes of these Notes, Section 1007 of the Base Indenture is hereby replaced in its entirety as follows:
The Bank may create, issue or incur any other Indebtedness which, in the event of the insolvency or winding-up of the Bank, would rank in right of payment in priority to, equally with, or subordinate to the Notes.
Section 803. Money or Limited Recourse Trust Assets for Notes Payments to Be Held in Trust
For the purposes of these Notes, Section 1003 of the Base Indenture is hereby replaced in its entirety as follows:
If the Bank shall at any time act as its own Paying Agent with respect to the Notes, it will, on each due date of the principal amount of, interest on or the Redemption Price of the Notes, deposit in an account established for the purpose of providing the Persons entitled thereto a sum sufficient to pay the principal amount, interest or the Redemption Price, as the case may be, so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Bank shall have one or more Paying Agents for the Notes, it will, on each due date of the principal amount of, interest on or the Redemption Price of the Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided herein, and (unless such Paying Agent is the Trustee) the Bank will promptly notify the Trustee of its action or failure so to act.
The Bank will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the
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provisions of this Section, that such Paying Agent will during the continuance of any default by the Bank (or any other obligor upon the Notes) in the making of any payment in respect of the Notes, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Notes.
The Bank may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Bank Order direct any Paying Agent to pay, to the Trustee all sums held by the Bank or such Paying Agent, such sums to be held by the Trustee in trust for the benefit of the Persons entitled thereto; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money or Limited Recourse Trust Assets deposited with the Trustee or any Paying Agent in trust for the payment of principal amount of, interest on or the Redemption Price of the Notes and remaining unclaimed for two years after such principal amount, interest or the Redemption Price has become due and payable shall be paid to the Bank on Bank Request; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Bank for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or Limited Recourse Trust Assets, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Bank cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City of Toronto, Ontario, Canada, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money or Limited Recourse Trust Assets then remaining will be repaid to the Bank.
Section 804. Waiver of Certain Covenants
For the purposes of these Notes, Section 1006 of the Base Indenture is hereby replaced in its entirety as follows:
The Bank may, with respect to the Notes, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(18), Section 901(2) or Section 901(7) of the Base Indenture or Section 802 or Section 803 of the Third Supplemental Indenture for the benefit of the Holders of such series or in Section 1005 of the Base Indenture if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Bank and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
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ARTICLE NINE
DELIVERY OF COMMON SHARES UPON A TRIGGER EVENT
Section 901. Trigger Event
Upon the occurrence of a Trigger Event and immediately following an NVCC Automatic Conversion (the “Trigger Event Redemption Date”), each Outstanding Note shall automatically and immediately be redeemed, on a full and permanent basis, without any action on the part of, or the consent of, the Holders, the LRT Trustee, or the Trustee, for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) (a “Trigger Event Redemption”).
Section 902. Conversion Rate
The number of Common Shares that will be held in the Limited Recourse Trust following an NVCC Automatic Conversion and immediately before the Trigger Event Redemption will be equal to the product of (a) the number of Preferred Shares held in the Limited Recourse Trust immediately prior to an NVCC Automatic Conversion, times (b) the quotient obtained by dividing (i) the Multiplier multiplied by the Share Value, by (ii) the Conversion Price (rounding down, if necessary, to the nearest whole number of Common Shares). For the purposes of this Section, the terms “Multiplier”, “Share Value” and “Conversion Price” shall have the respective meanings ascribed to them in the terms and conditions applicable to the Preferred Shares.
Upon redemption of the Notes for Limited Recourse Trust Assets, each Holder shall receive the number of Common Shares (subject to Section 1103) in proportion to the principal amount of the Outstanding Notes held by each Holder. For greater certainty, any accrued and unpaid interest will not be taken into account.
Section 903. Time of Trigger Event Redemption
A Trigger Event Redemption is deemed to be effected immediately following the occurrence of an NVCC Automatic Conversion and the rights of the Holder of such Notes as the holder thereof shall cease at such time and the person or persons entitled to receive Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) upon a Trigger Event Redemption shall be treated for all purposes as having become the holder or holders of record of such Common Shares at such time. Subject to Section 1003, as promptly as practicable after the occurrence of a Trigger Event, the Bank shall announce the Trigger Event Redemption by way of a press release and shall give notice (a “Trigger Event Notice”) of the Trigger Event Redemption in accordance with the provisions of Section 106 of the Base Indenture to the Holders and the Trustee. From and after the Trigger Event Redemption Date, the Notes shall cease to be outstanding, the holders thereof shall cease to be entitled to interest thereon, and any certificates representing the Notes shall represent only the right to receive upon surrender thereof the applicable number of Common Shares as specified in Section 902. A Trigger Event Redemption shall be mandatory and binding upon the Bank and all Holders notwithstanding anything else including, without limitation: (i) the existence or prior occurrence of an Event of Default in respect of the Notes; (ii) any prior action to or in furtherance of a redeeming, exchanging or converting the Notes pursuant to the other terms and conditions of the Indenture;
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and (iii) any delay or impediment to the issuance or delivery of the Common Shares to the Holders.
Section 904. Trigger Event Redemption Procedure
(1) If the Notes are held in the form of one or more Global Notes at the time of the Trigger Event Redemption, within two Business Days of its receipt of the Trigger Event Notice, the Trustee shall, acting pursuant to this Indenture, cause such notice to be transmitted to the direct participants of DTC holding the Notes at such time.
(2) If the Notes are held in definitive form at the time of the Trigger Event Redemption, the Bank will provide Holders with a notice describing, among other things, how the Bank intends to deliver the evidence of beneficial ownership of the Common Shares and requesting such Holders to provide the Bank with their relevant securities account information for purposes of receiving such evidence of beneficial ownership.
(3) The Bank shall have no liability to any Holder or Beneficial Owner of the Notes from any delay in the receipt of the evidence of beneficial ownership of the Common Shares resulting from the Bank’s compliance with applicable operational and corporate law requirements.
Section 905. Duties of Trustee upon Trigger Event Redemption
Upon a Trigger Event Redemption, (i) the Trustee shall not be required to take any further directions from Holders or Beneficial Owners of the Notes under this Indenture; and (ii) this Indenture shall impose no duties upon the Trustee whatsoever with respect to redemption of the Notes into Common Shares upon a Trigger Event (except for the delivery of a notice by the Trustee to participants of DTC following a Trigger Event pursuant to Section 904).
Section 906. General
(1) Upon a Trigger Event Redemption, the principal amount of the Note and any accrued and unpaid interest thereon shall be deemed paid in full upon such redemption by the delivery of Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) and the Holders shall have no further rights and the Bank shall have no further obligations under this Indenture. If tax is required to be withheld from such payment of any interest in the form of Common Shares, the number of Common Shares received by a Holder shall reflect an amount net of any applicable withholding tax.
(2) Notwithstanding any other provision of this Indenture or the Notes, the redemption of the Notes in connection with a Trigger Event Redemption shall not be an Event of Default and the only consequence of a Trigger Event and the resulting Trigger Event Redemption shall be the redemption of the Notes for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion).
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(3) The Trustee shall have no duty to determine the occurrence of a Trigger Event Redemption or any calculations in connection with such Trigger Event Redemption. The Trustee makes no representation as to the validity or value of any securities or assets issued upon a Trigger Event Redemption, and the Trustee shall not be responsible for the Bank’s failure to comply with any provisions of this Article Nine.
(4) Notwithstanding any other provision of this Indenture or the Notes, a failure to provide any notice referred to in Sections 903 and 904 shall not have any impact on the effectiveness of, or otherwise invalidate, any redemption, or give the Holders and beneficial owners of the Notes any rights as a result of such failure.
Section 907. Agreement of Holders and Beneficial Owners of the Notes
By acquiring any Note, each Holder and Beneficial Owner of such Note or any interest therein, including any person acquiring any such Note or interest therein after the date hereof, irrevocably acknowledges, consents and agrees with and for the benefit of the Bank and the Trustee as follows:
(1) that the principal amount of the Note and any accrued and unpaid interest thereon shall be deemed paid in full by the delivery of Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) upon the occurrence of a Trigger Event and the resulting Trigger Event Redemption, which occurrence and resulting Trigger Event Redemption shall occur without any further action on the part of such Holder or Beneficial Owner or the Trustee;
(2) that a Trigger Event Redemption upon the occurrence of a Trigger Event shall not constitute an Event of Default under the terms of the Notes or the Indenture, and following a Trigger Event Redemption, no Holder or Beneficial Owner of the Notes will have any rights against the Bank with respect to the repayment of the principal amount of, or interest on, the Notes;
(3) that, upon a Trigger Event Redemption, (i) the Trustee shall not be required to take any further directions from Holders or Beneficial Owners of the Notes under the Indenture and (ii) the Indenture shall impose no duties upon the Trustee whatsoever with respect to redemption of the Notes for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) upon a Trigger Event (except for the delivery of a notice by the Trustee to participants of DTC following a Trigger Event pursuant to Section 904);
(4) that such Holder or Beneficial Owner authorizes, directs and requests DTC and any direct participant in DTC or other intermediary through which it holds such Notes to take any and all necessary action, if required, to implement the redemption of the Notes for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion) upon a Trigger Event without any further action or direction on the part of such Holder or such Beneficial Owner; and
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(5) that such Holder or Beneficial Owner acknowledges and agrees that all authority conferred or agreed to be conferred by any Holder and Beneficial Owner pursuant to the provisions described above shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of each Holder and Beneficial Owner of a Note or any interest therein.
ARTICLE TEN
REDEMPTION OF NOTES
Section 1001. Applicability of Article Eleven of the Base Indenture
The provisions of Article Eleven of the Base Indenture shall not be applicable to the Notes and is hereby replaced in its entirety as follows:
Subject to any applicable law restricting the redemption of the Notes, including the Bank Act and the regulations and guidelines thereunder, including the OSFI Capital Adequacy Requirements (CAR) Guideline, as may be amended from time to time, and provided that a Trigger Event has not occurred, the Notes shall be redeemable in accordance with this Article Ten. For greater certainty, this Article Ten shall not apply to a Trigger Event Redemption, and upon the occurrence of a Trigger Event, the Notes shall only be redeemed in accordance with Article Nine. For certainty, the Bank will not redeem the Notes under any circumstances if such redemption would, directly or indirectly, result in the Bank’s breach of any provision of the Bank Act.
Section 1002. Cash Redemption
Upon the occurrence of a Preferred Share Redemption (a “Cash Redemption Date”) on any date other than the Maturity Date, a corresponding number of Outstanding Notes with an aggregate principal amount equal to the aggregate face amount of Preferred Shares redeemed by the Bank pursuant to the Preferred Share Redemption, shall automatically and immediately be redeemed for a cash amount equal to the Redemption Price (a “Cash Redemption”), on a full and permanent basis, without any action on the part of, or the consent of, the Holders of such Notes. For certainty, to the extent that the Bank has immediately prior to or concurrently with such Preferred Share Redemption redeemed or purchased for cancellation a corresponding number of Outstanding Notes in accordance with the terms of this Indenture, the foregoing requirement to automatically and immediately redeem a corresponding number of Outstanding Notes shall be deemed satisfied.
From and after the Cash Redemption Date, any Outstanding Notes so redeemed shall cease to be outstanding, the Holders thereof shall cease to be entitled to interest thereon, and any certificates representing the Notes shall represent only the right to receive upon surrender thereof the Redemption Price.
Section 1003. Special Event Redemption
In respect of a Special Event Date, the Bank may, at its option, with the prior written approval of the Superintendent, at any time on or within 90 days following a Special Event Date, on not less than 10 nor more than 60 days’ prior notice to the Holders, redeem the Notes, in
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whole but not in part, on a full and permanent basis, without any action on the part of, or the consent of, the Holders of such Notes, for the Redemption Price (a “Special Event Redemption”).
From and after the date of a Special Event Redemption (it being understood that the redemption shall be deemed to occur on the date fixed by the Bank in the notice of redemption delivered pursuant to Section 1007) (a “Special Event Redemption Date”), all Outstanding Notes shall cease to be outstanding, the Holders thereof shall cease to be entitled to interest thereon, and any certificates representing the Notes shall represent only the right to receive upon surrender thereof the Redemption Price.
Section 1004. Failed Coupon Redemption
Subject to Section 1101, upon the occurrence of a Failed Coupon Payment Date, each Outstanding Note shall automatically and immediately be redeemed, on a full and permanent basis, without any action on the part of, or the consent of, the Holders, for the Redemption Price (a “Failed Coupon Redemption”).
A Failed Coupon Redemption is deemed to be effected on the Failed Coupon Payment Date and the rights of all the Holders, as the holder of Notes shall cease at such time. From and after the Failed Coupon Payment Date, all Outstanding Notes shall cease to be outstanding, each Holder shall cease to be entitled to interest thereon, and any certificates representing the Notes shall represent only the right to receive upon surrender thereof the Redemption Price.
A Failed Coupon Redemption shall be mandatory and binding upon the Bank and all Holders notwithstanding anything else including, without limitation any delay or impediment to the issuance or delivery of the Redemption Price to the Holders.
Section 1005. Mandatory Redemption; Open Market Purchases
Except as provided in Article Nine and this Article Ten, the Bank shall not be required to make mandatory redemption payments with respect to the Notes. At any time the Bank may, with the prior written approval of the Superintendent, purchase Notes, in whole or in part, by tender offer, open market purchases, negotiated transactions or otherwise in accordance with applicable securities laws and regulations, so long as such acquisition does not otherwise violate the terms of this Indenture, upon such terms and at such prices as the Bank may determine. Notes purchased by the Bank shall, subject to the following paragraph, be cancelled and shall not be re-issued. Notwithstanding the foregoing, any subsidiary of the Bank may purchase Notes in the ordinary course of its business of dealing in securities.
If any Notes are to be cancelled pursuant to the preceding paragraph, the Bank shall, immediately before such purchase and with the prior written approval of the Superintendent, redeem a corresponding number of Preferred Shares (which amount shall equal the aggregate principal amount of the Notes to be cancelled) then held in the Limited Recourse Trust for cancellation. The Bank shall apply, or cause the LRT Trustee to apply, the proceeds from the redemption of such Preferred Shares first towards the payment of the principal amount of, and second towards any accrued and unpaid interest on the Notes.
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Section 1006. Election to Redeem; Notice to Trustee
The election of the Bank to redeem any Notes pursuant to Section 1003 shall be evidenced by a Board Resolution.
Section 1007. Notice of Redemption
(1) In respect of a Cash Redemption, notice of redemption shall be given in accordance with Section 106 of the Base Indenture to each Holder not less than 10 nor more than 60 days prior to the Cash Redemption Date. All such notices of redemption shall state:
(A) the Cash Redemption Date;
(B) the Redemption Price;
(C) that on the Cash Redemption Date, the Redemption Price will become due and payable upon each Note and that interest thereon will cease to accrue on and after said date;
(D) the place or places where each such Note is to be surrendered for payment of the Redemption Price; and
(E) if applicable, the CUSIP numbers of the Notes.
(2) In respect of a Special Event Redemption, notice of redemption shall be given in accordance with Section 106 of the Base Indenture to each Holder not less than 10 nor more than 60 days prior to the Special Event Redemption Date. All such notices of redemption shall state:
(A) the Special Event Redemption Date;
(B) the Redemption Price;
(C) that on the Special Event Redemption Date, the Redemption Price will become due and payable upon each such Note and that interest thereon will cease to accrue on and after said date;
(D) the place or places where each such Note is to be surrendered for payment of the Redemption Price; and
(E) if applicable, the CUSIP numbers of the Notes.
(3) In respect of a Failed Coupon Redemption, notice of redemption shall be given in accordance with Section 106 of the Base Indenture to each Holder as promptly as practicable after the Failed Coupon Payment Date. All such notices of redemption shall state:
(A) that a Failed Coupon Redemption has occurred on the Failed Coupon Payment Date;
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(B) the Redemption Price (calculated as of the Failed Coupon Payment Date);
(C) that on the Failed Coupon Payment Date, the Redemption Price will become due and payable upon each Note and that all Notes shall have ceased to be outstanding as of the Failed Coupon Payment Date and interest on the Notes shall have ceased to accrue on and after said date;
(D) the place or places where each such Note is to be surrendered for payment of the Redemption Price; and
(E) if applicable, the CUSIP numbers of the Notes.
(4) Notice of redemption of Notes to be redeemed at the election of the Bank shall be given by the Bank or, at the Bank’s request, by the Trustee in the name and at the expense of the Bank and, subject to Clause (5) below and unless otherwise specified or contemplated in this Indenture, shall be irrevocable.
(5) The occurrence of a Trigger Event prior to the date fixed for redemption shall automatically rescind a notice of redemption and, in such circumstances, no Notes shall be redeemed and no payment in respect of the Notes shall be due and payable.
(6) Notwithstanding any other provision of this Indenture or the Notes, a failure to provide any notice (except for the notice in Clause (1) and (2)) referred to in this Article Ten shall not have any impact on the effectiveness of, or otherwise invalidate, any redemption, or give the Holders and beneficial owners of the Notes any rights as a result of such failure.
Section 1008. Deposit of Redemption Price
In the case of a Cash Redemption or Special Event Redemption, on the applicable Redemption Date, the Bank shall deposit with the Trustee or with a Paying Agent (or, if the Bank is acting as its own Paying Agent, deposit in an account established for the purpose as provided in Section 803) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date.
Section 1009. Notes Payable on Redemption Date
Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the applicable Redemption Date (or such other date specified in this Indenture), become due and payable at the Redemption Price therein specified, and from and after such Redemption Date, such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Bank at the Redemption Price; provided, however, that, unless otherwise specified as contemplated by Section 306, installments of interest whose Interest Payment Date is on or prior to the Redemption Date will be payable to the Holders of such Notes, or one or more Predecessor Notes, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 306.
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Section 1010. Agreement of Holders and Beneficial Owners of the Notes
By acquiring any Note, each Holder and Beneficial Owner of such Note or any interest therein, including any person acquiring any such Note or interest therein after the date hereof, irrevocably acknowledges, consents and agrees with and for the benefit of the Bank as follows:
(1) that upon the occurrence of a Cash Redemption, Special Event Redemption or Failed Coupon Redemption, as the case may be, such redemption shall, in each case, occur without any further action on the part of such Holder or Beneficial Owner;
(2) that the occurrence of a Cash Redemption, Special Event Redemption or Failed Coupon Redemption shall not constitute an Event of Default under the terms of the Notes or the Indenture, and following such redemption, Holders and Beneficial Owners of the Notes will not have any rights against the Bank with respect to the repayment of the principal amount of, or interest on, the Notes other than recourse to the Limited Recourse Trust Assets; and
(3) that in the event of a Recourse Event, the Redemption Price shall be deemed paid in full by the delivery of Limited Recourse Trust Assets.
ARTICLE ELEVEN
LIMITED RECOURSE TRUST AND SUPPLEMENTAL INDENTURE
Section 1101. Satisfaction of Payment Obligations with Limited Recourse Trust Assets
Notwithstanding any other provision in this Indenture, the sole remedy of Holders in the event of a Recourse Event (including, for the avoidance of doubt, the non-payment of the principal amount of, interest on or the Redemption Price for the Notes when due) shall be recourse to the applicable Limited Recourse Trust Assets. Upon any such Recourse Event, the Bank shall deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to the Holders, and the delivery of Limited Recourse Trust Assets to the Holder shall be deemed to be in full satisfaction of the Notes and shall extinguish all claims of such Holder against the Bank in accordance with Section 603 regardless of whether the value of such Limited Recourse Trust Assets is less than the principal amount of and any accrued and unpaid interest on the Notes or the Redemption Price of the Notes, as applicable.
Section 1102. Limited Recourse Trust Assets
(1) In connection with the issuance of the Notes, the Bank will cause the LRT Trustee to hold Limited Recourse Trust Assets in the Limited Recourse Trust, that will, on the Date of Issue, consist of 1,000,000 Preferred Shares.
(2) From and after the Date of Issue, in the event of a Recourse Event other than a Trigger Event Redemption, each Holder will be entitled to receive from the Limited Recourse Trust, such Holder’s pro rata share of the Limited Recourse Trust Assets in proportion to the principal amount of the Outstanding Notes held by such Holder.
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(3) Upon the occurrence of a Trigger Event Redemption, each Holder of the Notes redeemed would receive a pro rata number of Common Shares (subject to Section 1103) from the Limited Recourse Trust in proportion to the principal amount of the Outstanding Notes held by such Holder in accordance with Section 902.
(4) In accordance with the LRT Declaration of Trust, the Bank shall not permit the LRT Trustee to distribute any Limited Recourse Trust Assets other than in connection with the redemption or cancellation of any Notes or the redemption of Preferred Shares pursuant to any Preferred Share Redemption.
(5) The Bank will comply with its undertakings in the LRT Declaration of Trust in all material respects and will deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to the Holders in the event of a Recourse Event in accordance with the terms of the LRT Declaration of Trust and of this Indenture.
Section 1103. Right Not to Deliver Common Shares or Preferred Shares
Notwithstanding any other provision in this Indenture, the Bank reserves the right not to deliver Common Shares or Preferred Shares to any Person whom the Bank or its transfer agent has reason to believe is an Ineligible Person or any person who, by virtue of that delivery, would become a Significant Shareholder. In such circumstances, the Bank will hold, as agent for such Persons, the Common Shares or Preferred Shares that would have otherwise been delivered to such Persons and will attempt to facilitate the sale of such Common Shares or Preferred Shares to parties other than the Bank and its Affiliates on behalf of such Persons through a registered dealer to be retained by the Bank on behalf of such Persons. Those sales (if any) may be made at any time and at any price. The Bank shall not be subject to any liability for failure to sell any such Common Shares or Preferred Shares on behalf of such Persons or at any particular price on any particular day. The net proceeds received by the Bank from the sale of any such Common Shares or Preferred Shares will be divided among the applicable Persons in proportion to the number of Common Shares or Preferred Shares that would otherwise have been delivered to them after deducting the costs of sale and any applicable withholding taxes. The Bank shall deliver a check or send a wire transfer in immediately available funds representing the aggregate net proceeds to the Depositary (if the Common Shares or Preferred Shares are then held in the form of one or more global securities) or in all other cases to such Persons in accordance with the regular practices and procedures of Depositary or otherwise.
Section 1104. Amendments to LRT Declaration of Trust; Termination of LRT Declaration of Trust
(1) Any amendment or supplemental declaration of trust for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the LRT Declaration of Trust shall require the consent of the Majority Holders; provided, however, that to the extent any such addition, change or elimination is in respect of the definition of “Trust Assets” in Section 1.1 (Definitions), Section 2.3 (Objective of Trust), Section 2.4(a), Section 2.4(b) or Section 2.4(d) (Ownership of Trust Assets), Section 2.6 (Binding Effect), Section 2.7 (Legal Character of Trust), Section 3.1 (Issuance of Preferred Shares), Section 3.2 (Issuance of Common Shares), Section 3.3 (Proceeds from Redemption of Preferred Shares), Section 4.1 or Section 4.2 (Recourse Event and Delivery of Trust Assets) and Article 10 (Termination) of the LRT Declaration
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of Trust (or the equivalent sections of the LRT Declaration of Trust following any addition, change or elimination to the LRT Declaration of Trust permitted in accordance with this Section 1104(1)), such addition, change or elimination shall not be made without the consent of the Holder of each Outstanding Note affected thereby. For certainty, a change to the governing law of the LRT Declaration of Trust in accordance with the provisions of the LRT Declaration of Trust shall not require the consent of any Holders. It shall not be necessary for any Act of Holders under this Section 1104(1) to approve the particular form of any proposed amendment or supplemental declaration of trust, but it shall be sufficient if such Act shall approve the substance thereof.
(2) Notwithstanding Section 1104(1), without the consent of any Holders, the Bank and the LRT Trustee may make any amendment to the LRT Declaration of Trust or enter into supplemental declarations of trust to the LRT Declaration of Trust for any of the following purposes:
(A) to evidence the succession of another Person to the Bank and the assumption by any such successor of the covenants of the Bank in the LRT Declaration of Trust; or
(B) to add to the covenants of the Bank for the benefit of the Holders or to surrender any right or power conferred upon the Bank in the LRT Declaration of Trust; or
(C) to evidence and provide for the acceptance of appointment hereunder by a successor LRT Trustee; or
(D) to cure any ambiguity, to correct or supplement any provision of the LRT Declaration of Trust which may be defective or inconsistent with any other provision of the LRT Declaration of Trust, to add, amend, correct or supplement any provision of the LRT Declaration of Trust which may become incorrect or inaccurate as a result of the passage of time (including changes to the provisions of legislation referred to in the LRT Declaration of Trust) or to make any other provisions with respect to matters or questions arising under the LRT Declaration of Trust, provided that such action pursuant to this Section 1104(2) shall not adversely affect the interests of the Holders in any material respect.
(3) The termination of the LRT Declaration of Trust shall require the consent of the Holder of each Outstanding Note affected thereby.
Section 1105. Supplemental Indentures Without Consent of Holders
For purposes of the Notes, Section 901(9) of the Base Indenture is hereby replaced in its entirety as follows:
(9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, to add, amend, correct or supplement any provision herein which may become incorrect or inaccurate as a result of the passage of time (including changes in the titles of officers of the Bank referred to herein and changes in titles of government authorities or legislation, or provisions of legislation, referred to herein) or to make
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any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Notes in any material respect.
Section 1106. Supplemental Indentures With Consent of Holders
For purposes of the Notes, Section 902(4) of the Base Indenture is hereby replaced in its entirety as follows:
(4) modify any of the provisions of this Section, or Section 609, Section 706, Section 804 or Section 1104 of the Third Supplemental Indenture, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section and Section 804 of the Third Supplemental Indenture, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8) of the Base Indenture.
ARTICLE TWELVE
SUBORDINATION OF NOTES
Section 1201. Applicability of Article Fifteen of the Base Indenture
(1) Other than as set forth in this Indenture, the provisions of Article Fifteen of the Base Indenture shall be applicable to the Notes, except as modified herein.
(2) Solely for purposes of the Notes (and not in relation to any other series of Securities), all references in Article Fifteen of the Base Indenture to “Senior Indebtedness” shall hereby be replaced with references to “Higher Ranked Indebtedness.”
Section 1202. Notes Subordinate to Deposit Liabilities and Other Indebtedness
For purposes of the Notes, Section 1501 of the Base Indenture is hereby replaced in its entirety as follows:
The Notes are direct unsecured debt obligations constituting bank subordinated indebtedness within the meaning of the Bank Act and, in the event of the insolvency or winding-up of the Bank, the Indebtedness evidenced by the Notes shall rank:
(1) subordinate in right of payment to the prior payment in full of all Indebtedness of the Bank then outstanding (including all Subordinated Indebtedness of the Bank then outstanding other than Junior Subordinated Indebtedness) (the “Higher Ranked Indebtedness”); and
(2) in right of payment equally with and not prior to the Junior Subordinated Indebtedness (other than the Junior Subordinated Indebtedness which by its terms ranks subordinate to the Notes) of the Bank then outstanding,
in each case, whether now outstanding or hereafter incurred.
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Notwithstanding the foregoing, in the event of the occurrence of a Recourse Event, including an Event of Default, the sole remedy of Holders shall be recourse to the applicable Limited Recourse Trust Assets.
The Bank agrees and each Holder of any Note, by his, her or its acceptance of such Note, also agrees and shall be deemed conclusively to have agreed, for the benefit of the present and future holders of Higher Ranked Indebtedness, and for the benefit of all present and future holders of Indebtedness to which the Notes are subordinate in right of payment, to the provisions of this Article Twelve and Article Fifteen of the Base Indenture and the Bank and each Holder of any Note by his, her or its acceptance of such Note shall be bound by such provisions.
Section 1203. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice
The Trustee shall not at any time be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee, and the Trustee shall not be required to withhold payment to the Holders, unless and until the Trustee shall have received written notice thereof at its Corporate Trust Office from the Bank, or from one or more holders of Higher Ranked Indebtedness of the Bank or from any representative therefor and, prior to the receipt of any such written notice, the Trustee, subject to the provisions of Sections 601 and 603 of the Base Indenture, shall be entitled to assume conclusively that no such facts exist.
The Trustee, subject to the provisions of Article Six of the Base Indenture and Article Seven, shall be entitled to rely on the delivery to it of a written notice by the Bank or a person representing himself, herself or itself to be a holder of Higher Ranked Indebtedness of the Bank to establish that such notice has been given. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Higher Ranked Indebtedness of the Bank to participate in any payment or distribution pursuant to this Article Twelve and Article Fifteen of the Base Indenture, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Higher Ranked Indebtedness of the Bank held by such person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article Twelve and Article Fifteen of the Base Indenture, and if such evidence is not furnished the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment.
Section 1204. No Fiduciary Duty of Trustee to Holders of Higher Ranked Indebtedness of the Bank
The Trustee shall not be deemed to owe any fiduciary duty to the holders of Higher Ranked Indebtedness of the Bank, and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to the Holders or the Bank or any other Person, cash, property or securities to which any holders of Higher Ranked Indebtedness of the Bank shall be entitled by virtue of this Article Twelve, Article Fifteen of the Base Indenture or otherwise. Nothing in this Section 1204 shall affect the obligation of any other such Person to hold such payment for the benefit of, and to pay such payment over to, the holders of Higher Ranked Indebtedness of the Bank or their representative.
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ARTICLE THIRTEEN
MISCELLANEOUS
Section 1301. Ratification of Base Indenture
The Base Indenture, as supplemented by this Third Supplemental Indenture, is in all respects ratified and confirmed, and this Third Supplemental Indenture shall be deemed part of the Base Indenture in the manner and to the extent herein and therein provided.
Section 1302. Conflict with Base Indenture
If any provision of this Third Supplemental Indenture relating to the Notes is inconsistent with any provision of the Base Indenture, such provision of this Third Supplemental Indenture shall control.
Section 1303. Execution in Counterparts
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page to this Indenture by any party hereto by facsimile transmission, email (i.e., “.pdf” or “.tif”) or other form of electronic transmission shall be as effective as delivery of a manually executed copy of this Indenture by such party.
Section 1304. Indenture and Notes Solely Corporate Obligations
No recourse under or upon any obligation, covenant or agreement of the Indenture or of Notes, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Bank or of any successor corporation, either directly or through the Bank, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that the Indenture and the Notes are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Bank or of any successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in the Indenture or the Notes or implied therefrom; and that any and all such personal liability, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in the Indenture or in the Notes or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Third Supplemental Indenture and the issue of the Notes.
Section 1305. Agreement of Subsequent Investors
Holders or Beneficial Owners of Notes that acquire the Notes in the secondary market shall be deemed to acknowledge, agree to be bound by and consent to the same provisions
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specified in the Indenture to the same extent as the Holders or Beneficial Owners of the Notes that acquire the Notes upon their initial issuance, including, without limitation, with respect to the acknowledgement and agreement to be bound by and consent to the terms of the Notes, including in relation to any Trigger Event Redemption.
Section 1306. Waiver of Jury Trial
EACH OF THE BANK AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS THIRD SUPPLEMENTAL INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the day and year first above written.
| ROYAL BANK OF CANADA | ||
| By: | /s/ Jason Drysdale | |
| Name: Jason Drysdale | ||
| Title: Executive Vice-President and Treasurer | ||
| By: | /s/ Rajneesh Sharma | |
| Name: Rajneesh Sharma | ||
| Title: Vice-President & Head, Term Funding and Capital Management | ||
| THE BANK OF NEW YORK MELLON, as Trustee | ||
| By: | /s/ Stacey B. Poindexter | |
| Name: Stacey B. Poindexter | ||
| Title: Vice President | ||
Exhibit A
TERMS AND CONDITIONS OF THE PREFERRED SHARES
PROVISIONS ATTACHING TO
NON-CUMULATIVE 5-YEAR FIXED RATE RESET FIRST PREFERRED SHARES
SERIES BX (NON-VIABILITY CONTINGENT CAPITAL (NVCC))
OF
ROYAL BANK OF CANADA
(the “Bank”)
The seventy-sixth series of First Preferred Shares will consist of 1,000,000 shares designated as “Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC))” (the “Preferred Shares Series BX”) and, in addition and subject to the rights, privileges, restrictions and conditions attaching to the First Preferred Shares as a class, the rights, privileges, restrictions and conditions attaching to the Preferred Shares Series BX shall be as follows:
1. DEFINITIONS – The following definitions are applicable to the Preferred Shares Series BX:
“Additional Amounts” has the meaning set out in the Indenture.
“Administrative Action” means any judicial decision, administrative pronouncement, published or private ruling, regulatory procedure, rule, notice, announcement, assessment or reassessment (including any notice or announcement of intent to adopt or issue such decision, pronouncement, ruling, procedure, rule, notice, announcement, assessment or reassessment).
“Annual Fixed Dividend Rate” means, for any Subsequent Fixed Rate Period, the rate (expressed as a percentage rounded to the nearest one hundred-thousandth of one percent (with 0.000005% being rounded up)) equal to the U.S. Treasury Rate on the applicable Fixed Rate Calculation Date plus 2.257%.
“Bank Act” means the Bank Act (Canada), as amended.
“Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in the City of New York and the City of Toronto are authorized or required by law or executive order to close.
“Calculation Agent” means the Bank or its designee.
“Canadian Dollar Equivalent” means the Canadian dollar equivalent of U.S. dollars using the spot exchange rate as of 4:30 p.m. New York City time on October 30, 2024.
“Common Shares” means common shares of the Bank.
“Conversion Price” means the greater of (i) Cdn$5.00 (which price is subject to adjustment in the event of (a) the issuance of Common Shares or securities exchangeable for or convertible into Common Shares to all holders of Common Shares as a stock dividend, (b) the subdivision, redivision or change of Common Shares into a greater number of Common Shares, or (c) the reduction, combination or consolidation of the Common Shares into a lesser number of shares), and (ii) the Current Market Price of the Common Shares. The adjustment shall be computed to the nearest one-tenth of one cent provided that no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% of the Conversion Price then in effect.
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“Current Market Price” of the Common Shares, for the purposes of article 7 hereof in connection with a Trigger Event, means the volume weighted average trading price in Canadian dollars of the Common Shares on the Toronto Stock Exchange, if such shares are then listed on the Toronto Stock Exchange, for the 10 consecutive trading days ending on the trading day preceding the date of the Trigger Event. If the Common Shares are not then listed on the Toronto Stock Exchange, for the purpose of the foregoing calculation reference shall be made to the principal securities exchange or market on which the Common Shares are then listed or quoted or, if no such trading prices are available, “Current Market Price” shall be the fair value of the Common Shares as reasonably determined by the board of directors of the Bank, expressed in Canadian dollars. If the Common Shares on such principal securities exchange or market are only traded in U.S. dollars or another foreign currency, for the purpose of the foregoing calculation, the trading price shall be converted into Canadian dollars on the basis of the closing exchange rate between Canadian dollars and U.S. dollars or the relevant foreign currency (in Canadian dollars per U.S. dollar or relevant foreign currency) reported by the Bank of Canada on the date immediately preceding the date of the Trigger Event (or if not available on such date, the date on which such closing rate was last available prior to such date). If such exchange rate is no longer reported by the Bank of Canada, the relevant exchange rate for calculating the trading price in Canadian dollars shall be the simple average of the closing exchange rates between Canadian dollars and U.S. dollars or the relevant foreign currency (in Canadian dollars per U.S. dollar or relevant foreign currency) quoted at approximately 4:00 p.m., New York City time, on such date by three major banks selected by the Bank.
“Fixed Period End Date” means November 24, 2034 and each November 24 every fifth year thereafter.
“Fixed Rate Calculation Date” means, for any Subsequent Fixed Rate Period, the Business Day prior to the first day of such Subsequent Fixed Rate Period.
“H.15 Daily Update” means the daily update of H.15 available through the worldwide website of the Board of Governors of the Federal Reserve System, at http://www.federalreserve.gov/releases/h15, or any successor site or publication.
“Indenture” means the subordinated debt indenture dated as of January 27, 2016 between the Bank and The Bank of New York Mellon, as trustee, as amended and supplemented by a third supplemental indenture dated as of November 1, 2024 between the Bank and The Bank of New York Mellon, as trustee, as the same may be further amended, restated or supplemented from time to time.
“Ineligible Person” means: (i) any Person whose address is in, or whom the Bank or its transfer agent has reason to believe is a resident of, any jurisdiction outside Canada or the United States of America to the extent that the issuance by the Bank or delivery by its transfer agent to that Person, pursuant to an NVCC Automatic Conversion, of Common Shares would require the Bank to take any action to comply with securities, banking or analogous laws of that jurisdiction, and (ii) any Person to the extent that the issuance by the Bank or delivery by its transfer agent to that Person, pursuant to an NVCC Automatic Conversion, of Common Shares would cause the Bank to be in violation of any law to which the Bank is subject.
“Initial Annual Fixed Dividend Rate” means, for the Initial Fixed Rate Period, the rate equal to the interest rate per annum on the Notes in effect as of the Transfer Date, provided that if the Transfer Date is on or after the Maturity Date, it means the rate (expressed as a percentage rounded to the nearest one hundred-thousandth of one percent (with 0.000005% being rounded up)) equal to the U.S. Treasury Rate on the Business Day prior to the Maturity Date (and in such case, for
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purposes of the definition of the U.S. Treasury Rate, such day shall be deemed to be a “Fixed Rate Calculation Date” and such Initial Fixed Rate Period shall be deemed to be a “Subsequent Fixed Rate Period”), plus 2.257%.
“Initial Fixed Rate Period” means, (i) if the Transfer Date is prior to November 24, 2034, the period from and including the Transfer Date to, but excluding, November 24, 2034 and (ii) if the Transfer Date is on or after November 24, 2034, the period from and including the Transfer Date, to, but excluding, the first Fixed Period End Date following the Transfer Date.
“Initial Reset Date” means, (i) if the Transfer Date is prior to November 24, 2034, November 24, 2034 and (ii) if the Transfer Date is on or after November 24, 2034, the first Fixed Period End Date following the Transfer Date.
“Limited Recourse Trust” means Leo LRCN Limited Recourse Trust, a trust established under the laws of Manitoba.
“LRT Declaration of Trust” mean the amended and restated declaration of trust dated as of July 28, 2020 between the Bank and Computershare Trust Company of Canada, the trustee of the Limited Recourse Trust, as the same may be further amended or restated from time to time.
“Maturity Date” has the meaning given to such term in the Indenture.
“Multiplier” means 1.0.
“Notes” means the 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 of the Bank issued pursuant to the Indenture.
“NVCC Automatic Conversion” has the meaning set out in article 7.
“OSFI” means the Office of the Superintendent of Financial Institutions (Canada), or the successor thereto or replacement therefor.
“Person” has the meaning given to it in the Bank Act.
“Regulatory Event Date” means the date, before the Transfer Date, specified in a letter from the Superintendent to the Bank on which the Notes will no longer be recognized in full as eligible “Tier 1 Capital” or will no longer be eligible to be included in full as risk-based “Total Capital” on a consolidated basis under the guidelines for capital adequacy requirements for banks in Canada as interpreted by the Superintendent.
“Share Value” means US$1,000.00 plus declared and unpaid dividends as at the date of the Trigger Event, expressed in Canadian dollars. In determining the Share Value of any Preferred Share Series BX, the face amount thereof and any declared and unpaid dividends thereon shall be converted from U.S. dollars into Canadian dollars on the basis of the closing exchange rate between Canadian dollars and U.S. dollars (in Canadian dollars per U.S. dollar) reported by the Bank of Canada on the date immediately preceding the date of the Trigger Event (or if not available on such date, the date on which such closing rate was last available prior to such date). If such exchange rate is no longer reported by the Bank of Canada, the relevant exchange rate for calculating the Share Value in Canadian dollars shall be the simple average of the closing exchange rates between Canadian
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dollars and U.S. dollars (in Canadian dollars per U.S. dollar) quoted at approximately 4:00 p.m., New York City time, on such date by three major banks selected by the Bank.
“Significant Shareholder” means any Person who beneficially owns directly, or indirectly through entities controlled by such Person or Persons associated with or acting jointly or in concert with such Person, a percentage of the total number of outstanding shares of a class of the Bank that is in excess of that permitted by the Bank Act.
“Special Event Date” means a date that is a Regulatory Event Date or a Tax Event Date.
“Subsequent Fixed Rate Period” means the period from and including the Initial Reset Date to, but excluding, the next Fixed Period End Date and each five year period thereafter from and including such Fixed Period End Date to, but excluding, the next Fixed Period End Date.
“Superintendent” means the Superintendent of Financial Institutions, or the successor thereto or replacement therefor.
“Tax Event Date” means the date, before the Transfer Date, on which the Bank has received an opinion of independent counsel of a nationally recognized law firm in Canada experienced in such matters (who may be counsel to the Bank) to the effect that,
(1) as a result of:
(A) any amendment to, clarification of, or change (including any announced prospective change) in, the laws, or any regulations thereunder, or any application or interpretation thereof, of Canada or any political subdivision or taxing authority thereof or therein, affecting taxation;
(B) any Administrative Action; or
(C) any amendment to, clarification of, or change in, the official position with respect to or the interpretation of any Administrative Action or any interpretation or pronouncement that provides for a position with respect to such Administrative Action that differs from the theretofore generally accepted position,
in each of case of clause (1) (A), (B) or (C), by any legislative body, court, governmental authority or agency, regulatory body or taxing authority, irrespective of the manner in which such amendment, clarification, change, Administrative Action, interpretation or pronouncement is made known, which amendment, clarification, change or Administrative Action is effective or which interpretation, pronouncement or Administrative Action is announced on or after the date of issue of the Notes, there is more than an insubstantial risk (assuming any proposed or announced amendment, clarification, change, interpretation, pronouncement or Administrative Action is effective and applicable) that the Bank is, or may be, subject to more than a de minimis amount of additional taxes, duties or other governmental charges or civil liabilities because the treatment of any of its items of income, taxable income, expense, taxable capital or taxable paid up capital with respect to the Notes or the treatment of the Notes, as or as would be reflected in any tax return or form filed, to be filed, or otherwise could have been filed, will not be respected by a taxing authority.
(2) as a result of:
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(A) any change (including any announced prospective change) in or amendment to the laws (or any regulations or rulings promulgated thereunder) of Canada (or the jurisdiction of organization of the successor to the Bank) or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change or amendment is announced or becomes effective on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), the Bank (or its successor) has become or would become obligated to pay (assuming, in the case of any announced prospective change, that such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, Additional Amounts with respect to the Notes; or
(B) on or after the date of issue of the Notes (or, in the case of a successor to the Bank, after the date of succession), any action having been taken by any taxing authority of, or any decision having been rendered by a court of competent jurisdiction in, Canada (or the jurisdiction of organization of the successor to the Bank) or any political subdivision or taxing authority thereof or therein, including any of those actions specified in clause 2(A) above, whether or not such action was taken or decision was rendered with respect to the Bank (or its successor), or any change, amendment, application or interpretation having been officially proposed, the Bank (or its successor) would become obligated to pay (assuming that such change, amendment, application, interpretation or action is applied to the Notes by the taxing authority and that, in the case of any announced prospective change, such announced change will become effective as of the date specified in such announcement and in the form announced), on the next succeeding date on which interest is due, Additional Amounts with respect to the Notes;
provided that in any such case of clause (2)(A) or (B), the Bank (or its successor), in its business judgment, determines that such obligation cannot be avoided by the use of reasonable measures available to it (or its successor).
“Threshold Number” means the number of Common Shares issuable or deliverable to any Person that would cause that Person to become a Significant Shareholder, being the sum of: (i) the total number of Common Shares held by that Person immediately prior to the NVCC Automatic Conversion and (ii) the total number of Common Shares otherwise issuable or deliverable to that Person by virtue of the operation of the NVCC Automatic Conversion, less (iii) the greatest number of Common Shares that such Person could hold, directly or indirectly, without being a Significant Shareholder.
“Transfer Date” means the date on which all of the Preferred Shares Series BX have been delivered to the holders of the Notes in accordance with the terms of the Indenture and the LRT Declaration of Trust.
“Trigger Event” has the meaning set out in the OSFI Capital Adequacy Requirements Guideline (CAR), Chapter 2 – Definition of Capital, effective November 2023, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:
| (a) | the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion or write-off, as applicable, of all contingent instruments and |
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| taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or |
| (b) | a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. |
“U.S. Treasury Rate” means, as at a Fixed Rate Calculation Date, the rate per annum equal to: the average of the yields on actively traded U.S. treasury securities adjusted to constant maturity, for five-year maturities, for the five business days immediately preceding the applicable Fixed Rate Calculation Date appearing under the caption “Treasury Constant Maturities” in the most recently published statistical release designated H.15 Daily Update or any successor publication which is published by the Federal Reserve Board, as determined by the Calculation Agent in its sole discretion. If no calculation is provided as described above, then the Calculation Agent, after consulting such sources as it deems comparable to the foregoing calculation, or any such source as it deems reasonable from which to estimate the five-year treasury rate, shall determine the U.S. Treasury Rate in its sole discretion, provided that if the Calculation Agent determines there is an industry-accepted successor five-year treasury rate, then the Calculation Agent shall use such successor rate. If the Calculation Agent has determined a substitute or successor base rate in accordance with the foregoing, the Calculation Agent in its sole discretion may determine the business day convention, the definition of business day and the Fixed Rate Calculation Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the five-year treasury rate, in a manner that is consistent with industry-accepted practices for such substitute or successor base rate. If such rate cannot be determined as described above, then (i) the U.S. Treasury Rate will be determined by the Bank or our designee by interpolation between the most recent weekly average yield to maturity for two series of U.S. treasury securities trading in the public securities market, (1) one maturing as close as possible to, but earlier than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, and (2) the other maturing as close as possible to, but later than, the first day of the Subsequent Fixed Rate Period following the next following Fixed Rate Calculation Date, in each case, appearing under the caption “Treasury Constant Maturities” in the most recent published statistical release designated H.15 Daily Update or any successor publication which is published by the U.S. Federal Reserve Board of Governors; or (ii) if the calculation described in clause (i) cannot be determined, then the U.S. Treasury Rate will be the same rate as determined for the prior Fixed Rate Calculation Date, provided, however, that in the case of the Initial Reset Date, the dividend rate on the Preferred Shares Series BX will be the Initial Annual Fixed Dividend Rate or in the case of a determination of the Initial Annual Fixed Dividend Rate if the Transfer Date is on or after the Maturity Date, the dividend rate on the Preferred Shares Series BX will be the interest rate per annum on the Notes in effect as of the business day prior to the Maturity Date.
2. ISSUE PRICE – The issue price of each Preferred Share Series BX will be US$1,000.00.
3. DIVIDENDS – Prior to the Transfer Date, the holders of the Preferred Shares Series BX shall not be entitled to receive dividends.
Following the Transfer Date, during the Initial Fixed Rate Period, the holders of the Preferred Shares Series BX will be entitled to receive fixed rate non-cumulative preferential cash dividends, as and
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when declared by the board of directors, subject to the provisions of the Bank Act, payable quarterly on February 24, May 24, August 24 and November 24 in each year, in an amount per share per annum determined by multiplying the applicable Initial Annual Fixed Dividend Rate by US$1,000.00; provided that, whenever it is necessary to compute any dividend amount in respect of the Preferred Shares Series BX for a period of less than one full quarterly dividend period, such dividend amount shall be calculated on the basis of the actual number of days in the period and a year of 365 days.
During each Subsequent Fixed Rate Period, the holders of the Preferred Shares Series BX will be entitled to receive fixed rate non-cumulative preferential cash dividends, as and when declared by the board of directors, subject to the provisions of the Bank Act, payable quarterly on February 24, May 24, August 24 and November 24 in each year, in an amount per share per annum determined by multiplying the Annual Fixed Dividend Rate applicable to such Subsequent Fixed Rate Period by US$1,000.00.
The Bank will determine the Annual Fixed Dividend Rate applicable to a Subsequent Fixed Rate Period on the Fixed Rate Calculation Date. Such determination will, in the absence of manifest error, be final and binding upon the Bank and all holders of Preferred Shares Series BX. The Bank will, on the relevant Fixed Rate Calculation Date, give notice of the Annual Fixed Dividend Rate for the ensuing Subsequent Fixed Rate Period to the registered holders of Preferred Shares Series BX.
If the board of directors does not declare a dividend, or any part thereof, on the Preferred Shares Series BX on or before the dividend payment date therefor, then the rights of the holders of the Preferred Shares Series BX to such dividend, or to any part thereof, will be extinguished.
Any dividends declared on the Preferred Shares Series BX will (except in case of redemption in which case payment of dividends will be made upon surrender of the certificates representing the Preferred Shares Series BX, if any, to be redeemed or except as otherwise provided with the consent of a registered holder of Preferred Shares Series BX) be paid by forwarding, by prepaid post, addressed to each registered holder of the Preferred Shares Series BX at the address of such holder as it appears on the books of the Bank or, in the case of joint registered holders, to the address of that one whose name stands first in the books of the Bank as one of such joint holders, a cheque for such dividends (less any tax deducted in conformity with applicable laws) payable to the order of such registered holder or, in the case of joint registered holders, to the order of all such holders failing written instructions from them to the contrary. Notwithstanding the foregoing, any dividend cheque may be delivered by the Bank to a registered holder of Preferred Shares Series BX at such registered holder’s address as aforesaid. The forwarding or delivery of such cheque shall satisfy such dividends to the extent of the sum represented thereby (plus the amount of any tax deducted in conformity with applicable laws) and shall be deemed to be payment to holders of Preferred Shares Series BX and discharge all liability for the dividends payable unless such cheque be not paid on presentation. Each dividend on the Preferred Shares Series BX shall be paid to the registered holders appearing on the registers at the close of business on such day (which shall not be more than 30 days preceding the date fixed for payment of such dividend) as may be determined from time to time by the board of directors.
The Bank shall elect, in the manner and within the time provided under section 191.2 of the Income Tax Act (Canada) (the “Income Tax Act”), or any successor or replacement provision of similar effect, and take all other necessary action under such Act, to pay tax at a rate such that no holder of the Preferred Shares Series BX will be required to pay tax under section 187.2 of Part IV.1 of the Income Tax Act or any successor or replacement provision of similar effect on dividends received on the Preferred Shares Series BX. Nothing in this paragraph shall prevent the Bank from entering into an agreement with a taxable Canadian corporation with which it is related to transfer all or a portion of the Bank’s liability for tax under section 191.1 of the Income Tax Act to that taxable Canadian corporation in accordance with the provisions of section 191.3 of the Income Tax Act.
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4. VOTING RIGHTS – Subject to the provisions of the Bank Act and except as otherwise herein expressly provided, holders of the Preferred Shares Series BX shall not, as such, be entitled to receive any notice of, or to attend or to vote at, any meeting of the shareholders of the Bank unless and until the first time at which the rights of such holders to any undeclared dividends have become extinguished as described under article 3 above (for clarity, such time may not occur before the Transfer Date because, prior to the Transfer Date, the holders of any Preferred Shares Series BX shall not be entitled to receive dividends). In that event, holders of the Preferred Shares Series BX will be entitled to receive notice of and to attend meetings of shareholders of the Bank at which directors of the Bank are to be elected and will be entitled to one vote for each Preferred Shares Series BX held. The voting rights of holders of the Preferred Shares Series BX shall forthwith cease upon payment by the Bank of the first quarterly dividend on the Preferred Shares Series BX to which holders are entitled subsequent to the time such voting rights first arose. At such time as the rights of such holders to any undeclared dividends on the Preferred Shares Series BX have again become extinguished, such voting rights shall become effective again and so on from time to time.
5. REDEMPTION – Except for a Special Event Redemption (as defined below) or a Note Repurchase Redemption (as defined below), the Preferred Shares Series BX will not be redeemable prior to November 24, 2034. Subject to the provisions of the Bank Act and the provisions of article 10, the Bank may (i) before the Transfer Date, redeem all but not less than all of the outstanding Preferred Shares Series BX, at the Bank’s option, on November 24, 2034 and on each February 24, May 24, August 24 and November 24 thereafter by the payment of an amount in cash for each share redeemed of Cdn$1,390.30 (being the Canadian Dollar Equivalent of US$1,000.00), and (ii) on or after the Transfer Date, redeem all or any part of the outstanding Preferred Shares Series BX, at the Bank’s option, on November 24, 2034 and on each February 24, May 24, August 24 and November 24 thereafter, by the payment of an amount in cash for each share redeemed of US$1,000.00 together with declared and unpaid dividends to, but excluding, the redemption date.
Upon the occurrence of a Special Event Date prior to the Transfer Date, subject to the provisions of the Bank Act and the provisions of article 10, the Bank may, at its option, at any time within 90 days following a Special Event Date and with the prior written approval of the Superintendent, redeem the Preferred Shares Series BX, in whole but not in part, by the payment of an amount in cash for each share redeemed of Cdn$1,390.30 (being the Canadian Dollar Equivalent of US$1,000.00) (a “Special Event Redemption”).
If at any time prior to the Transfer Date, the Bank, with the prior written approval of the Superintendent, purchases Notes, in whole or in part, by tender offer, open market purchases, negotiated transactions or otherwise, for cancellation, then, subject to the provisions of the Bank Act and the provisions of article 10, the Bank shall redeem such number of Preferred Shares Series BX with an aggregate face amount equal to the aggregate principal amount of Notes purchased for cancellation by the Bank, by the payment of an amount in cash for each share redeemed of Cdn$1,390.30 (being the Canadian Dollar Equivalent of US$1,000.00) (a “Note Repurchase Redemption”).
Concurrently with or upon the maturity of the Notes, subject to the provisions of the Bank Act and the provisions of article 10, the Bank, with the prior written approval of the Superintendent, may redeem all of the outstanding Preferred Shares Series BX, at the Bank’s option, by the payment of an amount in cash for each share redeemed of Cdn$1,390.30 (being the Canadian Dollar Equivalent of US$1,000.00).
Notice of any redemption other than a Special Event Redemption will be given by the Bank to registered holders not more than 60 days and not less than 10 days prior to the redemption date. Notice of any Special Event Redemption will be given by the Bank to registered holders not more than 60 days and not less than 10 days prior to the redemption date.
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Where, on or after the Transfer Date, a part only of the then outstanding Preferred Shares Series BX is at any time to be redeemed, the Preferred Shares Series BX to be redeemed will be redeemed pro rata disregarding fractions, or in such other manner as the board of directors determines.
All redemptions of the Preferred Shares Series BX are subject to the prior written approval of the Superintendent.
The notice of redemption shall set out the redemption price, the place at which the redemption price is to be paid, and the redemption date, and, if less than all of the shares are to be redeemed, the number of shares to be redeemed. On or before the redemption date, the Bank shall deposit the redemption price for the shares to be redeemed with the transfer agent and registrar for the Preferred Shares Series BX, to be paid without interest to or to the order of the registered holders of such shares upon presentation and surrender to the agent of the certificates representing the shares, if any. Such deposit shall be deemed to be payment to holders of the Preferred Shares Series BX and satisfy and discharge all liability for the redemption price for the shares to be redeemed. Provided such deposit shall have been made, the shares called for redemption shall, on the redemption date, be and be deemed to be redeemed and no longer outstanding. If a part only of the shares represented by any certificate are to be redeemed, a new certificate for the part not redeemed shall be issued at the expense of the Bank. Provided the redemption price shall have been deposited, the shares called for redemption shall from and after the redemption date cease to be entitled to dividends, and holders shall not be entitled to exercise any of the other rights of shareholders in respect thereof, and their rights shall be limited to receiving, without interest, their proportionate part of the total redemption price deposited against presentation and surrender of the certificates held by them respectively, if any. If the redemption price shall not be deposited, the rights of holders of the shares called for redemption shall remain unaffected.
6. PURCHASE FOR CANCELLATION – From and after the Transfer Date, subject to the provisions of the Bank Act, to the prior written approval of the Superintendent and to the provisions of article 10, the Bank may at any time or from time to time purchase for cancellation, the whole or any part of the outstanding Preferred Shares Series BX by private contract or in the market or by tender, at the lowest price or prices at which in the opinion of the board of directors such shares are obtainable.
In the case of purchase of shares by tender, the Bank shall give notice of its intention to invite tenders to registered holders of the Preferred Shares Series BX and, if two or more tenders of shares at the same price are received, which shares when added to any shares already tendered at a lower price or prices aggregate more than the number of shares to be purchased at such time, the Bank shall prorate as nearly as may be (disregarding fractions) among the shareholders submitting such tenders at the same price the number of shares necessary to complete the number of shares to be purchased at such time.
7. CONVERSION UPON NVCC TRIGGER EVENT – Upon the occurrence of a Trigger Event, each Preferred Share Series BX shall automatically and immediately be converted, on a full and permanent basis, into a number of Common Shares equal to (Multiplier x Share Value) ÷ Conversion Price (rounding down, if necessary, to the nearest whole number of Common Shares) (an “NVCC Automatic Conversion”). Notwithstanding any other provision hereof, such conversion of the Preferred Shares Series BX shall not be an event of default and the only consequence hereunder of a Trigger Event shall be the conversion of the Preferred Shares Series BX into Common Shares as provided in this article 7. Fractions of Common Shares shall not be issued or delivered pursuant to an NVCC Automatic Conversion, the number of Common Shares shall be rounded down to the nearest whole number of Common Shares where there is otherwise a fraction and no cash payment will be made in lieu of a fractional Common Share.
In the event of a capital reorganization, consolidation, merger or amalgamation of the Bank or comparable transaction affecting the Common Shares, the Bank will take necessary action to ensure that
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holders of Preferred Shares Series BX receive, pursuant to an NVCC Automatic Conversion, the number of Common Shares or other securities that the holders of Preferred Shares Series BX would have received if the NVCC Automatic Conversion occurred immediately prior to the record date for such event.
8. RIGHT NOT TO DELIVER COMMON SHARES UPON AN NVCC AUTOMATIC CONVERSION
| (a) | Upon an NVCC Automatic Conversion, the Bank reserves the right not to deliver Common Shares to any Ineligible Person. In such circumstances, the Bank will hold, as agent of all Ineligible Persons, all Common Shares otherwise deliverable to the Ineligible Persons and will attempt to facilitate the sale of such Common Shares to parties other than the Bank and its affiliates on behalf of such Ineligible Persons through a registered dealer to be retained by the Bank on behalf of such Ineligible Persons. Those sales (if any) may be made at any time and at any price. The Bank will not be subject to any liability for failure to sell such Common Shares on behalf of the Ineligible Persons or at any particular price on any particular day. The net proceeds received by the Bank from the sale of any such Common Shares will be divided among the Ineligible Persons in proportion to the number of Common Shares that would otherwise have been delivered to them upon the NVCC Automatic Conversion after deducting the costs of sale and any applicable withholding taxes. The Bank will deliver a cheque representing the aggregate net proceeds to the Depository (as defined in article 14 below) (if the Common Shares are then held in the Book-Entry-Only System) or in all other cases to such Ineligible Persons in accordance with the regular practices and procedures of the Depository or otherwise. |
| (b) | Upon an NVCC Automatic Conversion, the Bank reserves the right not to deliver Common Shares to any Person who, by virtue of the operation of the NVCC Automatic Conversion, would become a Significant Shareholder through the acquisition of Common Shares. In such circumstances, the Bank will hold, as agent of that Person, the Threshold Number of Common Shares otherwise deliverable to such Person, and the Bank will attempt to facilitate the sale of such Common Shares to parties other than the Bank and its affiliates on behalf of that Person through a registered dealer to be retained by the Bank on behalf of such Person. Those sales (if any) may be made at any time and at any price. The Bank will not be subject to any liability for failure to sell any such Common Shares on behalf of that Person or at any particular price on any particular day. The net proceeds received by the Bank from the sale of any such Common Shares will be delivered to that Person, after deducting the costs of sale and any applicable withholding taxes. The Bank will deliver a cheque representing the aggregate net proceeds to the Depository (if the Common Shares are then held in the Book-Entry-Only System) or in all other cases to such Person in accordance with the regular practices and procedures of the Depository or otherwise. |
9. RIGHTS ON LIQUIDATION – If a Trigger Event has occurred, all Preferred Shares Series BX shall have been converted into Common Shares in accordance with article 7. At any time after the Transfer Date but prior to the occurrence of a Trigger Event, in the event of the liquidation, dissolution or winding-up of the Bank, holders of the Preferred Shares Series BX shall be entitled to receive US$1,000.00 per share plus an amount equal to all dividends declared and unpaid to and including the date of payment, before any amount shall be paid or any assets of the Bank distributed to the registered holders of any shares of the Bank ranking junior to the Preferred Shares Series BX. Upon payment to the registered holders of the Preferred Shares Series BX of the amount so payable to them, holders shall not be entitled to share in any further distribution of the assets of the Bank.
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10. RESTRICTION ON DIVIDENDS AND RETIREMENT OF SHARES – From and after the Transfer Date, so long as any of the Preferred Shares Series BX are outstanding, the Bank shall not, without the approval of holders of the Preferred Shares Series BX given in the manner specified under article 13 below:
| (a) | pay any dividends on any Second Preferred Shares, any Common Shares or any other shares of the Bank ranking junior to the Preferred Shares Series BX (other than stock dividends in any shares of the Bank ranking junior to the Preferred Shares Series BX); or |
| (b) | redeem, purchase or otherwise retire any Second Preferred Shares, any Common Shares or any other shares of the Bank ranking junior to the Preferred Shares Series BX (except out of the net cash proceeds of a substantially concurrent issue of shares ranking junior to the Preferred Shares Series BX); or |
| (c) | redeem, purchase or otherwise retire less than all the Preferred Shares Series BX; or |
| (d) | except pursuant to any purchase obligation, sinking fund, retraction privilege or mandatory redemption provisions attaching to any series of preferred shares, redeem, purchase or otherwise retire any other shares ranking on a parity with the Preferred Shares Series BX; |
unless all dividends up to and including the dividend payment date for the last completed period for which dividends shall be payable shall have been declared and paid or set apart for payment in respect of each series of cumulative First Preferred Shares then issued and outstanding and all other cumulative shares ranking on a parity with the First Preferred Shares and there shall have been paid or set apart for payment all declared dividends in respect of each series of non-cumulative First Preferred Shares then issued and outstanding and on all other non-cumulative shares ranking on a parity with the First Preferred Shares.
11. ISSUE OF ADDITIONAL SERIES OF FIRST PREFERRED SHARES – The Bank may issue other series of First Preferred Shares ranking on a parity with the Preferred Shares Series BX without the approval of holders of the Preferred Shares Series BX as a series.
12. AMENDMENTS TO PREFERRED SHARES SERIES BX – The Bank will not without, but may from time to time with, the approval of holders of the Preferred Shares Series BX given as specified below under article 13 and any approval as may be required by any stock exchange on which the Preferred Shares Series BX may then be traded, delete or vary any rights, privileges, restrictions or conditions attaching to the Preferred Shares Series BX. In addition to the aforementioned approvals, the Bank will not without, but may from time to time with, the consent of the Superintendent, make any such deletion or variation which might affect the classification afforded the Preferred Shares Series BX from time to time for capital adequacy requirements pursuant to the Bank Act and all applicable regulations and guidelines thereunder, including the OSFI Capital Adequacy Requirements (CAR) Guideline, as may be amended from time to time.
13. SHAREHOLDER APPROVALS – Any approval required to be given hereunder at any time by holders of the Preferred Shares Series BX shall be given in such manner as may then be required by the by-laws of the Bank with respect to approvals of holders of First Preferred Shares as a class or series, as the case may be. The formalities to be observed with respect to the calling and conduct of meetings or adjourned meetings of holders of Preferred Shares Series BX shall be those from time to time prescribed by the by-laws of the Bank with respect to meetings of holders of First Preferred Shares or in the absence thereof, mutatis mutandis, be those prescribed in the by-laws of the Bank for meetings of the holders of voting shares generally. In no event shall the by-laws of the Bank applicable to meetings of holders of Preferred Shares Series BX provide for a quorum of less than 51% in number of outstanding Preferred Shares Series
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BX, provided that the by-laws may provide that at an adjourned meeting of holders of Preferred Shares Series BX, those holders of Preferred Shares Series BX who are present or represented shall constitute a quorum thereat and may transact the business for which the meeting was originally called.
14. BOOK-ENTRY-ONLY ISSUE – The Preferred Shares Series BX shall initially be registered in the name of the holders thereof. In the event that the Preferred Shares Series BX are required to be delivered to the holders of the Notes in accordance with the terms of the Indenture and the LRT Declaration of Trust, the holders of the Preferred Shares Series BX will be required to surrender to the Bank’s transfer agent the physical certificate or certificates representing such holder’s Preferred Shares Series BX, if any, together with such other instruments of transfer necessary to transfer such Preferred Shares Series BX into the “Book-Entry Only System” and to the holders of the Notes, and upon the Transfer Date and thereafter, except as provided in article 15 below, Preferred Shares Series BX shall be issued and held under the “Book-Entry-Only System” and shall be held electronically through the non-certificated inventory system maintained by the Depository or represented by a single fully-registered permanent global share certificate. The Preferred Shares Series BX shall be held by, or on behalf of, the Depository as depository of Participants and shall be registered in the name of the Depository (or such other name as the Depository may use from time to time as its nominee for the purposes of the Book-Entry-Only System).
For these purposes:
“Book-Entry-Only System” means the “Depository Service” record entry securities transfer and pledge system administered by the Depository in accordance with the operating rules and procedures of its securities settlement service for book-entry-only securities;
“Depository” means CDS Clearing and Depository Services Inc. or The Depository Trust Company, or a successor depository or any other depository appointed by the Bank in respect of Preferred Shares Series BX; and
“Participant” means a participant in the Book-Entry-Only System who has an interest in Preferred Shares Series BX.
For so long as the Preferred Shares Series BX are held under the “Book-Entry-Only System”:
| (a) | Transfers and registrations of ownership of the Preferred Shares Series BX will only be made to another nominee of the Depository or to a successor Depository or a nominee of such successor Depository. Transfers and redemptions of Preferred Shares Series BX will be effected only: (a) with respect to the interest of Participants, through records maintained by the Depository or its nominee, and (b) with respect to the interests of persons other than Participants, through records maintained by Participants. Persons, other than Participants, having an interest in Preferred Shares Series BX who wish to purchase, sell or otherwise transfer ownership of or other interests in Preferred Shares Series BX may do so only through a Participant. |
| (b) | The rights of persons, other than Participants, having an interest in Preferred Shares Series BX shall be limited to those established by applicable law and agreements between the Depository and the Participants and between Participants and such persons, and must be exercised through a Participant in accordance with the rules and procedures of the Depository and the Book-Entry-Only System. |
| (c) | Subject to applicable law and the provisions described below under article 15, the Bank is under no obligation to deliver to Participants or persons, other than Participants having an |
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| interest in Preferred Shares Series BX, nor shall the Participants or persons, other than Participants having an interest in Preferred Shares Series BX, have any right to require the delivery of a certificate or other instrument evidencing an interest in a Preferred Share Series BX. |
| (d) | Payments of dividends and other amounts in respect of the Preferred Shares Series BX will be made by the Bank to the Depository or its nominee, as registered holder of Preferred Shares Series BX. Participants must look solely to the Depository, in accordance with the rules and procedures of the Depository and the Book-Entry-Only System, and persons, other than Participants, having an interest in Preferred Shares Series BX must look solely to Participants, for their share of payments of dividends and other amounts in respect of Preferred Shares Series BX. No person, including any Participant, shall have any claim against the Bank in respect of payments due on Preferred Shares Series BX and the obligations of the Bank shall be discharged by payment to the Depository or its nominee, as registered holder of Preferred Shares Series BX, in respect of each amount so paid. |
The Bank understands that the Depository acts as the agent and depository for the Participants. The Bank assumes no liability or responsibility for: (a) any aspect of the records relating to the beneficial ownership of the Preferred Shares Series BX held by the Depository or payments relating to the shares; (b) maintaining, supervising or reviewing any records relating to the beneficial ownership of Preferred Shares Series BX held by the Depository; or (c) any action to be taken by the Depository or at the direction of the Participant.
The Bank understands that the Depository will from time to time deliver a certified list of Participants as at the date requested by the Bank showing the name and address of each Participant together with the interest of the Participants in the Preferred Shares Series BX held by Participants and such additional information as the Bank may reasonably request. The Bank may rely upon all such information provided by the Depository to the Bank.
15. TERMINATION OF BOOK-ENTRY-ONLY ISSUE – If, at any time that the Preferred Shares Series BX are held under the “Book-Entry-Only System”:
| (a) | required by applicable law; |
| (b) | the Book-Entry-Only System ceases to exist; |
| (c) | the Depository advises the Bank that it is no longer willing or able to discharge properly its responsibilities as registered holder of the Preferred Shares Series BX and the Bank is unable to locate a qualified successor; or |
| (d) | the Bank at its option elects to terminate its arrangements with the Depository in respect of the Preferred Shares Series BX for any reason (including, without limitation, in circumstances where the Bank considers it impracticable or inefficient to effect any distribution or conversion in respect of Preferred Shares Series BX through the facilities of the Depository); |
the Bank shall notify the Depository, for and on behalf of Participants and other persons having an interest in Preferred Shares Series BX, of the availability through the Depository of physical certificates in respect of Preferred Shares Series BX. The Depository will then be required to surrender the permanent global share certificate in respect of the Preferred Shares Series BX, if any, along with written instructions to the Bank as to the Participants in whose names the physical certificates are to be registered and delivered and
13
the authorized denominations of the physical certificates to be registered in the name of each such Participant.
16. NON-BUSINESS DAYS – If any action or payment is required to be taken or paid by the Bank or any matter, consequence or other thing is provided to occur in respect of the Preferred Shares Series BX on a day that is not a Business Day, then such action or payment will be taken or made and such matter, consequence or other thing will occur on the immediately following day which is a Business Day unless the Bank determines to take such action or make such payment on the immediately preceding Business Day.
17. NOTICE TO REGISTERED HOLDERS – Any notice given, or required to be given, by the Bank to registered holders of Preferred Shares Series BX, shall be in writing and sent by prepaid post or delivered to each person who at the applicable record date or, if no record date is set, at the date that notice is or is required to be given is a registered holder of Preferred Shares Series BX and shall be sent to each stock exchange on which the Preferred Shares Series BX are then listed, if applicable.
14
EXHIBIT B
FORM OF NOTE
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER, OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE FOLLOWING RESALE RESTRICTION IS ONLY APPLICABLE TO RESIDENTS OF CANADA WHO PURCHASED THIS SECURITY PURSUANT TO A PROSPECTUS EXEMPTION UNDER APPLICABLE CANADIAN SECURITIES LAWS: UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE March 2, 2025.
ROYAL BANK OF CANADA
6.350% LIMITED RECOURSE CAPITAL NOTES, SERIES 5
(Non-Viability Contingent Capital (NVCC))
(Subordinated Indebtedness) due 2084
This note will not constitute a deposit that is insured under
the Canada Deposit Insurance Corporation Act or by the
United States Federal Deposit Insurance Corporation.
| No. |
CUSIP No. 780082 AT0 |
| Issue Date: November 1, 2024 |
Stated Maturity: November 24, 2084 |
Royal Bank of Canada, a Schedule I bank under the Bank Act (herein called the “Bank”, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or its registered assigns, the principal sum of $ ( UNITED STATES DOLLARS) on November 24, 2084, and to pay interest thereon from November 1, 2024 to, but excluding, November 24, 2034, at the rate of 6.350% per annum (after as well as before default, with interest on overdue interest at the same rate) payable quarterly in arrears on February 24, May 24, August
24 and November 24 in each year with the first payment on February 24, 2025, and, from and including November 24, 2034, to, but excluding, November 24, 2039, and each five year period thereafter from and including the day immediately following the end of the immediately preceding Subsequent Fixed Rate Period to, but excluding, November 24 in the fifth year thereafter, until the Maturity Date, a rate per annum equal to the U.S. Treasury Rate as determined on the relevant Fixed Rate Calculation Date plus 2.257% (after as well as before default, with interest on overdue interest at the same rate), payable quarterly in arrears on February 24, May 24, August 24 and November 24 in each year, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered on the Security Register at the close of business on the Record Date for such interest, which shall be the 2nd day (whether or not a Business Day), preceding such Interest Payment Date.
Payment of the principal of (and premium, if any) and interest on this Note will be made to the registered holder hereof in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual, facsimile or electronic signature in accordance with the Trustee’s applicable internal rules and procedures, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Bank has caused this instrument to be duly executed.
Dated:
| Royal Bank of Canada | ||
| By | ||
| Name: | ||
| Title: | ||
| By | ||
| Name: | ||
| Title: | ||
CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated herein referred to in the within-mentioned Indenture.
Dated:
| The Bank of New York Mellon As Trustee | ||
| By | ||
| Authorized Officer | ||
[REVERSE OF SECURITY]
This Note is one of a duly authorized issue of notes of the Bank (herein called the “Notes”), issued and to be issued under an Indenture, dated as of January 27, 2016 (the “Base Indenture”), between the Bank and The Bank of New York Mellon, as Trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), as amended and supplemented by the Third Supplemental Indenture, dated as of November 1, 2024 between the Bank and the Trustee (the “Third Supplemental Indenture” and, together with the Base Indenture, the “Indenture”) and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Bank, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered all to the same effect as if the provisions of the Indenture were herein set forth, to all of which provisions each Holder of the Notes by acceptance hereof assents and is hereby deemed to have notice. The Notes are limited in aggregate principal amount to $1,000,000,000.
Definitions
All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture.
Cash Redemption
Subject to any applicable law restricting the redemption of the Notes, including the Bank Act and regulations and guidelines thereunder, and provided that a Trigger Event has not occurred, upon the occurrence of a Preferred Share Redemption on any date other than the Maturity Date, a corresponding number of Outstanding Notes with an aggregate principal amount equal to the aggregate face amount of Preferred Shares redeemed by the Bank pursuant to the Preferred Share Redemption shall automatically and immediately be redeemed, on a full and permanent basis, without any action on the part of, or the consent of, the Holders of such Notes, for a cash amount equal to the Redemption Price.
Special Event Redemption
Subject to any applicable law restricting the redemption of the Notes, including the Bank Act and regulations and guidelines thereunder, and provided that a Trigger Event has not occurred, upon the occurrence of a Special Event Date, the Bank may, at its option, and with the prior written approval of the Superintendent of Financial Institutions (Canada) (the “Superintendent”), at any time on or within 90 days following such Special Event Date, on not less than 10 nor more than 60 days’ prior notice to the Holders, redeem the Notes, in whole but not in part, on a full and permanent basis, without any action on the part of, or the consent of, the Holders of such Notes, for the Redemption Price.
Failed Coupon Redemption
Subject to any applicable law restricting the redemption of the Notes, including the Bank Act and regulations and guidelines thereunder, and provided that a Trigger Event has not occurred, upon the occurrence of a Failed Coupon Payment Date, each Outstanding Note shall (subject to Section 1101 of the Third Supplemental Indenture) automatically and immediately be redeemed, on a full and permanent basis, without any action on the part of, or the consent of, the Holders, for the Redemption Price. A Failed Coupon Redemption is deemed to be effected on the Failed Coupon Payment Date and the rights of all the Holders as the holder of Notes shall cease at such time.
The occurrence of a Failed Coupon Payment Date shall also be a Recourse Event. See “Satisfaction of Payment Obligations with Limited Recourse Trust Assets” below.
Notice of Redemption
Notice of a Cash Redemption shall be given in writing by electronic communication or mailed, first-class postage prepaid, not less than 10 nor more than 60 days prior to the Cash Redemption Date, to each Holder to be redeemed, at his, her or its address appearing on the Security Register. Notice of a Special Event Redemption shall be given in writing by electronic communication or mailed, first-class postage prepaid, not less than 10 nor more than 60 days prior to the Special Event Redemption Date, to each Holder to be redeemed, at his, her or its address appearing on the Security Register. All notices of Cash Redemption or Special Event Redemption shall specify the Cash Redemption Date or the Special Event Redemption Date, as the case may be, the CUSIP number of the Notes (if applicable), the Redemption Price and the place or places where each such Note is to be surrendered for payment of the Redemption Price and shall state that on the Cash Redemption Date or the Special Event Redemption Date, as the case may be, the Redemption Price will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and after said date. In the case of a Cash Redemption or Special Event Redemption, the Bank shall, on the applicable Redemption Date, deposit an amount of money sufficient to pay the Redemption Price of all the Notes to be redeemed with the Trustee or with a Paying Agent (or, if the Bank is acting as its own Paying Agent, deposit in an account established for the purpose as provided in Section 803 of the Third Supplemental Indenture), to be paid upon presentation and surrender of the Notes to be redeemed. Provided such deposit has been made, the Notes so called for redemption shall, from and after the Cash Redemption Date or Special Event Redemption Date, as applicable, cease to bear interest.
Notice of a Failed Coupon Redemption shall be given in writing by electronic communication or mailed, first-class postage prepaid, as promptly as practicable after the Failed Coupon Payment Date, to each Holder, at his, her or its address appearing on the Security Register. All notices of Failed Coupon Redemption shall state that a Failed Coupon Redemption has occurred on the Failed Coupon Payment Date, the CUSIP numbers of the Notes (if applicable), the Redemption Price (calculated as of the Failed Coupon Payment Date) and the place or places where each such Note is to be surrendered for payment of the Redemption Price and shall further state that on the Failed Coupon Payment Date, the Redemption Price will become due and payable upon each such Note to be redeemed and that all Notes shall have ceased to be outstanding as of the Failed Coupon Payment Date and that interest thereon will cease to accrue on and after said date. Upon surrender of any such Note for redemption in accordance with the aforesaid notice, such Note shall be paid by the Bank at the Redemption Price. In the case of a Failed Coupon Redemption, the Notes so called for redemption shall, from and after the Failed Coupon Payment Date, cease to bear interest. Upon surrender of any such Note for redemption in accordance with the aforesaid notice, such Note shall be paid by the Bank at the Redemption Price.
Agreement of Holders and Beneficial Owners of the Notes
By acquiring this Note, each Holder and Beneficial Owner of the Note or any interest herein, including any person acquiring this Note or interest herein after the date hereof, irrevocably acknowledges, consents and agrees with and for the benefit of the Bank that, upon the occurrence of a Cash Redemption, Special Event Redemption, or Failed Coupon Redemption, (1) such redemption shall occur without any further action on the part of such Holder or Beneficial Owner, (2) such redemption shall not constitute an Event of Default under the terms of the Notes or the Indenture, and that following such redemption, such Holder or Beneficial Owner will not have any rights against the Bank with respect to the repayment of the principal amount of, or interest on, the Notes other than recourse to the Limited Recourse Trust Assets and (3) that in the event of a Recourse Event, the Redemption Price shall be deemed paid in full by the delivery of Limited Recourse Trust Assets.
Purchase
At any time and from time to time, the Bank may, at its option and with the prior written approval of the Superintendent, purchase Notes, in whole or in part, by tender offer, open market purchases
negotiated transactions or otherwise in accordance with applicable securities laws and regulations, so long as such acquisition does not otherwise violate the terms of the Indenture, upon such terms and at such prices as the Bank may determine. Notes purchased by the Bank shall, subject to the following paragraph, be cancelled and shall not be re-issued. Notwithstanding the foregoing, any subsidiary of the Bank may purchase Notes at any time in the ordinary course of its business in dealing in securities, subject to applicable law.
If any Notes are to be cancelled pursuant to the preceding paragraph, the Bank shall, immediately before such purchase and with the prior written approval of the Superintendent, redeem a corresponding number of Preferred Shares then held in the Limited Recourse Trust for cancellation. The Bank shall apply, or cause the LRT Trustee to apply, the proceeds from the redemption of such Preferred Shares towards the payment of the principal amount of and any accrued and unpaid interest on the Notes.
Redemption Upon Occurrence of Non-Viability Contingent Capital Trigger Event
Upon the occurrence of a Trigger Event (as defined below) and immediately following an NVCC Automatic Conversion (as defined below), each Outstanding Note shall automatically and immediately be redeemed, on a full and permanent basis, without any action on the part of, or the consent of, the Holders, the LRT Trustee, or the Trustee, for Limited Recourse Trust Assets (which shall be the fully paid and non-assessable common shares of the Bank (the “Common Shares”) then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion).
The number of Common Shares that will be held in the Limited Recourse Trust following an NVCC Automatic Conversion and immediately before the Trigger Event Redemption will be equal to the product of (a) the number of Preferred Shares held in the Limited Recourse Trust immediately prior to an NVCC Automatic Conversion, times (b) the quotient obtained by dividing (i) the Multiplier multiplied by the Share Value, by (ii) the Conversion Price (rounding down, if necessary, to the nearest whole number of Common Shares).
For the purposes of the foregoing, the terms “Multiplier”, “Share Value” and “Conversion Price” shall have the respective meanings ascribed to them in the terms and conditions applicable to the Preferred Shares, and:
“NVCC Automatic Conversion” means, upon the occurrence of a Trigger Event, the automatic conversion of each outstanding Preferred Share into fully-paid and non-assessable Common Shares in accordance with the terms of the Preferred Shares.
“Trigger Event” has the meaning set out in the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”) Capital Adequacy Requirements (CAR) Guideline, Chapter 2 – Definition of Capital, effective November 2023, as such term may be amended or superseded by OSFI from time to time, which term currently provides that each of the following constitutes a Trigger Event:
| • | the Superintendent publicly announces that the Bank has been advised, in writing, that the Superintendent is of the opinion that the Bank has ceased, or is about to cease, to be viable and that, after the conversion or write-off, as applicable, of all contingent instruments and taking into account any other factors or circumstances that are considered relevant or appropriate, it is reasonably likely that the viability of the Bank will be restored or maintained; or |
| • | a federal or provincial government in Canada publicly announces that the Bank has accepted or agreed to accept a capital injection, or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof without which the Bank would have been determined by the Superintendent to be non-viable. |
Notwithstanding any other provision in this Note or in the Indenture, the redemption of the Notes in connection with a Trigger Event Redemption shall not be an Event of Default and the only consequence of a Trigger Event and the resulting Trigger Event Redemption shall be the redemption of the Notes for Limited Recourse Trust Assets (which shall be the fully-paid and non-assessable Common Shares then held in the Limited Recourse Trust pursuant to an NVCC Automatic Conversion).
Satisfaction of Payment Obligations with Limited Recourse Trust Assets
Notwithstanding any other provision in this Note or in the Indenture, the sole remedy of Holders in the event of a Recourse Event (including, for the avoidance of doubt, the non-payment of the principal amount of, interest on or the Redemption Price for the Notes when due) shall be recourse to the applicable Limited Recourse Trust Assets. Upon any such Recourse Event, the Bank shall deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to the Holders, and the delivery of Limited Recourse Trust Assets to the Holder shall be deemed to be in full satisfaction of the Notes and shall extinguish all claims of such Holders against the Bank in accordance with Section 604 of the Third Supplemental Indenture regardless of whether the value of such Limited Recourse Trust Assets is less than the principal amount of and any accrued and unpaid interest on the Notes or the Redemption Price of the Notes, as applicable.
Right Not to Deliver Common Shares or Preferred Shares upon Recourse Event
Upon a Recourse Event, the Bank reserves the right not to deliver some or all, as applicable, of the Common Shares or Preferred Shares issuable thereupon to any Person whom the Bank or its transfer agent has reason to believe is an Ineligible Person (as defined below) or any Person who, by virtue of that delivery, would become a Significant Shareholder (as defined below). In such circumstances, the Bank will hold, as agent for such Persons, the Common Shares or Preferred Shares that would have otherwise been delivered to such Persons and will attempt to facilitate the sale of such Common Shares or Preferred Shares to parties other than the Bank and its Affiliates on behalf of such Persons through a registered dealer to be retained by the Bank on behalf of such Persons. Those sales (if any) may be made at any time and at any price. The Bank shall not be subject to any liability for failure to sell any such Common Shares or Preferred Shares on behalf of such Persons or at any particular price on any particular day. The net proceeds received by the Bank from the sale of any such Common Shares or Preferred Shares will be divided among the applicable Persons in proportion to the number of Common Shares or Preferred Shares that would otherwise have been delivered to them after deducting the costs of sale and any applicable withholding taxes. The Bank shall deliver a check or send a wire transfer in immediately available funds representing the aggregate net proceeds to the Depositary (if the Common Shares or Preferred Shares are then held in the form of one or more global securities) or in all other cases to such Persons in accordance with the regular practices and procedures of Depositary or otherwise. For the purposes of the foregoing:
“Ineligible Person” means (i) any person whose address is in, or whom the Bank or its transfer agent has reason to believe is a resident of, any jurisdiction outside Canada to the extent that the issuance by the Bank or delivery by its transfer agent to that person of Common Shares or Preferred Shares would require the Bank to take any action to comply with securities, banking or analogous laws of that jurisdiction, and (ii) any person to the extent that the issuance by the Bank or delivery by its transfer agent to that person of Common Shares or Preferred Shares would cause the Bank to be in violation of any law to which the Bank is subject.
“Significant Shareholder” means any person who beneficially owns directly, or indirectly through entities controlled by such person or persons associated with or acting jointly or in concert with such person, a percentage of the total number of outstanding shares of a class of the Bank that is in excess of that permitted by the Bank Act.
Other
The indebtedness evidenced by this Note is, to the extent provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of all Indebtedness (including all Subordinated Indebtedness of the Bank other than Junior Subordinated Indebtedness), and this Note is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Note, by accepting the same, (a) agrees to and shall be bound by such provisions and (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Indebtedness, other than Junior Subordinated Indebtedness, whether now outstanding or hereafter created, incurred, assumed or guaranteed, and waives reliance by each such holder upon said provisions.
Notwithstanding the foregoing, in the event of the occurrence of a Recourse Event, including an Event of Default, the sole remedy of Holders shall be recourse to the applicable Limited Recourse Trust Assets.
Upon the occurrence of a Trigger Event, each Preferred Share will be automatically converted into Common Shares pursuant to an NVCC Automatic Conversion, and immediately following such NVCC Automatic Conversion, each outstanding Note will automatically and immediately be redeemed for the same number of Common Shares into which the Preferred Shares converted pursuant to such NVCC Automatic Conversion, such that the subordination provisions of the Notes will not be relevant since all of the Notes will have been converted into Common Shares which will rank on parity with all other Common Shares of the Bank.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Bank and the rights of the Holders of the Notes under the Indenture at any time by the Bank and the Trustee with the consent of the Holders of a majority in principal amount of the Outstanding Notes affected. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Outstanding Notes, on behalf of the Holders of all Notes, to waive compliance by the Bank with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
Notwithstanding any provision of the Indenture, without the prior consent of the Superintendent, no amendment to or variation of terms of this Note, the Indenture, or any supplemental indenture thereto that would affect the regulatory capital classification of such Notes under the guidelines for capital adequacy requirements for banks in Canada shall be made.
As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless (1) such Holder shall have previously given the Trustee written notice of a continuing Event of Default or non-payment of the Redemption Price with respect to the Notes or failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, (2) the Holders of not less than 25% in principal amount of the Outstanding Notes shall have made written request to the Trustee to institute proceedings in respect of such Event of Default or failure to pay the Redemption Price or failure of the Bank to deliver, or cause the LRT Trustee to deliver, the applicable Limited Recourse Trust Assets to a Holder, in its own name as Trustee hereunder, (3) such Holder or Holders have offered to the Trustee full indemnity against reasonable costs, expenses and liabilities to be incurred in compliance with such request, (4) the Trustee for 90 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding and (5) no direction inconsistent with such written request has been given to the Trustee during such 90-day period by the Majority Holders. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein if a Trigger Event has not occurred, provided, however, that the sole remedy of Holders if the Bank does not make such payment shall be recourse to the Limited Recourse Trust Assets.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Bank to pay the principal of and any premium and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed, provided, however, that the sole remedy of Holders if the Bank does not make such payment shall be recourse to the Limited Recourse Trust Assets.
For disclosure purposes under the Interest Act (Canada), whenever in the Notes or the Indenture interest at a specified rate is to be calculated on the basis of a period less than a calendar year, the yearly rate of interest to which such rate is equivalent is such rate multiplied by the actual number of days in the relevant calendar year and divided by the number of days in such period.
As provided in the Indenture and subject to certain limitations therein and herein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Bank in any place where the principal of and any premium and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Bank and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
Book-Entry Only Issue
Except as required by applicable law, as provided by the rules and procedures of the Book-Entry-Only System or as otherwise agreed by the Bank and the Depositary, the Notes shall be issued and held under the Book-Entry-Only System and shall be represented by a single fully-registered Global Note registered in the name of a Depositary. For these purposes “Book-Entry-Only System” means the book-entry-only securities services administered by the Depositary in accordance with the operating rules and procedures therefor.
No service charge shall be made for any such registration of transfer or exchange, but the Bank or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Bank, the Trustee and any agent of the Bank or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and none of the Bank, the Trustee or any such agent shall be affected by notice to the contrary.
Exhibit 5.1
[Letterhead of Sullivan & Cromwell LLP]
November 1, 2024
Royal Bank of Canada,
200 Bay Street,
Royal Bank Plaza,
Toronto, Ontario,
Canada M5J 2J5.
Ladies and Gentlemen:
This opinion is delivered in connection with the issuance by Royal Bank of Canada (the “Bank”) of (i) U.S. $1,000,000,000 aggregate principal amount of 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 (the “Notes”) and (ii) 1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) (the “Preferred Shares”). The Bank filed with the Securities and Exchange Commission a registration statement on Form F-3 (File No. 333-275898) (the “Registration Statement”) under the Securities Act of 1933 (the “Act”) that was declared effective on December 20, 2023, relating to, among other things, the proposed offer and sale of up to $75,000,000,000 aggregate initial offering price of securities. The Notes are being issued pursuant to the Indenture, dated as of January 27, 2016 (the “Base Indenture”), between the Bank and The Bank of New York Mellon, as Trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated as of November 1, 2024 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), among the Bank and the Trustee. The Preferred Shares will be convertible into common shares of the Bank upon the occurrence of a Trigger Event (as such term is defined in the provisions attaching to the Preferred Shares).
In rendering this opinion, we have examined the following documents:
| 1. | The Indenture. |
| 2. | Certificates of officers of the Bank with respect to the authorization of the Notes, the determination of the terms of the Notes and related matters. |
| 3. | Specimens of the Notes. |
| 4. | The prospectus dated December 20, 2023, and the prospectus supplement dated October 17, 2024. |
We have also examined such questions of United States Federal and New York state law as we have considered necessary or appropriate for the purposes of this opinion.
| Royal Bank of Canada | - 2 - |
Upon the basis of such examination, we advise you that, in our opinion, the Notes constitute valid and legally binding obligations of the Bank, 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; provided, however, that we express no opinion with respect to Article 15 and Section 1601 of the Base Indenture or Sections 901, 902, 903, 906, 907, 1103 and 1202 of the Supplemental Indenture, and the corresponding provisions in the Notes, which are governed by the laws of the Province of Ontario and the Federal laws of Canada applicable therein.
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. In rendering the foregoing opinion, we have assumed that the Bank validly exists as a Schedule I bank under the Bank Act (Canada) and has the corporate power to create, issue and sell the Notes, that the Indenture was duly authorized, executed and delivered by the Bank insofar as the laws of the Provinces of Ontario and Québec and the Federal laws of Canada applicable therein are concerned and that all corporate action by the Bank related to the Notes was duly authorized as a matter of such laws. We understand that you are relying upon the opinion, dated the date hereof, of Osler, Hoskin & Harcourt LLP, Canadian counsel for the Bank, that the Bank validly exists as a Schedule I bank under the Bank Act (Canada) and has the corporate power to create, issue and sell the Notes, that the Indenture was duly authorized, executed and delivered by the Bank insofar as the laws of the Provinces of Ontario and Québec and the Federal laws of Canada applicable therein are concerned and that all corporate action by the Bank related to the Notes was duly authorized as a matter of such laws. Our opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Osler, Hoskin & Harcourt LLP.
In rendering the foregoing opinion, we are not passing upon, and assume no responsibility for, any disclosure in the Registration Statement or any related prospectus or other offering material regarding the Bank or the Notes or their offering and sale.
We have also relied as to certain factual matters on 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, that the Notes have been duly issued, authenticated and delivered by the Trustee, that the Notes have been delivered against payment as contemplated in the Registration Statement and that the signatures on all documents examined by us are genuine, assumptions which we have not independently verified.
We hereby consent to this filing of this opinion as an exhibit to a Current Report on Form 6-K to be incorporated by reference in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act.
| Very truly yours, |
| /S/ SULLIVAN & CROMWELL LLP |
Exhibit 5.2
| Osler, Hoskin & Harcourt LLP Box 50, 1 First Canadian Place Toronto, Ontario, Canada M5X 1B8 416.362.2111 MAIN 416.862.6666 FACSIMILE |
|
November 1, 2024
Royal Bank of Canada
Royal Bank Plaza
200 Bay Street
Toronto, Ontario
M5J 2J5
Dear Sirs/Mesdames:
Royal Bank of Canada – US$1,000,000,000 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness)
We have acted as Canadian counsel to Royal Bank of Canada (the “Bank”) in connection with the issue and sale on the date hereof (the “Offering”) by the Bank of US$1,000,000,000 aggregate principal amount of its 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 (the “Notes”) pursuant to an underwriting agreement dated as of October 17, 2024 (the “Underwriting Agreement”) among the Bank and RBC Capital Markets, LLC, BofA Securities, Inc., Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC and HSBC Securities (USA) Inc., as representatives of the several underwriters named therein (collectively, the “Underwriters”). The Notes are issuable under and pursuant to a subordinated debt indenture dated as of January 27, 2016 (the “Base Indenture”), between the Bank and The Bank of New York Mellon, as trustee (the “Trustee”), as amended and supplemented by a third supplemental indenture dated as of November 1, 2024 (the “Third Supplemental Indenture” and together with the Base Indenture, the “Indenture”), between the Bank and the Trustee. Concurrently with the Offering, the Bank will issue and sell 1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) of the Bank (the “Preferred Shares”) to Computershare Trust Company of Canada, as trustee (the “Limited Recourse Trustee”) of Leo LRCN Limited Recourse Trust (the “Limited Recourse Trust”).
In accordance with the terms of an amended and restated declaration of trust dated as of July 28, 2020, as amended by a first amendment to amended and restated declaration of trust dated as of April 15, 2024 (the “Declaration of Trust”), in respect of the Limited Recourse Trust between the Bank and the Limited Recourse Trustee, the Limited Recourse Trustee will hold legal title to the Preferred Shares in trust as trustee for the benefit of the Bank to satisfy the Bank’s obligations under the Indenture. Upon the occurrence of a Recourse Event (as defined in the Indenture), the assets held in the Limited Recourse Trust in respect of the Notes, which will initially consist of the Preferred Shares, will be delivered to the holders of the Notes.
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The provisions attaching to the Preferred Shares (the “Share Terms”) provide that the Preferred Shares will convert, upon the occurrence of a Trigger Event (as defined in the Share Terms), into common shares in the capital of the Bank (each, a “Common Share”), subject to certain conditions as described in the Share Terms (an “NVCC Automatic Conversion”). If a Trigger Event occurs prior to the Transfer Date (as defined in the Share Terms), the terms of the Indenture provide that immediately following such NVCC Automatic Conversion, each outstanding Note will automatically and immediately be redeemed for the same number of Common Shares into which the Preferred Shares converted pursuant to such NVCC Automatic Conversion, subject to certain conditions as described in the Indenture. We are solicitors qualified to practice law in the Province of Ontario and we express no opinion as to any laws or any matters governed by any laws other than the laws of the Province of Ontario and the federal laws of Canada applicable therein (“Ontario Law”).
As Canadian counsel to the Bank, we have examined originals or copies, certified or otherwise authenticated to our satisfaction, of the following:
| (i) | the preliminary prospectus supplement dated October 17, 2024 (the “Preliminary Prospectus Supplement”), the final prospectus supplement dated October 17, 2024 (the “Final Prospectus Supplement”) and the base prospectus dated December 20, 2023 (the “Base Prospectus” and together with the Preliminary Prospectus Supplement and the Final Prospectus Supplement, the “Prospectus”); |
| (ii) | the Underwriting Agreement; and |
| (iii) | the Indenture. |
In connection with the opinions expressed in this letter we have considered such questions of law and examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, records of corporate proceedings, certificates and acknowledgements of government officials and others and such other material as we have considered necessary or appropriate for the purposes of the opinions hereafter expressed, including the following documents:
| (i) | the by-laws of the Bank; |
| (ii) | officers’ certificates of the Bank as to resolutions of the directors of the Bank (and related term sheets summarizing the terms and conditions of the Notes and the Preferred Shares signed by an executive officer of the Bank) authorizing the Registration Statement filed with the U.S. Securities and Exchange Commission (the “Commission”) on Form F-3 on December 5, 2023 and Amendment No. 1 thereto dated December 19, 2023 (collectively, |
Page 3
| the “Registration Statement”), the Prospectus, the Underwriting Agreement, the Indenture, the creation and issuance of the Notes, the creation and issuance of the Preferred Shares and the allotment, reservation for issue and issuance of the Common Shares into which the Preferred Shares will be converted upon the occurrence of a Trigger Event and other related matters; and |
| (iii) | a Certificate of Confirmation dated October 31, 2024 issued by the Office of the Superintendent of Financial Institutions (Canada) in respect of the Bank (the “Certificate of Confirmation”). |
We understand that the Registration Statement and the Prospectus were filed with the Commission in connection with the Notes and the Preferred Shares.
We have assumed, with respect to all documents examined by us, the legal capacity of all individuals, the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified, notarial, conformed, telecopied, facsimile, electronic or photostatic copies, that the certificates referred to above continue to be accurate as at the date hereof and that each of the documents, instruments or agreements executed in connection with the issue and sale of the Notes and the Preferred Shares are within the capacity of, and have been validly authorized, executed and delivered and constitute legal, valid, binding and enforceable obligations of, each party other than the Bank. We have also assumed that the Indenture and the Notes, other than the provisions thereof governed by Ontario Law, constitute legal, valid, binding and enforceable obligations of the Bank.
In giving the opinion in paragraph 1 as to the existence of the Bank, we have relied exclusively on the Certificate of Confirmation, which certificate we assume continues to be accurate as of the date hereof.
Based upon the foregoing, and subject to the qualifications expressed herein, we are of the opinion that:
| 1. | The Bank validly exists as a Schedule I bank under the Bank Act (Canada) (the “Bank Act”). |
| 2. | The Bank has the corporate power to (i) create, issue and sell the Notes in the manner provided in the Underwriting Agreement, (ii) create, issue and sell the Preferred Shares to the Limited Recourse Trustee, and (iii) create and issue the Common Shares into which the Preferred Shares may be converted upon an NVCC Automatic Conversion (as defined in the Share Terms). |
| 3. | All necessary corporate action has been taken by the Bank to (i) authorize the creation, issuance, sale and delivery of the Notes, (ii) authorize the creation, |
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| issuance, sale and delivery of the Preferred Shares to the Limited Recourse Trustee, and (iii) authorize and reserve for issuance the Common Shares into which the Preferred Shares may be converted upon an NVCC Automatic Conversion. |
| 4. | All necessary corporate action has been taken by the Bank to authorize the execution and delivery of the Indenture and the Notes, and the performance of its obligations thereunder, and the Indenture and the Notes have been, to the extent execution and delivery are matters governed by Ontario Law, duly executed and delivered by the Bank. |
| 5. | The Preferred Shares have been validly created and allotted and, payment therefor having been made to the Bank, have been validly issued and are outstanding as fully-paid and non-assessable shares of the Bank. |
| 6. | The Common Shares into which the Preferred Shares may be converted upon an NVCC Automatic Conversion have been validly allotted and reserved for issuance and will, upon their issuance in accordance with the Share Terms, be outstanding as fully-paid and non-assessable shares of the Bank. |
| 7. | The provisions of the Indenture and the Notes governed by Ontario Law constitute legal, valid and binding obligations of the Bank enforceable against it in accordance with their respective terms. |
The opinion expressed in paragraph 7 above as to the enforceability of the Indenture and the Notes is subject to the qualifications that:
| (a) | enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, preference, moratorium, arrangement or winding-up laws or other similar laws affecting the enforcement of creditors’ rights generally; |
| (b) | enforceability may be limited by equitable principles, including the principle that equitable remedies such as specific performance and injunction may only be granted in the discretion of a court of competent jurisdiction; |
| (c) | enforceability will be subject to the limitations contained in the Limitations Act, 2002 (Ontario), and we express no opinion as to whether a court may find any provision of the Notes or the Indenture to be unenforceable as an attempt to vary or exclude a limitation period under that Act; and |
| (d) | enforceability will be subject to the limitations contained in the Currency Act (Canada). |
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This opinion is rendered solely in connection with the transactions covered hereby, is limited to the matters stated herein, and no opinions may be implied or inferred beyond matters expressly stated herein.
We hereby consent to the filing of this opinion as an exhibit to a Current Report on Form 6-K to be incorporated by reference in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the United States Securities Act of 1933.
Yours truly,
/s/ Osler, Hoskin & Harcourt LLP
Exhibit 8.1
[Letterhead of Sullivan & Cromwell LLP]
November 1, 2024
Royal Bank of Canada,
200 Bay Street,
Royal Bank Plaza,
Toronto, Ontario,
Canada M5J 2J5.
Ladies and Gentlemen:
We are acting as special United States federal taxation counsel to Royal Bank of Canada (the “Bank”), in connection with the issuance and delivery of the debt securities identified in Annex A to this letter (the “Notes”) as described in the Prospectus Supplement dated October 17, 2024 (the “Prospectus Supplement”) to the Prospectus dated December 20, 2023 (the “Prospectus”) contained in the Registration Statement on Form F-3, File No. 333-275898 (the “Registration Statement”). We hereby confirm to you that the statements of U.S. tax law set forth under the heading “U.S. Federal Income Tax Considerations” in the Prospectus Supplement are our opinion and constitute a fair and accurate summary of the material tax consequences of owning the Notes, Preferred Shares Series BX acquired on a Recourse Event, and Common Shares acquired on a Recourse Event that is a Trigger Event or on an NVCC Automatic Conversion after the Preferred Shares Series BX are delivered to holders of Notes, subject to the limitations and exceptions set forth in the Prospectus Supplement and the Prospectus. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Prospectus Supplement.
We hereby consent to the filing of this opinion as an exhibit to a Current Report on Form 6-K incorporated by reference in the Registration Statement, and to the reference to our opinion in the Prospectus Supplement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.
| Very truly yours, |
| /s/ Sullivan & Cromwell LLP |
Annex A
| Title of Note |
Date of Prospectus Supplement |
Date of Issue of Note | ||
| US$ 1,000,000,000 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 | October 17, 2024 | November 1, 2024 |
Exhibit 8.2
| Osler, Hoskin & Harcourt LLP Box 50, 1 First Canadian Place 416.862.6666 FACSIMILE |
|
November 1, 2024
Royal Bank of Canada
Royal Bank Plaza
200 Bay Street
Toronto, Ontario
M5J 2J5
Dear Sirs/Mesdames:
Royal Bank of Canada – US$1,000,000,000 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) and 1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC))
We have acted as Canadian counsel to Royal Bank of Canada (the “Bank”) in connection with the issue and sale today by the Bank of (i) US$1,000,000,000 aggregate principal amount of 6.350% Limited Recourse Capital Notes, Series 5 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) due 2084 (the “Notes”) and (ii) 1,000,000 Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series BX (Non-Viability Contingent Capital (NVCC)) of the Bank (the “Preferred Shares” and, collectively with the Notes, the “Securities”) to Computershare Trust Company of Canada, as trustee of Leo LRCN Limited Recourse Trust.
We hereby confirm to you that the statements of Canadian tax law set forth under the heading “Canadian Federal Income Tax Considerations” in the prospectus supplement relating to the Securities, dated October 17, 2024 (the “Prospectus Supplement”), are our opinion and are accurate in all material respects subject to the limitations and qualifications therein.
We hereby consent to the filing of this opinion as an exhibit to the Bank’s Current Report on Form 6-K and to the reference to us under the heading “Canadian Federal Income Tax Considerations” in the Prospectus Supplement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the United States Securities Act of 1933.
Yours truly,
/s/ Osler, Hoskin & Harcourt LLP