2012 Terms and Conditions

1.

Types

The Bonds will be issued in three types: Variable-Rate Bonds, Step-Up Bonds, 3-Year Fixed-Rate Bonds and 10-Year Fixed-Rate Bonds (collectively, the “Fixed Rate Bonds”) (the Variable Rate Bonds, the Step-Up Bonds and the Fixed-Rate Bonds, collectively the "Bonds").

2.

Form and Denomination

The Bonds will be issued in fully registered form in denominations of $100 and integral multiples of $100.

3.

Status

The Bonds will be direct obligations of the Province of Ontario (the "Province") and the principal amount of and interest on the Bonds will be a charge on and payable out of the Consolidated Revenue Fund of the Province.

4.

Registrar

Computershare Trust Company of Canada in the City of Toronto (together with any successor or replacement registrar called the "Registrar") has been appointed by the Province as registrar for the Bonds to maintain a register (the "Register") in the City of Toronto for the names and addresses of the registered holders of the Bonds and particulars of the Bonds held by them respectively and in which transfers or exchanges of Bonds may be registered.

5.

Ownership Eligibility

The Bonds may only be acquired for or by a beneficial owner who is at the time of acquisition:

1. an individual normally residing in Ontario and having an Ontario address;
2. a corporation, society, non-profit association or other organization having a permanent establishment in Ontario; or
3. a beneficiary of:
   1. a Registered Retirement Savings Plan, Registered Retirement Income Fund, Deferred Profit Sharing Plan, Employee Benefit Plan, Registered Education Savings Plan, or Registered Pension Plan, or
   2. an estate or other trust
   where that beneficiary meets the requirements of (a) or (b) above.

The Province shall have the right to cancel any Bonds acquired by or for a beneficial owner who does not at the time of acquisition meet the ownership eligibility requirements.

6.

Maximum Ownership Limit

The maximum principal amount of Bonds that may be purchased for or by a beneficial owner during the Selling Period is $1,000,000 or such other amount established by the Province during the Selling Period (the "Dollar Limit"). The Dollar Limit shall not apply to purchases of Bonds in the secondary market. When Bonds are beneficially owned jointly, the maximum permitted principal amount will be the Dollar Limit multiplied by the number of joint beneficial owners. The Province shall have the right to require redemption of any Bonds acquired in excess of the Dollar Limit.

7.

Interest

Variable-Rate Bonds
The Minister of Finance (the "Minister") or other authorized officer of the Province will set the interest rate per annum payable on the Variable-Rate Bonds for the one-year period commencing June 21, 2012 on or before June 1, 2012 and will reset the interest rate for the Variable-Rate annually, by written notice to the Registrar. The Province will set the interest rate payable on the Variable-Rate Bonds for the period beginning on June 21 of each year prior to the commencement of the period. Interest will cease to accrue on the Variable-Rate Bonds on June 21, 2015 (the "Maturity Date" for the Variable-Rate Bonds).

Step-Up Bonds
The Minister or other authorized officer of the Province will set the interest rates (the "Set Interest Rates ") payable on the Step-Up Bonds for the term of the Step-Up Bonds on or before June 1, 2012 and may reset the interest rates for the Step-Up Bonds from time to time, by written notice to the Registrar. The interest rates payable on the Step-Up Bonds shall not be less than the Set Interest Rates. Interest will cease to accrue on the Step-Up Bonds on June 21, 2017 (the "Maturity Date" for the Step-Up Bonds).

Fixed-Rate Bonds
The Minister or other authorized officer of the Province will set the interest rates payable on the Fixed-Rate Bonds for the terms of the Fixed-Rate Bonds on or before June 1, 2012 and may reset the interest rate for the Fixed-Rate Bonds at any time before June 21, 2012, by written notice to the Registrar. Interest will cease to accrue on the 3-Year Fixed-Rate Bonds on June 21, 2015 and on the 10-Year Fixed-Rate Bonds on June 21, 2022 (the "Maturity Dates" for the Fixed-Rate Bonds).

Unless a registered holder elects by written notice to the Registrar to have interest paid by direct deposit to a specified account within Canada, interest will be paid by cheque mailed to the address of the registered holder in the Register. The registered holder may change interest payment arrangements by written notice delivered to the Registrar except on June 21 or December 21, each a redemption date (“Redemption Date”), or during the immediately preceding 15 days.

Each of the Variable-Rate Bonds, the Step-Up Bonds and the Fixed-Rate Bonds will be issued in two forms: Annual Interest Bonds and Compound Interest Bonds.

Annual Interest Bonds
Simple interest is payable on Annual Interest Bonds, on June 21, 2013 and every June 21 thereafter up to and including the Maturity Date for the Bonds or such earlier date on which the Bonds are redeemed, at the rate set for the Bonds for the relevant period.

Compound Interest Bonds
Interest on Compound Interest Bonds is compounded annually, on June 21, 2013 and every June 21 thereafter up to and including the Maturity Date, at the rate set for the Bonds for each relevant period.

Interest on Compound Interest Bonds accumulates, and is payable, on:

1. the Maturity Date for the Bonds, or
2. in accordance with paragraph 23, when exchanged for Annual Interest Bonds, or
3. if the Bonds are redeemed on a Redemption Date.

8.

Joint Holders

Where a Bond is registered in more than one name, the principal of and interest payable on the Bond shall be paid to or to the order of all joint registered holders, failing written instructions from them to the contrary. Such payment shall constitute a valid discharge to the Province and the Registrar. If paid by cheque, the cheque shall be sent to the address of the joint holder whose name stands first in the Register. In the case of the death of one or more joint registered holders, the principal of and interest on any Bonds registered in their names may be paid to the survivor or survivors of such holders and such payment shall constitute a valid discharge to the Province and the Registrar.

9.

Cancellation

The purchaser may cancel a Purchase Application at any time prior to the close of business on the expiry or termination of the Selling Period by providing written notification along with a copy of the Purchase Application to the branch of the Sales Agent where the purchaser originally submitted the application.

10.

Redemption Prior to Maturity

The Sales Agents are the redemption agents (the “Redemption Agent”) for the Bonds. The Variable-Rate Bonds are redeemable annually on June 21 only and the Step-Up Bonds are redeemable prior to maturity at the option of the registered holder on June 21 or December 21 for their full principal amount by endorsing the reverse side of the tear-off redemption portion of the Bonds (the “Payment Instrument”) and presenting and surrendering the Bonds to be redeemed to a Redemption Agent on or before the fourteenth day following the Redemption Date. The Payment Instrument must be attached to the Bonds at the time of surrender otherwise the Bonds will be void. Redemption of book-based Bonds will be processed according to the investment dealer’s operating procedures. Interest will accrue on the Bonds and be paid up to and including the Redemption Date regardless of whether the Bonds are surrendered for redemption before or after such date. The Fixed-Rate Bonds are not redeemable prior to maturity except in accordance with paragraph 18 of these Terms and Conditions.

For December 21 redemptions of Annual Interest Bonds and for June 21 and December 21 redemptions of Compound Interest Bonds, accrued interest will be paid by the Redemption Agent. For June 21 redemptions of Annual Interest Bonds, including at maturity, accrued interest will be paid by the Registrar in accordance with paragraph 10 of these Terms and Conditions. December 21 redemptions of Annual or Compound Interest Bonds will be calculated on a semi-annual basis, regardless of the actual number of days in the period.

Bonds can be redeemed upon death of a beneficial owner, upon presentation and surrender of the Bonds to the Registrar with such other documentation as may be reasonably required by the Registrar. However, any requests for redemption received during the 15 days immediately preceding a Redemption Date may not be able to be processed until the Redemption Date. Interest will accrue on the Bonds and be paid up to and including the date of redemption.

Interest computed for a period of less than one year, other than the computation of regular half-yearly interest, shall be calculated on the basis of the actual number of days in the period and a year of 365 days.

In order to redeem a portion of the principal amount of a Bond, the registered holder must first exchange the Bond for the equivalent principal amount of smaller authorized denominations which will include the amount to be redeemed in accordance with paragraph 22 of these Terms and Conditions.

11.

Business Day

Payments in respect of principal of and interest on the Bonds shall only be made on a day other than a Saturday, Sunday or statutory holiday in Ontario (a "Business Day") and if any date for payment is not a Business Day, payment shall be made on the next following Business Day and no further interest shall be paid in respect of the delay in such payment. In the event that the fourteenth day following a Redemption Date is not a Business Day, then for the purposes of paragraph 16 of these Terms and Conditions, the Bond may be presented and surrendered on the Business Day next following the fourteenth day.

12.

Exchanges

Bonds may be exchanged at any time for an equivalent principal amount of Bonds of the same type and in the same form in authorized denominations by presenting and surrendering the Bonds to be exchanged to the Registrar. For any exchange, the Registrar shall not be required to deliver more than five certificates for each of up to three authorized denominations of Bonds. No exchanges will be permitted on a Redemption Date or during the immediately preceding 15 days.

Compound Interest Bonds may be exchanged at any time prior to maturity for an equivalent principal amount of Annual Interest Bonds of the same type by presenting and surrendering the Compound Interest Bonds to be exchanged to the Registrar. No exchanges of Compound Interest Bonds for Annual Interest Bonds will be permitted on a Redemption Date or during the immediately preceding 15 days.

The Registrar will pay on the exchanged Bonds:

1. compound interest for the period from June 21, 2012 to the June 21 prior to the date of the exchange, plus
2. simple interest, if applicable, to the date of the exchange.

Simple Interest on the principal amount of the Annual Interest Bonds received for exchanged Compound Interest Bonds will accrue from the June 21 prior to the date of the exchange.

13.

Transfers

Subject to the requirements of paragraphs 5 and 6 of these Terms and Conditions being satisfied by presentation of documentation satisfactory to the Registrar, a Bond may be transferred by the registered holder by completing a transfer form and then presenting and surrendering the Bond to the Registrar for registration in the name of the transferee. No transfers will be permitted on a Redemption Date or during the immediately preceding 15 days.

14.

Mutilated, Defaced, Destroyed, Stolen or Lost Bonds

If a Bond becomes mutilated, defaced, destroyed, stolen or lost, the Registrar will, at the request of the registered holder, issue a new Bond in replacement of the mutilated, defaced, destroyed, stolen or lost Bond upon receipt by the Registrar of:

1. in the case of a mutilated or defaced Bond, the mutilated or defaced Bond; and
2. in the case of a destroyed, stolen or lost Bond
   1. evidence satisfactory to the Province and Registrar that the Bond was destroyed, stolen or lost, and
   2. an indemnity bond issued by a surety company satisfactory to the Province and the Registrar, in such form as the Province may require where the cost of the indemnity arising from the above transaction is borne by the registered holder.

15.

Not Bound by Trust

Neither the Province nor the Registrar shall be bound to see to the execution of any trust affecting the ownership of any Bond or be affected by notice of any equity that may be subsisting in respect of a Bond. Payments to or to the order of the registered holder of the Bonds shall discharge the liability of the Province and the Registrar to the extent of the sum paid.

16.

Purchases

The Province, may at any time, purchase Bonds in the open market or by tender or by private contract at any price.

17.

Governing Law

The Bonds are governed by and shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

18.

Notice

The personal information collected by or on behalf of the Ontario Financing Authority (“OFA”) in connection with the Ontario Savings Bonds program is collected under the authority of the Capital Investment Plan Act, 1993, S.O. 1993, c.23 [s.30(1)], and the Financial Administration Act, R.S.O. 1990, c. F.12 [ss. 20, 21]. This information will be used by the OFA and its registrar, fiscal agent, transfer agent, paying agent and order administrator in the administration of the Ontario Savings Bond program.

Questions about the collection of personal information in relation to Ontario Savings Bonds may be directed to: Manager, Customer Service Centre, Ministry of Finance, 33 King Street W., Oshawa, Ontario L1H 8H5. Telephone: 1-800-263-7965 (general enquiries), 1-800-668-5821 (service in French), 1-800-263-7776 (TTY).

19.

Income Tax Forms

The Registrar will deliver a T5 tax form to registered holders on or prior to February 28 each year, for the interest attributable to the previous calendar year.

20.

Dealing with Registrar

Bondholders may contact the Registrar for transfers, exchanges and other purposes at:

Computershare Trust Company of Canada
100 University Avenue
9th Floor
Toronto, Ontario
M5J 2Y1

Attention: Bondholder Services
Tel: 1-800-433-3596
Fax: 1-888-453-0330
Internet: osb@computershare.com