Document:

Unassociated Document

    Amended
      and Restated

     

    Advisory
      Agreement

    

    ----
      between ----

    

    NB
      Capital Corporation

    

    ---
      and ---

    

    National
      Bank of Canada

    

    
      
        

      

    

    

    March
      21, 2006

    

    
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

      
        	 	 	
                Page

              
	 	 	 
	
                1.

              	
                DEFINITIONS

              	
                1

              
	
                2.

              	
                DUTIES
                  OF THE ADVISOR

              	
                2

              
	
                3.

              	
                COMPENSATION
                  OF THE ADVISOR

              	
                4

              
	
                4.

              	
                EXPENSES
                  OF THE ADVISOR

              	
                4

              
	
                5.

              	
                RECORDS

              	
                4

              
	
                6.

              	
                REIT
                  QUALIFICATION AND COMPLIANCE

              	
                4

              
	
                7.

              	
                TERM:
                  TERMINATION

              	
                5

              
	
                8.

              	
                OTHER
                  ACTIVITIES OF THE ADVISOR

              	
                5

              
	
                9.

              	
                CONFIDENTIALITY

              	
                5

              
	
                10.

              	
                BINDING
                  EFFECT: ASSIGNMENT

              	
                5

              
	
                11.

              	
                SUBCONTRACTING

              	
                6

              
	
                12.

              	
                LIABILITY
                  AND INDEMNITY OF THE ADVISOR

              	
                6

              
	
                13.

              	
                ACTION
                  UPON NOTICE OF NON-RENEWAL OR TERMINATION

              	
                6

              
	
                14.

              	
                NO
                  JOINT VENTURE OF PARTNERSHIP

              	
                7

              
	
                15.

              	
                NOTICES

              	
                7

              
	
                16.

              	
                SEVERABILITY

              	
                7

              
	
                17.

              	
                GOVERNING
                  LAW

              	
                8

              
	
                18.

              	
                AMENDMENTS

              	
                8

              
	
                19.

              	
                HEADINGS

              	
                9

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    AMENDED
      AND RESTATED ADVISORY AGREEMENT

    

    Amended
      and Restated Advisory Agreement entered into as of March 21, 2006.

     

    BETWEEN:        NB
      CAPITAL CORPORATION,
      a
      Maryland

      
                corporation;

    

    (the
      “Company”)

    

    AND:                        NATIONAL
      BANK OF CANADA,
      a
      Canadian

                          
      chartered bank;

    

    (the
      “Advisor”)

     

    WHEREAS
      the Company qualifies as a “real estate investment trust” (“REIT”)
      under
      the Internal
      Revenue Code of 1986,
      as
      amended (the “Code”);

    

    WHEREAS
      the Company desires to avail itself of the experience and assistance of the
      Advisor and to have the Advisor undertake, on the Company’s behalf, the duties
      and responsibilities hereinafter set forth, subject to the control and
      supervision of the Board of Directors of the Company (the “Board
      of Directors”)
      as
      provided for herein;

    

    WHEREAS
      the Advisor desires to render such services to the Company subject to the
      control and supervision of the Board of Directors, on the terms and conditions
      hereinafter set forth;

    

    WHEREAS
      the parties signed an advisory agreement dated September 3, 1997, that was
      subsequently amended on October 31, 2001, October 31, 2003 and November 3,
      2004,
      by a first supplemental advisory agreement, a second supplemental advisory
      agreement and an amended and restated advisory agreement,
      respectively;

    

    WHEREAS
      the parties wish to amend said amended and restated advisory agreement,
      hereinafter referred to as the “Agreement”, as defined below;

    

    NOW,
      THEREFORE, the parties hereto hereby agree as follows:

    

    
      
        	1.	
                DEFINITIONS

              

      

    

    

    
      
        	1.1	
                Definitions

                As
                  used herein, the following terms shall have the respective meanings
                  set
                  forth below:

              

      

    

    

    
      
        	1.1.1	
                “Advisor”
                  has the meaning set forth in the forepart of this
                  Agreement.

              

      

    

    

    
      
        	1.1.2	
                “Advisor
                  Termination Date”
                  means the date on which this Agreement
                  terminates.

              

      

    

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

      

        
          	1.1.3	
                  “Agreement”
                    means this Amended and Restated Advisory Agreement, as amended,
                    modified
                    and supplemented from time to
                    time.

                

        

      

    

    
      
         

      

    

    
      
        
          	1.1.4	
                  “Board
                    of Directors”
                    has the meaning set forth in the forepart of this
                    Agreement.

                

        

      

    

    

    
      
        	1.1.5	
                “Company”
                  has the meaning set forth in the forepart of this
                  Agreement.

              

      

    

    

    
      
        	1.1.6	
                “Independent
                  Directors”
                  means the members of the Board of Directors who are not current
                  officers
                  or employees of the Company or current directors, employees or
                  officers of
                  the Advisor or any affiliate of the
                  Advisor.

              

      

    

    

    
      
        	1.1.7	
                “Operating
                  Expenses”
                  for any period means any operating expenses of the Company (with
                  the
                  exception of those expenses to be borne by the Advisor in accordance
                  with
                  Section 4 hereof).

              

      

    

    

    
      
        	1.1.8	
                “Person”
                  means and includes individuals, corporations, limited partnerships,
                  general partnerships, joint stock companies or associations, limited
                  liability companies, joint ventures, associations, consortia, companies,
                  trusts, banks, trust companies, land trusts, common laws trusts,
                  business
                  trusts or other entities, governments and agencies and political
                  subdivisions thereof.

              

      

    

    

    
      
        	1.1.9	
                “REIT”
                  has the meaning set forth in the forepart of this
                  Agreement.

              

      

    

     

    
      
        	2.	
                DUTIES
                  OF THE ADVISOR

              

      

    

    

    The
      Advisor shall regulary consult with the Board of Directors and the officers
      of
      the Company and shall, at their request, furnish advice and recommendations
      with
      respect to all aspects of the business and affairs of the Company. Furthermore,
      subject to the control and discretion of and to instructions to the contrary
      from the Board of Directors, the Advisor shall perform the following services,
      without any specific request from the Board of Directors:

    

    
      	
            	(a)	
              administer
                the day-to-day operations and affairs of the Company, including,
                without
                limitation, the performance or supervision of the functions described
                in
                this Section 2;

            

    

    

    
      	
            	(b)	
              monitor
                the credit quality of the real estate mortgage assets held by the
                Company;

            

    

    

    
      	
            	(c)	
              advise
                the Company with respect to the acquisition, management, financing
                and
                disposition of the Company’s real estate mortgage
                assets;

            

    

    

    
      	
            	(d)	
              represent
                the Company in its day-to-day dealings with Persons with whom the
                Company
                interacts, including, without limitation, stockholders of the Company,
                the
                transfer agent of the Company, consultants, accountants, attorneys,
                servicers of the Company’s mortgage loans, custodians, insurers, banks,
                governments, government agencies and regulatory
                bodies;

            

    

    

    
      	
            	(e)	
              establish
                and provide all the necessary services for the Company, including,
                without
                limitation, executive, administrative, accounting, stockholder relations,
                secretarial, recordkeeping, copying, telephone, mailing and distribution
                facilities;

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
            	(f)	
              maintain
                communications and relations with the stockholders of the Company,
                including, but not limited to, responding to inquiries, proxy
                solicitations, providing reports to stockholders and arranging and
                coordination of all meetings of
                stockholders;

            

    

    

    
      	
            	(g)	
              monitor
                and supervise the performance of all parties who have contracts to
                perform
                services for the Company, provided that the Advisor shall have no
                duty to
                assume the obligations or guarantee the performance of such parties
                under
                such contract;

            

    

    

    
      	
            	(h)	
              arrange
                for the execution and delivery of such documents and instruments
                by the
                officers of the Company as may be required in order to perform the
                functions herein described and to take other required action contemplated
                by the terms of this Agreement;

            

    

    

    
      	
            	(i)	
              maintain
                proper books and records of the Company’s affairs and furnish or cause to
                be furnished to the Board of Directors such periodic reports and
                accounting information as may be required from time to time by the
                Board
                of Directors, including, but not limited to, quarterly reports of
                all
                income, expenses and distributions of the Company;
                

            

    

    

    
      	
            	(j)	
              consult
                and work with legal counsel for the Company in implementing Company
                decisions and undertaking measures consistent with all pertinent
                federal,
                provincial, state and local laws and rules or regulations of governmental
                or quasi-governmental agencies, including, but not limited to, federal,
                provincial and state securities laws and tax laws, as it relates
                to the
                Company’s qualification as a REIT, and the regulations promulgated under
                each of the foregoing;

            

    

    

    
      	
            	(k)	
              consult
                and work with accountants for the Company in connection with the
                preparation of financial statements, annual reports and tax
                returns;

            

    

    

    
      	
            	(l)	
              prepare
                and distribute, in consultation with the accountants for the Company,
                annual reports to stockholders which will contain audited financial
                statements;

            

    

    

    
      	
            	(m)	
              furnish
                reports to the Board of Directors and provide research, economical
                and
                statistical data in connection with the Company’s investments;
                and

            

    

    

    
      	
            	(n)	
              as
                reasonably requested by the Company, make reports to the Company
                of its
                performance of the foregoing services and furnish advice and
                recommendations with respect to other aspects of the business of
                the
                Company.

            

    

    

    For
      greater certainty, this Agreement does not provide the Advisor with the
      authority to modify or conclude contracts in the name of the
      Company.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    
      
        	3.	
                COMPENSATION
                  OF THE ADVISOR

              

      

    

    

    The
      Company shall pay to the Advisor, for services rendered by the Advisor
      hereunder, an advisory fee equal to ONE HUNDRED THOUSAND Dollars ($100,000)
      per
      year, payable in equal quarterly instalments.

    

    
      	4.	
              EXPENSES
                OF THE ADVISOR

            

    

    

    
      	
            	(a)	
              Without
                regard to the compensation received pursuant to Section 3 hereof,
                the
                Advisor shall bear the following
                expenses:

            

    

    

    
      	
            	(i)	
              employment
                expenses of the personnel employed by the Advisor, including, without
                limitation, salaries, wages, payroll taxes and the cost of employee
                benefit plans; and

            

    

    

    
      	
            	(ii)	
              rent,
                telephone equipment, utilities, office furniture and equipment and
                machinery and other office expenses of the Advisor incurred in connection
                with the maintenance of any office facility of the
                Advisor.

            

    

    

    
      	
            	(b)	
              Subject
                to paragraph 4(a) above, the Company shall reimburse the Advisor
                within 30
                days of a written request by the Advisor for any Operating Expenses
                paid
                or incurred by the Advisor on behalf of the
                Company.

            

    

     

    
      	5.	
              RECORDS

            

    

    

    The
      Advisor shall maintain appropriate books of account and records relating to
      services performed hereunder, and such books of account and records shall be
      accessible for inspection by the Board of Directors and representatives of
      the
      Company at all times.

    

    
      	6.	
              REIT
                QUALIFICATION AND
                COMPLIANCE

            

    

    

    The
      Advisor shall consult and work with the Company’s legal counsel in maintaining
      the Company’s qualification as a REIT. Notwithstanding any other provisions of
      this Agreement to the contrary, the Advisor shall refrain from any action which,
      in its reasonable judgment or in the judgment of the Board of Directors (of
      which the Advisor has received written notice), may adversely affect the
      qualification of the Company as a REIT or which would violate any laws, rule
      or
      regulation of any governmental body or agency having jurisdiction over the
      Company or its securities, or which would otherwise not be permitted by the
      articles of incorporation or by-laws of the Company. Furthermore, the Advisor
      shall take any action which, in its judgment or the judgment of the Board of
      Directors (of which the Advisor has received written notice), may be necessary
      to maintain the qualification of the Company as a REIT or prevent the violation
      of any law or regulation of any governmental body or agency having jurisdiction
      over the Company or its securities.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	7.	
              TERM:
                TERMINATION

            

    

    

    This
      Agreement shall be in full force and effect for a term beginning on the date
      hereof with an initial term of one year, and may be renewed for additional
      one-year periods at the election of the Company. Notwithstanding the foregoing,
      at any time after the initial term, the Company may terminate this Agreement
      at
      any time upon 60 days’ prior written notice; provided, however, that as long as
      any shares of the Company’s 8.35% Non Cumulative Exchangeable Preferred Stock,
      Series A, par value US$.01 per share, remain outstanding, any decision by the
      Company to renew, terminate or modify this Agreement must be approved by a
      majority of the Board of Directors, as well as by a majority of the Independent
      Directors.

    

    
      	8.	
              OTHER
                ACTIVITIES OF THE
                ADVISOR

            

    

    

    
      	
            	(a)	
              Nothing
                herein contained shall prevent the Advisor, an affiliate of the Advisor
                or
                an officer, director, employee or stockholder of the Advisor from
                engaging
                in any activity, including, without limitation, originating, purchasing
                and managing real estate mortgage assets, rendering of services and
                investment advice with respect to real estate investment opportunities
                to
                any other Person (including other REITs) and managing other investments
                (including the investments of the Advisor and its
                affiliates).

            

    

    

    
      	
            	(b)	
              Officers,
                directors, employees, stockholders and agents of the Advisor or of
                any
                affiliate of the Advisor may serve as officers, directors, employee
                or
                agents of the Company, but shall receive no compensation (other than
                reimbursement for expenses) from the Company for such
                service.

            

    

     

    
      	9.	
              CONFIDENTIALITY

            

    

    

    The
      Advisor acknowledges that all information provided in this Agreement is
      confidential, non-public and/or proprietary in nature. The Advisor agrees that
      it will, at all times, treat such information as confidential and that it will
      not circulate, communicate or otherwise disclose any information in the
      Agreement, directly or indirectly, to anyone other than the original recipient.
      The Advisor agrees that all information provided shall be used solely for the
      purposes described in the Agreement and that it shall have no rights of
      ownership in any such information provided.

    

    
      	10.	
              BINDING
                EFFECT: ASSIGNMENT

            

    

    

    This
      Agreement shall inure to the benefit of and shall be binding upon the parties
      hereto and their respective successors and assigns. Neither party may assign
      this Agreement or any of its respective rights hereunder (other than an
      assignment to a successor organization which acquires substantially all of
      the
      property of such party or, in the case of the Advisor, to an affiliate of the
      Advisor) without the prior written consent of the other party to this
      Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	11.	
              SUBCONTRACTING

            

    

    

    The
      Advisor may at any time subcontract all or a portion of its obligations under
      this Agreement to one or more affiliates of the Advisor that are involved in
      the
      Business of managing real estate mortgage assets without the consent of the
      Company. If no affiliate of the Advisor is engaged in the business of managing
      real estate mortgage assets, the Advisor may, with the approval of a majority
      of
      the Board of Directors, as well as a majority of the Independent Directors,
      subcontract all or a portion of its obligations under this Agreement to
      unrelated third parties. Notwithstanding the foregoing, the Advisor will not,
      in
      connection with subcontracting any of its obligations under this Agreement,
      be
      discharged or relieved in any respect from its obligations under this
      Agreement.

    

    
      	12.	
              LIABILITY
                AND INDEMNITY OF THE
                ADVISOR

            

    

    

    The
      Advisor assumes no responsibilities under this Agreement other than to perform
      the services called for hereunder in good faith. Neither the Advisor nor any
      of
      its affiliates, stockholders, directors, officers or employees will have any
      liability to the Company, stockholders of the Company or others except by reason
      of acts or omissions constituting gross negligence or willful breach of any
      of
      the Advisor’s material obligations under this Agreement. The Company shall
      indemnify and reimburse (if necessary) the Advisor, its stockholders, directors,
      officers, employees and agents for any and all expenses (including, without
      limitation, attorney’s fees and expenses), losses, damages, liabilities, demands
      and charges of any nature whatsoever in respect of or arising from any acts
      or
      omissions by the Advisor, or any of its affiliates, stockholders, directors,
      officers or employees pursuant to this Agreement, provided that the conduct
      against which the claim is made was determined by such Person, in good faith,
      to
      be in the best interests of the Company and was not the result of gross
      negligence by such Person or willful breach of any of such Person’s material
      obligations by such Person. The Advisor agrees that any such indemnification
      is
      recoverable only from the assets of the Company and not from the
      stockholders.

    

    
      
        	13.	
                ACTION
                  UPON NOTICE OF NON-RENEWAL OR
                  TERMINATION

              

      

    

    

    Forthwith
      upon giving of notice of non-renewal of this Agreement by the Company or of
      termination of this Agreement by the Company, the Advisor shall not be entitled
      to compensation after the Advisor Termination Date for further services under
      this Agreement, but shall be paid all compensation accruing to the Advisor
      Termination Date and shall be reimbursed for all expenses of the Company paid
      or
      incurred by the Advisor as of the Advisor Termination Date which are
      reimbursable by the Company under this Agreement. The Advisor shall promptly
      after the Advisor Termination Date:

    

    
      	
            	(a)	
              deliver
                to the Company all assets and documents of the Company then in the
                custody
                of the Advisor; and

            

    

    

    
      	
            	(b)	
              cooperate
                with the Company and take all reasonable steps requested to assist
                the
                Board of Directors in making an orderly transfer of the administrative
                functions of the Company.

            

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    
      	14.	
              NO
                JOINT VENTURE OR
                PARTNERSHIP

            

    

    

    Nothing
      in this Agreement shall be deemed to create a joint venture or partnership
      between the parties, whether for purposes of taxation or otherwise. Furthermore,
      nothing in the Agreement conveys to, or otherwise grants, the Advisor the
      authority to conclude contracts in the name of the Company.

    

    
      	15.	
              NOTICES

            

    

    

    Unless
      expressly provided otherwise herein, all notices, requests, demands and other
      communications required or permitted under this Agreement shall be in writing
      and shall be made by hand delivery, certified mail, overnight courier service,
      telex or telecopier. Any notice shall be duly addressed to the parties as
      follows:

    

    
      	
            	(a)	
              If
                to the Company:

            

    

    NB
      CAPITAL CORPORATION

    65
      East
      55th
      Street

    31st
      Floor

    New
      York,
      New York 10022

    

    Attention:
      Chairman of the Board and President

    

    
      	
            	(b)	
              If
                to the Advisor:

            

    

    

    NATIONAL
      BANK OF CANADA

    600
      de la
      Gauchetiere Street West

    Montreal
      (Québec)

    H3B
      4L2

    

    Attention:
      Vice-President & Chief Accountant

    

    Either
      party may alter the address to which communications or copies are to be sent
      by
      giving notice of such change of address in conformity with the provisions of
      this Section 15 for the giving of notice.

    

    
      	16.	
              SEVERABILITY

            

    

    

    If
      any
      term of provision of this Agreement or the application thereof with respect
      to
      any Person or circumstance shall, to any extent, be invalid or unenforceable
      (other than Section 14), the remainder of this Agreement, or the application
      of
      that term or provision to persons or circumstances other than those as to which
      it is held invalid or unenforceable, shall not be affected thereby, and each
      term and provision of this Agreement shall be valid and be enforced to the
      fullest extent permitted by law.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	17.	
              JURISDICTION
                AND FORUM NON CONVENIENS

            

    

    

    Each
      of
      the parties hereto irrevocably and unconditionally submits, for itself and
      its
      property, to the non-exclusive jurisdiction of the Québec courts, and any
      appellate court thereof, in any action or proceeding arising out of or relating
      to this Agreement, or for recognition or enforcement of any judgment, and each
      of the parties hereto hereby irrevocably and unconditionally agrees that all
      claims in respect of any such action or proceeding may be heard and determined
      in such court. Each of the parties hereto agrees that a final judgment in any
      such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      Nothing in this Agreement shall affect any right that any party may otherwise
      have to bring any action or proceeding relating to this Agreement in the courts
      of any jurisdiction. Each of the parties hereto irrevocably and unconditionally
      waives, to the fullest extent it may legally and effectively do so, any
      objection they may now or hereafter have to the laying of venue of any suit,
      action or proceeding arising out of or relating to his Agreement in the courts
      of the Province of Québec. Each of the parties hereto hereby irrevocably waives,
      to the fullest extent permitted by law, the defence of an inconvenient forum
      to
      the maintenance of such action or proceeding in any such court. The Company
      hereby irrevocably appoints the Bank of Nova Scotia Trust Company of New York,
      One Liberty Plaza, New-York, NY 10006, U.S.A. (“Company’s
      Process Agent”),
      as
      its agent to receive, on behalf of the Company, service of copies of the summons
      and complaint and in any other process that may be served in any such action
      or
      proceeding. Any such service may be made by mailing or delivering a copy of
      such
      process, in care of the Company’s Process Agent at the Company’s Process Agent’s
      above address. The Company hereby irrevocably authorizes and directs its agent
      to accept such service on its behalf. The parties hereto hereby agree that
      the
      final judgment in any such action or proceeding shall be conclusive and may
      be
      in force in any other jurisdiction by suit on the judgment or any other manner
      provided by law.

    

    
      	18.	
              GOVERNING
                LAW

            

    

    

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Québec and the obligations, rights and remedies hereunder shall be
      determined in accordance with the substantive laws of the Province of
      Québec.

    

    
      	19.	
              AMENDMENTS

            

    

    

    This
      Agreement shall not be amended, changed, modified or terminated in whole or
      in
      part except by an instrument in writing signed by both parties hereto or their
      respective successors or assigns, or otherwise as provided herein.

    

    The
      provisions of this Agreement replace any and all previous advisory agreements
      between the parties, namely, the advisory agreement dated September 3, 1997,
      the
      first supplemental advisory agreement dated October 31, 2001, the second
      supplemental advisory agreement dated October 31, 2003 and the amended and
      restarted advisory agreement dated November 3, 2004. 

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	20.	
              HEADINGS

            

    

    

    The
      section headings herein have been inserted for convenience of reference only
      and
      shall not be construed to affect the meaning, construction or effect of this
      Agreement.

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
      by
      their officers thereunto duly authorized as of the date first written
      above.

     

    NB
      CAPITAL CORPORATION

    

    
      	 	 	 	 
	By:    
              /s/ Donna Goral	 	 	
            
	
              
                

              

            	 	 	
            

    

     

    NATIONAL
      BANK OF CANADA

    
      

      
        	 	 	 	 
	By:    
                /s/ Jean Dagenais	 	 	
              
	
                
                  

                

              	 	 	
              

      

       

      
        
          
          

        

        
          9Amended
      and Restated

     

    Servicing
      Agreement

     

    —
      between —

     

    National
      Bank of Canada

     

    —
      and —

     

    NB
      Capital Corporation

     

    
      

    

    June 28,
      2006 
      
        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

      
        	 	
                 

              	 	
                Page 

              
	 	 	 
	
                1.

              	
                DEFINITIONS

              	
                2

              
	 	
                1.1

              	
                Definitions

              	
                2

              
	 	 	
                 

              
	
                2.

              	
                SERVICING

              	
                6

              
	 	
                2.1

              	
                Duties
                  of Servicer

              	
                6

              
	 	
                2.2

              	
                Liquidation
                  of Mortgage Loans

              	
                7

              
	 	
                2.3

              	
                Collection
                  of Mortgage Loan Payments

              	
                9

              
	 	
                2.4

              	
                Establishment
                  of and Deposits to Custodial Account

              	
                9

              
	 	
                2.5

              	
                Permitted
                  Withdrawals from Custodial Account

              	
                10

              
	 	
                2.6

              	
                Establishment
                  of and Deposits to Escrow Account

              	
                10

              
	 	
                2.7

              	
                Permitted
                  Withdrawals from Escrow Account

              	
                11

              
	 	
                2.8

              	
                Protection
                  of Accounts

              	
                12

              
	 	
                2.9

              	
                Maintenance
                  of Hazard Insurance

              	
                12

              
	 	
                2.10

              	
                Maintenance
                  of Mortgage Impairment Insurance

              	
                13

              
	 	
                2.11

              	
                Maintenance
                  of Fidelity Bond

              	
                13

              
	 	
                2.12

              	
                Inspections

              	
                13

              
	 	
                2.13

              	
                Restoration
                  of Mortgaged Property

              	
                14

              
	 	
                2.14

              	
                Title,
                  Management and Disposition of REO Property

              	
                14

              
	 	
                2.15

              	
                Permitted
                  Withdrawals with respect to REO Property

              	
                15

              
	 	
                2.16

              	
                Real
                  Estate Owned Reports

              	
                16

              
	 	 	
                 

              
	
                3.

              	
                PAYMENTS
                  TO THE COMPANY

              	
                16

              
	 	
                3.1

              	
                Remittances

              	
                16

              
	 	
                3.2

              	
                Statements
                  to the Company

              	
                16

              
	 	 	
                 

              
	
                4.

              	
                GENERAL
                  SERVICING PROCEDURES

              	
                17

              
	 	
                4.1

              	
                Transfers
                  of Mortgaged Property

              	
                17

              
	 	
                4.2

              	
                Satisfaction
                  of Mortgages and Release of Mortgage Files

              	
                18

              
	 	
                4.3

              	
                Servicing
                  Compensation

              	
                18

              
	 	
                4.4

              	
                Annual
                  Statement as to Compliance

              	
                18

              
	 	
                4.5

              	
                Annual
                  Independent Chartered Accountants Servicing Report

              	
                18

              
	 	
                4.6

              	
                Right
                  to Examine Servicer Records

              	
                19

              
	 	 	
                 

              
	
                5.

              	
                SERVICER
                  TO COOPERATE

              	
                19

              
	 	
                5.1

              	
                Provision
                  of Information

              	
                19

              
	 	 	
                 

              
	
                6.

              	
                TERMINATION

              	
                19

              
	 	
                6.1

              	
                Agency
                  Suspension

              	
                19

              
	 	
                6.2

              	
                Damages

              	
                19

              
	 	
                6.3

              	
                Termination

              	
                19

              
	 	
                6.4

              	
                Termination
                  without Cause

              	
                20

              

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      
        	 	 	
                 

              
	
                7.

              	
                BOOKS
                  AND RECORDS

              	
                20

              
	 	
                7.1

              	
                Possession
                  of Servicing Files

              	
                20

              
	 	 	
                 

              
	
                8.

              	
                INDEMNIFICATION
                  AND ASSIGNMENT

              	
                21

              
	 	
                8.1

              	
                Indemnification

              	
                21

              
	 	
                8.2

              	
                Limitation
                  on Liability of Servicer and Others

              	
                21

              
	 	
                8.3

              	
                Limitation
                  on Registration and Assignment by Servicer

              	
                22

              
	 	
                8.4

              	
                Assignment
                  by the Company

              	
                22

              
	 	
                8.5

              	
                Merger
                  or Consolidation of the Servicer

              	
                22

              
	 	
                8.6

              	
                Successor
                  to the Servicer

              	
                23

              
	 	 	
                 

              
	
                9.

              	
                REPRESENTATIONS,
                  WARRANTIES AND COVENANTS OF THE COMPANY

              	
                24

              
	 	
                9.1

              	
                Due
                  Organization and Authority

              	
                24

              
	 	
                9.2

              	
                No
                  Conflicts

              	
                24

              
	 	
                9.3

              	
                Ability
                  to Perform

              	
                24

              
	 	
                9.4

              	
                No
                  Litigation Pending

              	
                24

              
	 	
                9.5

              	
                No
                  Consent Required

              	
                25

              
	 	 	
                 

              
	
                10.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF SERVICER

              	
                25

              
	 	
                10.1

              	
                Qualification
                  as a REIT

              	
                25

              
	 	
                10.2

              	
                Due
                  Organization and Authority

              	
                25

              
	 	
                10.3

              	
                Ordinary
                  Course of Business

              	
                25

              
	 	
                10.4

              	
                No
                  Conflicts

              	
                25

              
	 	
                10.5

              	
                Ability
                  to Service

              	
                26

              
	 	
                10.6

              	
                Ability
                  to Perform

              	
                26

              
	 	
                10.7

              	
                No
                  Litigation Pending

              	
                26

              
	 	
                10.8

              	
                No
                  Consent Required

              	
                26

              
	 	
                10.9

              	
                No
                  Untrue Information

              	
                27

              
	 	
                10.10

              	
                Reasonable
                  Servicing Fee

              	
                27

              
	 	
                10.11

              	
                Conflict
                  of Interest

              	
                27

              
	 	
                10.12

              	
                Confirmation
                  of Original Servicing Agreement

              	
                27

              
	 	 	
                 

              
	
                11.

              	
                DEFAULT

              	
                27

              
	 	
                11.1

              	
                Events
                  of Default

              	
                27

              
	 	
                11.2

              	
                Waiver
                  of Defaults

              	
                29

              
	 	 	
                 

              
	
                12.

              	
                MISCELLANEOUS
                  PROVISIONS

              	
                29

              
	 	
                12.1

              	
                Notices

              	
                29

              
	 	
                12.2

              	
                Waivers

              	
                30

              
	 	
                12.3

              	
                Entire
                  Agreement — Amendment

              	
                30

              
	 	
                12.4

              	
                Execution
                  — Binding Effect

              	
                30

              
	 	
                12.5

              	
                Headings

              	
                30

              
	 	
                12.6

              	
                Governing
                  Law

              	
                30

              
	 	
                12.7

              	
                Relationship
                  of Parties

              	
                31

              
	 	
                12.8

              	
                Quebec
                  Sales Tax and Goods and Services Tax

              	
                31

              
	 	
                12.9

              	
                Severability
                  of Provisions

              	
                31

              
	 	
                12.10

              	
                Recordation
                  of Assignments of Mortgage

              	
                32

              
	 	
                12.11

              	
                Exhibits

              	
                32

              
	 	
                12.12

              	
                English
                  Language

              	
                32

              

      

    

     

    
      
        
        

      

      
        -ii-

        
          

        

      

      
        
        

      

    

     

    
      	 EXHIBITS	 	 
	 	 	 
	 Exhibit 1	 	 Custodial Account
              Certification
	 	 	 
	 Exhibit 2	 	  Custodial
              Account Letter Agreement
	 	 	 
	 Exhibit 3	 	 Escrow Account
              Certification
	 	 	 
	 Exhibit 4	 	 Escrow Account Letter
              Agreement

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    AMENDED
      AND RESTATED

     

    SERVICING
      AGREEMENT

     

    Amended
      and Restated Servicing Agreement (the "Servicing
      Agreement"
      or
      the "Agreement")
      entered into on June 28, 2006.

     

    
      	 BETWEEN: 	 	 NATIONAL
              BANK OF CANADA,
              a
              Canadian chartered bank;
	 	 	
               (the "Servicer")

            
	 	 	 
	 AND: 	 	 NB CAPITAL
              CORPORATION,
              a
              Maryland Corporation;
	 	 	
               (the "Company")

            

    

     

    WHEREAS
      NB Finance, Ltd., a Bermuda Corporation, (the "Purchaser")
      and
      National Bank of Canada, acting as seller (the "Seller"),
      entered into various deeds of sale of mortgage loans including, without
      limitation, the deeds of sale of mortgage loans dated as of September 3,
      1997, December 4, 1998, September 28, 1999, June 12, 2001, September
      24, 2001, January 29, 2002, June 20, 2002, December 16, 2002, May 27, 2003,
      October 21, 2003, April 28, 2004, August 26, 2004, February 24, 2005, August
      29,
      2005 and February 22, 2006 (collectively, the "Purchase
      Agreement")
      pursuant to which the Purchaser purchased from the Seller the Mortgage Loans
      (as
      hereinafter defined);

     

    WHEREAS
      the Purchaser and the Company entered into various assignment agreements
      including, without limitation, the assignment agreements dated as of
      September 3, 1997, December 4, 1998, September 28, 1999, April
      14, 2000, June 12, 2001, September 24, 2001, January 29, 2002, June 20, 2002,
      December 16, 2002, May 27, 2003, October 21, 2003, April 28, 2004, August 26,
      2004, February 24, 2005, August 29, 2005 and February 22, 2006
      (the "Mortgage
      Loan Assignment Agreements")
      pursuant to which the Purchaser assigned all of its right, title and interest
      in, to and under the Mortgage Loans to the Company;

     

    WHEREAS
      the Company is qualified and intends to remain qualified as a "real estate
      investment trust" ("REIT")
      under
      the Internal Revenue Code of 1986, as amended;

     

    WHEREAS
      this Agreement amends and restates the servicing agreement dated as of
      September 3, 1997, as supplemented by a first supplemental servicing
      agreement, a second supplemental servicing agreement and a third supplemental
      servicing agreement dated as of December 4, 1998, September 28, 1999
      and April 14, 2000 as well as an amended and restated servicing agreement once
      a
      year after the latter date, renewing the Agreement for additional one-year
      periods, respectively entered into by the Company and the Servicer
      (collectively, the "Original
      Servicing Agreement")
      establishing the terms and conditions on which the Servicer services and
      administers the Mortgage Loans;

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

       

    

    WHEREAS
      the parties hereto wish to confirm that all the Mortgage Loans have been
      serviced and administered by the Servicer in accordance with the terms and
      conditions of the Original Servicing Agreement;

     

    WHEREAS
      the Company desires to continue to have the Servicer service and administer
      the
      Mortgage Loans, the Servicer desires to continue to service and administer
      the
      Mortgage Loans on behalf of the Company, and the parties desire to set forth
      the
      terms and conditions on which the Servicer will continue to service and
      administer to the Mortgage Loans.

     

    NOW,
      THEREFORE, in consideration of the mutual agreements set forth herein and for
      other good and valuable consideration, the receipt and the sufficiency of which
      are hereby acknowledged, the parties hereto hereby agree as
      follows:

     

    
      	
              1.

            	
              DEFINITIONS

            

    

     

    
      	
              1.1

            	
              Definitions

            

    

     

    The
      following terms are defined as follows:

     

    
      	 	
              1.1.1

            	
              "Accepted
                Servicing Practices"
                means, with respect to any Mortgage Loan, those mortgage servicing
                practices (i) provided for in the CMHC Guide and in the NHA,
                (ii) established by the Company, and (iii) subject to the terms
                of this Agreement, those normal mortgage servicing practices of prudent
                mortgage lending institutions which service mortgage loans of the
                same
                type as such Mortgage Loan in the jurisdiction where the related
                Mortgaged
                Property is located to the extent such normal mortgage servicing
                practices
                do not conflict with the practices established by the CMHC Guide, the
                NHA and the Company;

            

    

     

    
      	 	
              1.1.2

            	
              "Ancillary
                Income"
                means all late payment charges, penalties and assumption fees,
                non-sufficient funds fees ("NSF"),
                escrow account benefits, reinstatement fees and other miscellaneous
                and
                similar types of fees arising from or in connection with any Mortgage
                Loan
                to the extent not otherwise payable to the Mortgagor under applicable
                law
                or pursuant to the terms of any applicable loan documents contained
                in the
                related Mortgage Loan File;

            

    

     

    
      	 	
              1.1.3

            	
              "CDIC"
                means The Canadian Deposit Insurance Corporation, or any successor
                thereto;

            

    

     

    
      	 	
              1.1.4

            	
              "Closing
                Date"
                means, with respect to each Mortgage Loan, the date upon which the
                assignment of such Mortgage Loan in favour of the Company becomes
                effective between the parties to the Mortgage Loan Assignment Agreement
                relating to such Mortgage Loan, or such other date as is mutually
                agreed
                upon by the parties hereto;

            

    

     

    
      	 	
              1.1.5

            	
              "CMHC"
                means the Canada Mortgage and Housing
                Corporation;

            

    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              1.1.6

            	
              "CMHC Guide"
                means the CMHC Mortgage Loan Insurance Handbook and all amendments or
                additions thereto, a copy of which is delivered to the Company
                concurrently with the execution
                hereof;

            

    

     

    
      	 	
              1.1.7

            	
              "Condemnation
                Proceeds"
                means all awards or settlements in respect of a Mortgaged Property,
                whether permanent or temporary, partial or entire, by exercise of
                the
                power of eminent domain, expropriation or condemnation, to the extent
                not
                required to be released to a Mortgagor in accordance with the terms
                of the
                related Mortgage Loan File;

            

    

     

    
      	 	
              1.1.8

            	
              "Custodial
                Account"
                means the separate account or accounts created and maintained pursuant
                to
                Section 2.4;

            

    

     

    
      	 	
              1.1.9

            	
              "Determination
                Date"
                means one (1) Business Day prior to the related Remittance
                Date;

            

    

     

    
      	 	
              1.1.10

            	
              "Due
                Period"
                means, with respect to each Remittance Date, the calendar month preceding
                the Remittance Date;

            

    

     

    
      	 	
              1.1.11

            	
              "Escrow
                Account"
                means the separate account or accounts created and maintained pursuant
                to
                Section 2.6;

            

    

     

    
      	 	
              1.1.12

            	
              "Escrow
                Payment"
                means, with respect to any Mortgage Loan, the amounts constituting
                real
                estate tax payments and any other payments required to be escrowed
                by the
                Mortgagor under the applicable documents contained in the Mortgage
                Loan
                File;

            

    

     

    
      	 	
              1.1.13

            	
              "Event
                of Default"
                means any one of the conditions or circumstances enumerated in
                Section 11.1;

            

    

     

    
      	 	
              1.1.14

            	
              "Fidelity
                Bond"
                means a fidelity bond to be maintained by the Servicer pursuant to
                Section 2.11;
                

            

    

     

    
      	 	
              1.1.15

            	
              "Insurance
                Proceeds"
                means, with respect to each Mortgage Loan, proceeds of insurance
                policies
                insuring the Mortgage Loan or the related Mortgaged
                Property;

            

    

     

    
      	 	
              1.1.16

            	
              "Liquidation
                Proceeds"
                means cash received in connection with the liquidation of a defaulted
                Mortgage Loan, whether through the sale of such Mortgage Loan, foreclosure
                sale or otherwise, or the sale of the related Mortgaged Property
                if the
                Mortgaged Property is acquired in satisfaction of the Mortgage
                Loan;

            

    

     

    
      	 	
              1.1.17

            	
              "Monthly
                Remittance Advice"
                means the monthly remittance advice to be provided to the Company
                pursuant
                to Section 3.2;

            

    

     

    
      	 	
              1.1.18

            	
              "Mortgage
                Impairment Insurance Policy"
                means a mortgage impairment or blanket hazard insurance policy as
                described in Section 2.10;

            

    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              1.1.19

            	
              "Mortgage
                Loan Assignment Agreement"
                has the meaning set forth in the
                recitals;

            

    

     

    
      	 	
              1.1.20

            	
              "Mortgage
                Loan File"
                means, collectively, all of the agreements, deeds and proceedings
                evidencing the Mortgage Loans and the Security, as well as any
                architectural and engineering report, title report, survey, insurance
                policy and other information and material with respect to the real
                property securing the Mortgage Loans and, with respect to each Mortgage
                Loan, all of the agreements, deeds and proceedings evidencing such
                Mortgage Loan and the Security relating thereto as well as any
                architectural and engineering report, title report, survey, insurance
                policy and other information and material with respect to the real
                property securing such Mortgage
                Loan;

            

    

     

    
      	 	
              1.1.21

            	
              "Mortgage
                Loans"
                means the Canada Mortgage and Housing Corporation insured residential
                first mortgage loans assigned on or before the date hereof by the
                Purchaser in favour of the Company together with all other Canada
                Mortgage
                and Housing Corporation insured residential first mortgage loans
                assigned
                in the future in favour of the Company by the
                Purchaser;

            

    

     

    
      	 	
              1.1.22

            	
              "Mortgage
                Property"
                means, with respect to each Mortgage Loan, the real or immoveable
                property
                mortgaged, charged or hypothecated pursuant to such Mortgage Loan,
                including all fixtures attached
                thereto;

            

    

     

    
      	 	
              1.1.23

            	
              "Mortgagor"
                means the mortgagor or hypothecary debtor under the Mortgage
                Loans;

            

    

     

    
      	 	
              1.1.24

            	
              "NHA"
                means the National
                Housing Act
                (Canada) as amended from time to time, and the regulations promulgated
                thereunder;

            

    

     

    
      	 	
              1.1.25

            	
              "Non-recoverable
                Advance"
                means any Servicing Advance previously made or proposed to be made
                in
                respect of a Mortgage Loan which, in the good faith judgement of
                the
                Servicer, will not or, in the case of a proposed Servicing Advance,
                would
                not, be ultimately recoverable from related Insurance Proceeds,
                Liquidation Proceeds or otherwise. The determination by the Servicer
                that
                it has made a Non-recoverable Advance or that any proposed Servicing
                Advance, if made, would constitute a Non-recoverable Advance, shall
                be
                evidenced by an Officers' Certificate delivered to the
                Company;

            

    

     

    
      	 	
              1.1.26

            	
              "Officer's
                Certificate"
                means a certificate signed by the Senior
                Vice-President, Internal Audit
                of
                the Servicer, and delivered to the Company as required by this
                Agreement;

            

    

     

    
      	 	
              1.1.27

            	
              "Original
                Servicing Agreement"
                has the meaning set forth in the
                recitals;

            

    

     

    
      	 	
              1.1.28

            	
              "Principal
                Prepayment"
                means any payment or other recovery of principal on a Mortgage Loan
                which
                is received in advance of its scheduled maturity date, including
                any
                prepayment penalty or premium thereon, and which is not accompanied
                by an
                amount of interest representing scheduled interest due on any date
                or
                dates in any month or months subsequent to the month of
                prepayment;

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              1.1.29

            	
              "Purchase
                Agreement"
                has the meaning set forth in the
                recitals;

            

    

     

    
      	 	
              1.1.30

            	
              "Qualified
                Depository"
                means a depository the accounts of which are insured by the
                CDIC;

            

    

     

    
      	 	
              1.1.31

            	
              "Qualified
                Insurer"
                means an insurance company duly qualified to carry on business as
                such
                under the laws of the provinces in which the Mortgaged Properties
                are
                located, duly authorized and licensed in such provinces to engage
                in the
                applicable insurance business and to sell policies of insurance and
                provide the coverages set forth in such policies provided, and approved
                by
                CMHC as an insurer with respect to hazard insurance and flood
                insurance;

            

    

     

    
      	 	
              1.1.32

            	
              "Remittance
                Date"
                means at the latest, on the 15th day (or if such 15th day is not
                a Business Day, the first Business Day immediately following) of
                any
                month, beginning with the first Remittance Date following
                the date hereof;

            

    

     

    
      	 	
              1.1.33

            	
              "REO
                Property"
                means a Mortgaged Property acquired by the Servicer on behalf of
                the
                Company through foreclosure or by deed in lieu of foreclosure or
                by taking
                in payment, as described in Section 2.14;

            

    

     

    
      	 	
              1.1.34

            	
              "Required
                Servicing Practices"
                means, with respect to any Mortgage Loan, those mortgage servicing
                practices (i) provided for in the CMHC Guide and in the NHA and
                (ii) where not inconsistent with the CMHC Guide and the NHA,
                established in writing by the
                Company;

            

    

     

    
      	 	
              1.1.35

            	
              "Security"
                means collectively the moveable and immoveable security securing
                the
                Mortgage Loans and set forth in the Mortgage Loan File, including,
                without
                limitation, any moveable and immoveable hypothecs, mortgages and
                similar
                instruments securing the Mortgage
                Loans;

            

    

     

    
      	 	
              1.1.36

            	
              "Servicer
                Employees"
                has the meaning set forth in Section 2.11;

            

    

     

    
      	 	
              1.1.37

            	
              "Servicing
                Advances"
                means all customary, reasonable and necessary "out of pocket" costs
                and
                expenses (including reasonable attorneys' fees and disbursements)
                incurred
                in the performance by the Servicer of its servicing obligations,
                including, but not limited to, the cost of (a) the preservation,
                restoration and protection of the Mortgaged Property, (b) any
                enforcement or judicial proceedings, including foreclosures or the
                exercise of the hypothecary rights contemplated in the Civil
                Code of Québec,
                and (c) the management and liquidation of the Mortgaged Property if
                the Mortgaged Property is acquired in satisfaction of the Mortgage
                Loan;

            

    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              1.1.38

            	
              "Servicing
                Agreement"
                means this agreement between the Company and the Servicer for the
                servicing and administration of the Mortgage
                Loans;

            

    

     

    
      	 	
              1.1.39

            	
              "Servicing
                Fee"
                means the amount of the annual fee the Company shall pay to the Servicer,
                which shall, for a period of one (1) full month, be equal to the sum
                of (i) one-twelfth of the product of the Servicing Fee Rate and the
                aggregate outstanding balance of the Mortgage Loans as of the last
                day of
                each calendar month, and (ii) any amounts not required to be
                deposited in the Custodial Account pursuant to Section 2.4.
                Such fee shall be payable quarterly, in US dollars and shall be computed
                on the basis of the same principal amount and period in respect of
                which
                any related interest payment on a Mortgage Loan is computed and shall
                be
                pro rated for any portion of a month during which the Mortgage Loan
                is
                serviced by the Servicer under this Agreement;
                and

            

    

     

    
      	 	
              1.1.40

            	
              "Servicing
                Fee Rate"
                means, with respect to each Mortgage Loan, a rate of 0.25% per annum
                or
                such other rate to which the parties may mutually
                agree.

            

    

     

    
      	
              2.

            	
              SERVICING

            

    

     

    
      	
              2.1

            	
              Duties
                of Servicer

            

    

     

    From
      and
      after the date hereof, the Servicer, as provider of services, shall service
      and
      administer the Mortgage Loans in strict compliance with the servicing provisions
      of the CMHC Guide and the NHA and shall, subject to such serving
      provisions, do all things in connection with such servicing and administration
      which are consistent with the terms of this Agreement and Required Servicing
      Practices. In the event of any conflict, inconsistency or discrepancy between
      any of the servicing provisions of this Agreement and any of the servicing
      provisions of the CMHC Guide and/or of the NHA, the provisions of the
      CMHC Guide and the NHA shall control and be binding upon the Servicer.
      Consistent with the terms of this Agreement, but in strict compliance with
      the
      CMHC Guide and the NHA, the Servicer shall, if so instructed in writing by
      the Company, waive, modify or vary any term of any Mortgage Loan or consent
      to
      the postponement of strict compliance with any such term or in any manner grant
      any indulgence to any Mortgagor. For greater certainty, unless the Servicer
      has
      obtained the consent of CMHC and the Company, the Servicer shall not permit
      any
      modification with respect to any Mortgage Loan that would change the mortgage
      interest rate, defer or forgive the payment of principal or interest, reduce
      or
      increase the outstanding principal balance (except for actual payments of
      principal) or change the final maturity date on such Mortgage Loan. Without
      limiting the generality of the foregoing, the Servicer shall, in accordance
      with
      Required Servicing Practices, execute and deliver all instruments of
      satisfaction or cancellation, or of partial or full release, discharge and
      all
      other comparable instruments, with respect to the Mortgage Loans and with
      respect to the Mortgaged Properties.

     

    In
      servicing and administering the Mortgage Loans, the Servicer shall employ
      procedures (including collection procedures) consistent with the provisions
      of
      this Agreement, in compliance with Required Servicing Practices and exercise
      the
      same care that it customarily employs and exercises in servicing and
      administering mortgage and hypothecary loans for its own account, giving due
      consideration to Accepted Servicing Practices and the Company's reliance on
      the
      Servicer.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    The
      Servicer shall keep at its servicing office books and records (including
      electronic records) in which, subject to such reasonable regulations as it
      may
      prescribe, the Servicer shall note sales and transfers of Mortgage Loans. No
      sale or transfer of a Mortgage Loan may be made unless such transfer is approved
      in writing by the Company, and is in compliance with the terms hereof and the
      NHA. For the purposes of this Agreement, the Servicer shall be under no
      obligation to deal with any person with respect to this Agreement or the
      Mortgage Loans unless the Servicer has been notified of such transfers as
      provided in this Section 2.1.
      The
      Company may sell and transfer, in whole or in part, the Mortgage Loans, provided
      that no such sale and transfer shall be binding upon the Servicer unless such
      transferee shall agree in writing to be bound by the terms of this Agreement,
      and an executed copy of the same shall have been delivered to the Servicer.
      Upon
      receipt thereof, the Servicer shall mark its books and records to reflect the
      ownership of the Mortgage Loans by such assignee, and the Company shall be
      released from its obligations hereunder. The Servicer shall be required to
      remit
      all amounts required to be remitted to the Company hereunder to said transferee,
      and said transferee shall succeed to all rights of the Company hereunder,
      commencing with the first Remittance Date falling after receipt of said copy
      of
      the related assignment and assumption agreement provided that the Servicer
      receives said copy no later than fifteen (15) Business Days immediately
      prior to the first day of the month of the related Remittance Date.

     

    Upon
      request by the Company, or as provided in Section 2.9,
      the
      Mortgage Loan File retained by the Servicer pursuant to this Agreement shall
      be
      amended to clearly record the sale of the related Mortgage Loan to the Company.
      The Servicer shall release from its custody the contents of the Mortgage Loan
      File retained by it only in accordance with this Agreement.

     

    The
      Servicer covenants that it has established an internal quality control program
      that is capable of evaluating and monitoring the overall quality of its
      servicing activities. The program shall ensure that the Mortgage Loans are
      (i) serviced in accordance with Accepted Servicing Practices and generally
      accepted accounting principles; (ii) guard against dishonest, fraudulent or
      negligent acts; and (iii) guard against errors and omissions by officers,
      employees or other authorized persons.

     

    For
      greater certainty, the Company and the Servicer acknowledge that in acting
      hereunder, the Servicer shall have only such authority to act on behalf of
      the
      Company as is expressly conferred in this Agreement and more specifically,
      this
      Agreement does not provide the Servicer with the authority to conclude or modify
      contracts in the name of the Company and the Servicer shall not hold itself
      out
      as having any such authority.

     

    
      	
              2.2

            	
              Liquidation
                of Mortgage Loans

            

    

     

    In
      the
      event that any payment due under any Mortgage Loan and not postponed pursuant
      to
      Section 2.1
      is not
      paid when the same becomes due and payable, or in the event the Mortgagor fails
      to perform any other covenant or obligation under the Mortgage Loan File and
      such failure continues beyond any applicable grace period, the Servicer shall
      take such administrative action as is consistent with Required Servicing
      Practices.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

       

    

    In
      the
      event that any payment due under any Mortgage Loan is not postponed pursuant
      to
      Section 2.1
      and
      remains delinquent beyond the expiration of any grace or cure period (or such
      other period as is required by law in the jurisdiction where the related
      Mortgaged Property is located), the Servicer shall commence foreclosure
      proceedings as directed by the Company in accordance with Required Servicing
      Practices. The Servicer shall transmit to the Company copies of the notices
      given to, and received from, CMHC with respect thereto. In such connection,
      the
      Servicer shall from its own funds make all necessary and proper Servicing
      Advances, provided, however, that the Servicer shall not be required to expend
      its own funds in connection with any foreclosure or towards the restoration
      or
      preservation of any Mortgaged Property, unless its shall determine:

     

    
      	
              (a)

            	
              that
                such preservation, restoration and/or foreclosure will increase the
                proceeds of liquidation of the Mortgage Loan to Company after
                reimbursement to itself for such expenses,
                and

            

    

     

    
      	
              (b)

            	
              that
                such expenses will be recoverable by it either through Liquidation
                Proceeds (in respect of which it shall have priority for purposes
                of
                withdrawals from the Custodial Account pursuant to
                Section 2.5)
                or through Insurance Proceeds (in respect of which it shall have
                similar
                priority).

            

    

     

    Notwithstanding
      anything to the contrary contained herein, in connection with a foreclosure,
      in
      the event the Servicer has reasonable cause to believe that a Mortgaged Property
      is contaminated by hazardous or toxic substances or wastes, or if CMHC otherwise
      requests an environmental inspection or review of such Mortgaged Property to
      be
      conducted by a qualified inspector, the Servicer shall immediately notify the
      Company and, upon receipt of instructions from the Company, the Servicer shall
      cause the Mortgaged Property to be so inspected at the expense of the Company.
      Upon completion of the inspection, the Servicer shall promptly provide the
      Company with a written report of the environmental inspection.

     

    After
      reviewing the environmental inspection report, the Company, subject to the
      rights of CMHC under the NHA, shall determine how the Servicer shall proceed
      with respect to the Mortgaged Property. In the event:

     

    
      	
              (a)

            	
              the
                environmental inspection report indicates that the Mortgaged Property
                is
                contaminated by hazardous or toxic substances or wastes,
                and

            

    

     

    
      	
              (b)

            	
              the
                Company and/or CMHC directs the Servicer, in writing, to proceed
                with
                foreclosure or acceptance of a deed in lieu of
                foreclosure,

            

    

     

    the
      Servicer shall be reimbursed for all reasonable costs associated with such
      foreclosure or acceptance of a deed in lieu of foreclosure and any related
      environmental clean up costs, as applicable, from the related Liquidation
      Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse
      the
      Servicer, the Servicer shall be entitled to be reimbursed from amounts in the
      Custodial Account pursuant to Section 2.5
      hereof
      and to the extent amounts in the Custodial Account are insufficient to fully
      reimburse the Servicer, the Servicer shall be entitled to be reimbursed by
      the
      Company for such deficiencies (upon presentation of satisfactory evidence of
      such deficiency). In the event the Company and/or CMHC directs the Servicer,
      in
      writing, not to proceed with foreclosure or acceptance of a deed in lieu of
      foreclosure, the Servicer shall be reimbursed for all Servicing Advances made
      with respect to the related Mortgaged Property from the Custodial Account
      pursuant to Section 2.5
      hereof.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      	
              2.3

            	
              Collection
                of Mortgage Loan Payments

            

    

     

    Continuously
      from the Closing Date, the Servicer shall proceed diligently to collect all
      payments due under each of the Mortgage Loans when the same shall become due
      and
      payable and shall take special care in ascertaining and estimating Escrow
      Payments and all other charges that will become due and payable with respect
      to
      the Mortgage Loans and each related Mortgaged Property, to the end that the
      instalments payable by the Mortgagors will be sufficient to pay such charges
      if
      and when they become due and payable.

     

    
      	
              2.4

            	
              Establishment
                of and Deposits to Custodial
                Account

            

    

     

    The
      Servicer shall segregate and hold the hereinafter mentioned funds collected
      and
      received pursuant to the Mortgage Loans separate and apart from any of its
      own
      funds and general assets and shall establish and maintain one or more Custodial
      Accounts, in the form of term deposit or demand accounts, titled "National
      Bank
      of Canada in trust for NB Capital Corporation" (or similar designation with
      respect to any subsequent Company). The Custodial Account shall be established
      with a depository acceptable to the Company. If the Custodial Account is held
      at
      a depository the deposit accounts of which are insured by CDIC, any funds
      deposited in the Custodial Account shall at all times be insured to the full
      extent permitted under applicable law. Funds deposited in the Custodial Account
      may be drawn on by the Servicer in accordance with Section 2.5.
      The
      creation of any Custodial Account shall be evidenced by a certificate in the
      form of Exhibit 2 hereto. A copy of such certificate shall be furnished to
      the Company and, upon request, to any subsequent company.

     

    The
      Servicer shall deposit in the Custodial Account and retain therein, the
      following collections received by the Servicer and payments made by the Servicer
      after the Closing Date, other than payments of principal and interest due on
      or
      before the Closing Date, or received by the Servicer prior to the Closing Date
      but allocable to a period subsequent thereto:

     

    
      	 	
              2.4.1

            	
              all
                payments on account of principal on the Mortgage Loans, including
                all
                Principal Prepayments;

            

    

     

    
      	 	
              2.4.2

            	
              all
                payments on account of interest on the Mortgage
                Loans;

            

    

     

    
      	 	
              2.4.3

            	
              all
                Liquidation Proceeds and any amount received with respect to
                REO Property;

            

    

     

    
      	 	
              2.4.4

            	
              all
                Insurance Proceeds including amounts required to be deposited pursuant
                to
                Section 2.9
                (other than proceeds to be held in the Escrow Account and applied
                to the
                restoration or repair of the Mortgaged Property or released to the
                Mortgagor in accordance with Section 2.13);

            

    

     

    
      	 	
              2.4.5

            	
              all
                Condemnation Proceeds which are not applied to the restoration or
                repair
                of the Mortgaged Property or released to the Mortgagor in accordance
                with
                Section 2.13;
                and

            

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              2.4.6

            	
              any
                amount required to be deposited in the Custodial Account pursuant
                to
                Sections 2.14
                or
                3.1.

            

    

     

    The
      collections mentioned in Sections 2.4.1
      and
2.4.2
      shall be
      deposited in the Custodial Account within one (1) Business Day of receipt
      by the Servicer. The collections mentioned in Sections 2.4.3
      to
2.4.6
      inclusive shall be deposited within thirty (30) Business Days of
      receipt.

     

    
      	
              2.5

            	
              Permitted
                Withdrawals from Custodial
                Account

            

    

     

    Subject
      to Section 2.14
      hereof,
      the Servicer shall, from time to time, withdraw funds from the Custodial Account
      for the following purposes:

     

    
      	 	
              2.5.1

            	
              to
                make payments to the Company in the amounts and in the manner provided
                for
                in Section 3.1;

            

    

     

    
      	 	
              2.5.2

            	
              to
                reimburse itself for unreimbursed Servicing Advances (except to the
                extent
                reimbursed pursuant to Section 2.7),
                any accrued but unpaid Servicing Fees and for unreimbursed advances
                of
                Servicer funds made pursuant to Section 2.14,
                the Servicer's right to reimburse itself pursuant to this
                subparagraph 2.5.2
                with respect to any Mortgage Loan being limited to related Liquidation
                Proceeds, Condemnation Proceeds, Insurance Proceeds and such other
                amounts
                as may be collected by the Servicer from the Mortgagor or otherwise
                relating to the Mortgage Loan, it being understood that, in the case
                of
                any such reimbursement, the Servicer's right thereto shall be subordinate
                to the right of the Company;

            

    

     

    
      	 	
              2.5.3

            	
              to
                pay to the person entitled thereto any amounts deposited in error;
                and

            

    

     

    
      	 	
              2.5.4

            	
              to
                clear and terminate the Custodial Account upon the termination of
                this
                Agreement.

            

    

     

    On
      each
      Remittance Date, the Servicer shall withdraw all funds from the Custodial
      Account except for those amounts which, pursuant to Section 3.1,
      the
      Servicer is not obligated to remit on such Remittance Date. The Servicer may
      use
      such withdrawn funds only for the purposes described in this
      Section 2.5.

     

    
      	
              2.6

            	
              Establishment
                of and Deposits to Escrow
                Account

            

    

     

    The
      Servicer shall segregate and hold all funds collected and received pursuant
      to a
      Mortgage Loan constituting Escrow Payments separate and apart from any of its
      own funds and general assets and shall establish and maintain one or more Escrow
      Accounts, in the form of term deposit or demand accounts. The Escrow Account
      or
      Accounts shall be established with a Qualified Depository. If the Escrow Account
      is held at a Qualified Depository the deposit accounts of which are insured
      by
      CDIC, any funds deposited in the Escrow Account shall at all times be insured
      to
      the full extent permitted under applicable law. Funds deposited in the Escrow
      Accounts may be drawn on by the Servicer in accordance with
      Section 2.7.
      The
      creation of any Escrow Account shall be evidenced by a certification in the
      form
      of Exhibit 4 hereto. A copy of such certificate shall be furnished to
      the Company and, upon request, to any subsequent Company.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    The
      Servicer shall deposit in the Escrow Account or Accounts within one Business
      Day
      of receipt, and retain therein all Escrow Payments collected on account of
      the
      Mortgage Loans, for the purpose of effecting timely payment of any such items
      as
      required under the terms of this Agreement. The Servicer shall deposit in the
      Escrow Account or Accounts as soon as possible, but within a maximum of
      five (5) Business Days of receipt, all amounts representing Insurance
      Proceeds or Condemnation Proceeds which are to be applied to the restoration
      or
      repair of any Mortgaged Property.

     

    The
      Servicer shall make withdrawals from the Escrow Account only to effect such
      payments as are required under this Agreement, as set forth in
      Section 2.7.
      The
      Servicer shall be entitled to retain any interest paid on, or other income
      generated by and paid on, funds deposited in the Escrow Account by the
      depository institution, other than interest on escrowed funds required by law
      of
      the Mortgage Loan File to be paid to the Mortgagor. To the extent required
      by
      law, the Servicer shall pay from its own funds interest on escrowed funds to
      the
      Mortgagor notwithstanding that the Escrow Account may be non-interest bearing
      or
      that interest paid thereon is insufficient for such purposes.

     

    
      	
              2.7

            	
              Permitted
                Withdrawals from Escrow
                Account

            

    

     

    Withdrawals
      from each Escrow Account may be made by the Servicer only:

     

    
      	 	
              2.7.1

            	
              to
                effect timely payments of taxes, assessments, mortgage insurance
                premiums,
                condominium charges or other items constituting Escrow Payments for
                the
                related Mortgage Loan;

            

    

     

    
      	 	
              2.7.2

            	
              to
                refund to the related Mortgagor any funds found to be in excess of
                the
                amounts required under the terms of the related Mortgage Loan or
                applicable federal or provincial law or judicial or administrative
                ruling;

            

    

     

    
      	 	
              2.7.3

            	
              for
                transfer to the Custodial Account and application to reduce the principal
                balance of the Mortgage Loan in accordance with the terms of the related
                Mortgage Loan File;

            

    

     

    
      	 	
              2.7.4

            	
              for
                application to restoration or repair of the related Mortgaged Property
                in
                accordance with the procedures outlined in Section 2.13;

            

    

     

    
      	 	
              2.7.5

            	
              to
                pay to the Servicer, or any Mortgagor to the extent required by law,
                any
                interest paid on the funds deposited in the Escrow
                Account;

            

    

     

    
      	 	
              2.7.6

            	
              to
                pay to the person entitled thereto any amounts deposited in error;
                and

            

    

     

    
      	 	
              2.7.7

            	
              to
                clear and terminate the Escrow Account on the termination of this
                Agreement.

            

    

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    
      	
              2.8

            	
              Protection
                of Accounts

            

    

     

    The
      Servicer may transfer the Custodial Account or the Escrow Account to a different
      depository from time to time. Such transfer shall be made only upon obtaining
      the written consent of the Company. The Servicer shall bear any expenses, losses
      or damages sustained by the Company because the Custodial Account and/or the
      Escrow Account are not demand deposit accounts.

     

    
      	
              2.9

            	
              Maintenance
                of Hazard Insurance

            

    

     

    The
      Servicer shall cause to be maintained for each Mortgage Loan hazard insurance
      such that all buildings upon the Mortgaged Property are insured against loss
      by
      fire, hazards of extended coverage and such other hazards as are required to
      be
      insured pursuant to Required Servicing Practices.

     

    If
      at any
      time during the term of the Mortgage Loan, the Servicer determines in accordance
      with applicable law and pursuant to the CMHC Guide that a Mortgaged
      Property is located in a special flood hazard area and is not covered by flood
      insurance satisfactory to CMHC, the Servicer shall notify the related Mortgagor
      (to the extent permitted by the applicable Mortgage Loan File) that the
      Mortgagor must obtain such flood insurance coverage, and if said Mortgagor
      fails
      to obtain the required flood insurance coverage within forty-five (45) days
      after such notification, the Servicer shall immediately purchase the required
      flood insurance on the Mortgagor's behalf.

     

    The
      Servicer shall cause to be maintained on each Mortgaged Property such other
      or
      additional insurance as may be required pursuant to such applicable laws and
      regulations as shall at any time be in force and as shall require such
      additional insurance, or pursuant to the requirements of CMHC Guide. All
      policies required hereunder shall name the Servicer and its successors and
      assigns as mortgagee and shall provide for at least thirty (30) days' prior
      written notice of any cancellation, reduction in amount or material change
      in
      coverage.

     

    The
      Servicer shall not interfere with the Mortgagor's freedom of choice in selecting
      either his insurance carrier or agent, provided, however, that the Servicer
      shall not accept any such insurance policies from insurance companies which
      do
      not meet or exceed applicable requirements of the CMHC Guide. The Servicer
      shall determine that such policies provide sufficient risk coverage and amounts
      as required pursuant to the CMHC Guide, that they insure the property
      owner, and that they properly describe the property address. To the extent
      reasonably possible the Servicer shall furnish to the Mortgagor a formal notice
      of expiration of any such insurance in sufficient time for the Mortgagor to
      arrange for renewal coverage by the expiration date; provided, however, that
      in
      the event that no such notice is furnished by the Servicer, the Servicer shall
      ensure that replacement insurance policies are in place in the required
      coverages and the Servicer shall be solely liable for any losses in the event
      such coverage is not provided.

     

    Pursuant
      to Section 2.4,
      any
      amounts collected by the Servicer under any such policies (other than amounts
      to
      be deposited in the Escrow Account and applied to the restoration or repair
      of
      the related Mortgaged Property, or property acquired in liquidation of the
      Mortgage Loan, or to be released to the Mortgagor as specified in
      Section 2.13)
      shall
      be deposited in the Custodial Account subject to withdrawal pursuant to
      Section 2.5.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

       

    

    
      	
              2.10

            	
              Maintenance
                of Mortgage Impairment
                Insurance

            

    

     

    In
      the
      event that the Servicer shall obtain and maintain a blanket policy insuring
      against losses arising from fire and hazards covered under extended coverage
      on
      all of the Mortgage Loans, then, to the extent such policy provides coverage
      in
      an amount equal to the amount required pursuant to Section 2.9
      and
      otherwise complies with all other requirements of Section 2.9,
      it
      shall conclusively be deemed to have satisfied its obligations as set forth
      in
      Section 2.9.
      Any
      amounts collected by the Servicer under any such policy relating to a Mortgage
      Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
      to Section 2.5.
      Such
      policy may contain a deductible clause, in which case, in the event that there
      shall not have been maintained on the related Mortgaged Property a policy
      complying with Section 2.9,
      and
      there shall have been a loss which would have been covered by such policy,
      the
      Servicer shall deposit in the Custodial Account at the time of such loss the
      amount not otherwise payable under the blanket policy because of such deductible
      clause, such amount to be deposited from the Servicer's funds, without
      reimbursement therefor. Upon request of the Company, the Servicer shall cause
      to
      be delivered to the Company a certified true copy of such policy and a statement
      from the insurer thereunder that such policy shall in no event be terminated
      or
      materially modified without thirty (30) days' prior written notice to the
      Company.

     

    
      	
              2.11

            	
              Maintenance
                of Fidelity Bond

            

    

     

    The
      Servicer shall maintain with responsible companies, at its own expense, a
      blanket Fidelity Bond, with broad coverage on all officers, employees or other
      persons acting in any capacity requiring such persons to handle funds, money,
      documents or papers relating to the Mortgage Loans ("Servicer
      Employees").
      Any
      such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the
      form of the Mortgage Banker's Blanket Bond and shall protect and insure the
      Servicer against losses, including forgery, theft, embezzlement, fraud, errors
      and omissions and negligent acts of such Servicer Employees. Such Fidelity
      Bond
      also shall protect and insure the Servicer against losses in connection with
      the
      release or satisfaction of a Mortgage Loan without having obtained payment
      in
      full of the indebtedness secured thereby. No provision of this
      Section 2.11
      requiring such Fidelity Bond shall diminish or relieve the Servicer from its
      duties and obligations as set forth in this Agreement. The minimum coverage
      under any such Fidelity Bond shall be at least equal to the corresponding
      amounts required by Accepted Servicing Practices. Upon the request of the
      Company, the Servicer shall cause to be delivered to the Company a certified
      true copy of such Fidelity Bond and a statement from the surety that such
      Fidelity Bond shall in no event be terminated or materially modified without
      thirty (30) days' prior written notice to the Company. In the event that
      the surety charges the Servicer a fee for providing such evidence, the Company
      shall reimburse the Servicer for the reasonable expense incurred by the Servicer
      in furnishing such evidence.

     

    
      	
              2.12

            	
              Inspections

            

    

     

    The
      Servicer shall inspect the Mortgaged Property as often as deemed necessary
      by
      the Servicer to assure itself that the value of the Mortgaged Property is being
      preserved, the whole in accordance with Accepted Servicing Practices. The
      Servicer shall keep a written report of each such inspection.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

       

    

    
      	
              2.13

            	
              Restoration
                of Mortgaged Property

            

    

     

    The
      Servicer need not obtain the approval of the Company prior to releasing any
      Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
      to
      the restoration or repair of the Mortgaged Property if such release is in
      accordance with the applicable Mortgage Loan File. The Servicer shall comply
      with the CMHC Guide and the NHA and, to the extent they do not contravene
      the CMHC Guide and NHA, with the following conditions in connection with
      any such release of Insurance Proceeds or Condemnation Proceeds:

     

    
      	 	
              2.13.1

            	
              the
                Servicer shall receive satisfactory independent verification of completion
                of repairs and issuance of any required approvals with respect
                thereto;

            

    

     

    
      	 	
              2.13.2

            	
              the
                Servicer shall take all steps necessary to preserve the priority
                of the
                lien securing the Mortgage Loan, including, but not limited to, requiring
                waivers or releases with respect to mechanics' and materialmen's
                liens or
                legal hypothecs in favour of the persons having taken part in the
                renovation of the Mortgaged
                Property;

            

    

     

    
      	 	
              2.13.3

            	
              the
                Servicer shall verify that the Mortgage Loan is not in default;
                and

            

    

     

    
      	 	
              2.13.4

            	
              pending
                repairs or restoration, the Servicer shall place the Insurance Proceeds
                or
                Condemnation Proceeds in the Escrow
                Account.

            

    

     

    If
      the
      Company is named as an additional mortgagee, the Servicer shall, in accordance
      with CMHC Guide and the NHA, endorse any loss draft issued in respect of
      such a claim in the name of the Company.

     

    
      	
              2.14

            	
              Title,
                Management and Disposition of
                REO Property

            

    

     

    In
      the
      event that title to any Mortgaged Property is acquired in foreclosure or by
      deed
      in lieu of foreclosure, the deed or certificate of sale shall be taken in the
      name of the Company.

     

    The
      Servicer shall manage, conserve, protect and operate each REO Property for
      the Company solely for the purpose of its prompt disposition and sale (unless
      otherwise directed in writing by the Company). The Servicer, either itself
      or
      through an agent selected by the Servicer and reasonably acceptable to the
      Company and CMHC, shall manage, conserve, protect and operate the
      REO Property in accordance with Required Servicing Practices and to the
      extent it does not contravene the Accepted Servicing Practices, in the same
      manner that it manages, conserves, protects and operates other foreclosed
      property for its own account, and in the same manner that similar property
      in
      the same locality as the REO Property is managed.

     

    The
      Servicer shall use its best efforts to dispose of the REO Property as soon
      as possible and shall sell such REO Property in any event within one year
      after title has been taken to such REO Property (unless otherwise directed
      by CMHC or otherwise directed in writing by the Company). If a period longer
      than one (1) year is permitted under the foregoing sentence and is
      necessary to sell any REO Property, the Servicer shall report monthly to
      the Company as to the progress being made in selling such
      REO Property.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

       

    

    The
      Servicer shall also maintain on each REO Property fire and hazard insurance
      with extended coverage in an amount which is at least equal to the maximum
      insurable value of the improvements which are a part of such property, liability
      insurance and, to the extent required and available, flood insurance in the
      amount required above.

     

    The
      disposition of REO Property shall be carried out by the Servicer at such
      price, and upon such terms and conditions, as the Servicer deems appropriate
      (subject to approval by CMHC and the Company). The proceeds of sale of the
      REO Property shall be promptly deposited in the Custodial Account. As soon
      as practical thereafter the expenses of such sale shall be paid and the Servicer
      shall reimburse itself pursuant to Section 2.5.3
      hereof,
      as applicable, for any related unreimbursed Servicing Advances, unpaid Servicing
      Fees and unreimbursed advances made pursuant to this Section, and on the
      Remittance Date immediately following the Due Period in which such sale proceeds
      are received the net cash proceeds of such sale remaining in the Custodial
      Account shall be distributed to the Company; provided that such distribution
      shall, in any event, be made within ninety (90) days from and after the
      closing of the sale of such REO Property.

     

    In
      addition to the Servicer's obligations set forth in this
      Section 2.14,
      the
      Servicer shall deliver to the Company, upon request, whenever title to any
      Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure
      copies of all notices transmitted to, and received from, CMHC with respect
      thereto, together with a copy of the appraisal, if any, of the related Mortgaged
      Property obtained by the Servicer on or prior to the date of such acquisition.
      Notwithstanding anything to the contrary contained herein, the Company may,
      at
      the Company's sole option, terminate the Servicer as servicer of any such
      REO Property without payment of any Termination Fee with respect thereto,
      provided that (i) the Company gives the Servicer notice of such termination
      within ten (10) Business Days of receipt of said copies of notices from the
      Servicer which termination shall be effective no more than fifteen (15)
      Business Days from and after the date of said notice from the Company and (ii)
      the Servicer shall on the date said termination takes effect be reimbursed
      by
      Company for any unreimbursed advances of the Servicer's funds made pursuant
      to
      Section 3.2
      and any
      unreimbursed Servicing Advances in each case relating to the Mortgage Loan
      underlying such REO Property. In the event of any such termination, the
      provisions of Section 8.6
      hereof
      shall apply to said termination and the transfer of servicing responsibilities
      with respect to such REO Property to the Company.

     

    With
      respect to each REO Property, the Servicer shall deposit all funds
      collected and received in connection with the operation of the REO Property
      in the Custodial Account. The Servicer shall cause to be deposited on a daily
      basis upon the receipt thereof in the Custodial Account all revenues received
      with respect to the conservation and disposition of the related
      REO Property.

     

    
      	
              2.15

            	
              Permitted
                Withdrawals with respect to
                REO Property

            

    

     

    For
      so
      long as the Servicer is acting as servicer of any Mortgage Loan relating to
      any
      REO Property, the Servicer shall withdraw funds on deposit in the Custodial
      Account with respect to each related REO Property necessary for the proper
      operation, management and maintenance of the REO Property, including the
      cost of maintaining any hazard insurance pursuant to Section 2.9
      and the
      fees of any managing agent acting on behalf of the Servicer. The Servicer shall
      make monthly distributions on each Remittance Date to the Company of the net
      cash flow from the REO Property (which shall equal the revenues from such
      REO Property net of the expenses described in Section 2.14
      and of
      any reserves reasonably required from time to time to be maintained to satisfy
      anticipated liabilities for such expenses).

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

       

    

    
      	
              2.16

            	
              Real
                Estate Owned Reports

            

    

     

    For
      so
      long as the Servicer is acting as servicer of any Mortgage Loan relating to
      any
      REO Property, the Servicer shall submit to the Company all reports with
      respect to such Mortgaged Property which it is obligated to submit to the CMHC
      pursuant to Required Servicing Practices.

     

    
      	
              3.

            	
              PAYMENTS
                TO THE COMPANY

            

    

     

    
      	
              3.1

            	
              Remittances

            

    

     

    On
      each
      Remittance Date, the Servicer shall remit by wire transfer of immediately
      available funds to the Company:

     

    
      	
              (a)

            	
              all
                amounts deposited in the Custodial Account as of the close of business
                on
                the Determination Date, minus

            

    

     

    
      	
              (b)

            	
              any
                amounts payable to the Servicer under Article 2
                of
                this Agreement.

            

    

     

    With
      respect to any remittance received by the Company after the fifth day following
      the Business Day on which such payment was due, the Servicer shall pay to the
      Company a "late charge" in an amount equal to 5% of such late payment. Such
      late
      charge shall be deposited in the Custodial Account by the Servicer on the date
      such late payment is made for each day/week which such payment remains
      outstanding. Such late charge shall be remitted along with the distribution
      payable on the next succeeding Remittance Date. The payment by the Servicer
      of
      any such late charge shall not be deemed an extension of time for payment or
      a
      waiver of any Event of Default by the Servicer.

     

    
      	
              3.2

            	
              Statements
                to the Company

            

    

     

    Not
      later
      than the fifteenth day of each month, the Servicer shall furnish to the Company
      in a mutually-acceptable format the reports required by the Company, together
      with a Monthly Remittance Advice showing the scheduled payments of principal
      and
      interest, the principal prepayments and the prepayment penalties.

     

    In
      addition, the Servicer shall furnish to the Company an annual statement in
      accordance with the requirements of applicable income tax laws as to the
      aggregate of remittances for the applicable portion of such year. Such
      obligation of the Servicer shall be deemed to have been satisfied to the extent
      that substantially comparable information shall be provided by the Servicer
      pursuant to any requirements of the governmental taxing authority as from time
      to time are in force.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

       

    

    The
      Servicer shall prepare and file, with respect to each Mortgage Loan, any and
      all
      tax returns, information statements or other filings required to be delivered
      to
      any governmental taxing authority or to the Company pursuant to any applicable
      law with respect to the Mortgage Loans and the transactions contemplated hereby.
      In addition, the Servicer shall provide the Company with such information
      concerning the Mortgage Loans as is necessary for the Company to prepare any
      applicable income tax returns as the Company may reasonably request from time
      to
      time.

     

    
      	
              4.

            	
              GENERAL
                SERVICING PROCEDURES

            

    

     

    
      	
              4.1

            	
              Transfers
                of Mortgaged Property

            

    

     

    The
      Servicer shall be required, consistent with Required Servicing Practices, to
      enforce on behalf of the Company any "due-on-sale" provision contained in any
      Mortgage Loan File and to deny assumption by the person to whom the Mortgaged
      Property has been or is about to be sold whether by absolute conveyance or
      by
      contract of sale, whether or not the Mortgagor remains liable on the Mortgage
      Loan. When the Mortgaged Property has been conveyed by the Mortgagor, the
      Servicer shall, to the extent it has knowledge of such conveyance, exercise
      its
      rights on behalf of the Company to accelerate the maturity of such Mortgage
      Loan
      under the "due-on-sale" clause applicable thereto, provided, however, that
      the
      Servicer shall not exercise such rights if the Servicer determines in good
      faith
      that it is prohibited by law from doing so or if, subject to written
      confirmation of the Company, the exercise of such rights would impair or
      threaten to impair any recovery under the related CMHC insurance policy issued
      with respect to such Mortgage Loan, if any.

     

    If
      the
      Servicer reasonably believes it is unable under applicable law to enforce
      "due-on-sale" clause, the Servicer, in the Company's name and with the prior
      written consent of the Company, shall, to the extent permitted by applicable
      law, enter into (i) an assumption and modification agreement with the
      person to whom such property has been conveyed, pursuant to which such person
      becomes liable under the Mortgage Loan and the original Mortgagor remains liable
      thereon or (ii) in the event the Servicer is unable under applicable law to
      require that the original Mortgagor remain liable under the Mortgage Note and
      the Servicer has the prior consent of the CMHC and the Company, a substitution
      of liability agreement with the purchaser of the Mortgaged Property pursuant
      to
      which the original Mortgagor is released from liability and the purchaser of
      the
      Mortgaged Property is substituted as Mortgagor and becomes liable under the
      Mortgage Loan. In connection with any such assumption, neither the mortgage
      interest rate borne by the related Mortgage Loan, the term of the Mortgage
      Loan
      nor the outstanding principal amount of the Mortgage Loan shall be
      changed.

     

    To
      the
      extent that any Mortgage Loan is assumable, the Servicer shall inquire
      diligently into the creditworthiness of the proposed transferee, and shall
      use
      the underwriting criteria for approving the credit of the proposed transferee
      which are used by CMHC with respect to underwriting mortgage loans of the same
      type as the Mortgage Loans. If the credit of the proposed transferee does not
      meet such underwriting criteria, the Servicer diligently shall, to the extent
      permitted by the Mortgage Loan File and by applicable law (and unless otherwise
      directed by the Company), accelerate the maturity of the Mortgage
      Loan.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

       

    

    
      	
              4.2

            	
              Satisfaction
                of Mortgages and Release of Mortgage
                Files

            

    

     

    Upon
      the
      payment in full of any Mortgage Loan, or the receipt by the Servicer of a
      notification that payment in full will be escrowed in a manner customary for
      such purposes, the Servicer shall notify the Company in the Monthly Remittance
      Advice as provided in Section 3.2
      and may
      request the release of any Mortgage Loan File from the Company in accordance
      with this Section 4.2
      hereof.
      The Servicer shall obtain discharge of the related Mortgage Loan as of record
      within any related time limit required by applicable law.

     

    
      	
              4.3

            	
              Servicing
                Compensation

            

    

     

    As
      consideration for servicing the Mortgage Loans hereunder, the Servicer shall
      deduct the Servicing Fee with respect to each Mortgage Loan from payments as
      received from Mortgagors and shall remit the net balance into the Custodial
      Account.

     

    Additional
      servicing compensation in the form of Ancillary Income shall be retained by
      the
      Servicer as and when collected. The Servicer shall be required to pay all
      expenses incurred by it in connection with its servicing activities hereunder
      and shall not be entitled to reimbursement thereof except as specifically
      provided for herein.

     

    
      	
              4.4

            	
              Annual
                Statement as to Compliance

            

    

     

    The
      Servicer shall deliver to the Company, on or before March 1st of each year
      beginning March 1, 2002, an Officer's Certificate, stating that (i) a
      review of the activities of the Servicer during its preceding fiscal year and
      of
      performance under this Agreement has been made under such officer's supervision,
      and (ii) the Servicer has complied in all material respects with the
      provisions of Article 2
      and
      Article 3,
      and
      (iii) to the best of such officer's knowledge; based on such review, the
      Servicer has fulfilled all its obligations under this Agreement throughout
      such
      year or part thereof, or, if there has been a default in the fulfilment of
      any
      such obligation, specifying each such default known to such officer and the
      nature and status thereof and the action being taken by the Servicer to cure
      such default.

     

    
      	
              4.5

            	
              Annual
                Independent Chartered Accountants Servicing
                Report

            

    

     

    On
      or
      before March 1 of each year, beginning with March 1, 2002, the
      Servicer at its expense shall cause a firm of independent chartered accountants
      (who may also render other services to the Servicer or any affiliate thereof)
      which is a member of the "Ordre
      des comptables agréés du Québec"
      (Corporation of the Chartered Accountants of Québec) to furnish a report to the
      Company to the effect that such firm has, in addition to their examination
      of
      the financial statements of the Servicer, performed specified auditing
      procedures to financial information, other than financial statements relating
      to
      Mortgage Loans serviced by the Servicer in accordance with the requirements
      of
      the Chapter 9100 of the Canadian Institute of Chartered Accounts Handbook
      and that, as the results of applying the procedures, any exceptions were
      disclosed.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

       

    

    
      	
              4.6

            	
              Right
                to Examine Servicer
                Records

            

    

     

    The
      Company shall have the right to examine and audit any and all of the books,
      records, or other information of the Servicer, whether held by the Servicer
      or
      by another on its behalf, with respect to or concerning this Agreement or the
      Mortgage Loans.

     

    
      	
              5.

            	
              SERVICER
                TO COOPERATE

            

    

     

    
      	
              5.1

            	
              Provision
                of Information

            

    

     

    During
      the term of this Agreement, the Servicer shall furnish to the Company such
      periodic, special, or other reports or information, whether or not provided
      for
      herein, as the Company shall request. The Servicer shall execute and deliver
      all
      such instruments and take all such action as the Company may reasonably request
      from time to time, in order to effectuate the purposes and to carry out the
      terms of this Agreement.

     

    
      	
              6.

            	
              TERMINATION

            

    

     

    
      	
              6.1

            	
              Agency
                Suspension

            

    

     

    Should
      the Servicer at any time during the term of this Agreement have its right to
      service temporarily or permanently suspended by CMHC or otherwise cease to
      be an
      approved servicer of conventional residential mortgage loans for CMHC, then
      the
      Company may immediately terminate this Agreement without assessment of any
      termination fee.

     

    
      	
              6.2

            	
              Damages

            

    

     

    The
      Company shall have the right at any time to seek and recover from the Servicer
      any damages or losses suffered by it as a result of any failure by the Servicer
      to observe or perform any duties, obligations, covenants or agreements herein
      contained, or as a result of the Servicer's failure to remain an approved CMHC
      mortgage servicer.

     

    
      	
              6.3

            	
              Termination

            

    

     

    The
      respective obligations and responsibilities of the Servicer shall terminate
      upon:

     

    
      	 	
              6.3.1

            	
              the
                earlier of the final payment or other liquidation (or any advance
                with
                respect thereto) of the last Mortgage Loan serviced by the Servicer,
                the
                remittance of all funds due hereunder or the first anniversary of
                this
                Agreement; or

            

    

     

    
      	 	
              6.3.2

            	
              by
                mutual consent of the Servicer and the Company in writing, unless
                earlier
                terminated pursuant to this
                Agreement.

            

    

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

       

    

    
      	
              6.4

            	
              Termination
                without Cause

            

    

     

    The
      Company, may, at its sole option, upon not less than sixty (60) days' prior
      written notice to the Servicer terminate any rights the Servicer may have
      hereunder with respect to any or all of the Mortgage Loans, without cause,
      upon
      written notice, provided that the Servicer shall have an additional period
      of
      not more than sixty (60) days from and after the date of said notice from
      the Company within which to effect the related transfer of servicing. Any such
      notice of termination shall be in writing and delivered to the Servicer as
      provided in Section 12.1
      of this
      Agreement. In the event of such termination, the Servicer shall be entitled
      to a
      termination fee, equal to the product of 0.0002% of the then current aggregate
      unpaid principal balance of the related Mortgage Loans and the number of months
      remaining until the first anniversary of this Agreement, provided, however,
      that
      the successor servicer is not an affiliate of the Servicer.

     

    
      	
              7.

            	
              BOOKS
                AND RECORDS

            

    

     

    
      	
              7.1

            	
              Possession
                of Servicing Files

            

    

     

    The
      contents of each Servicing File are and shall be held by the Servicer for the
      benefit of the Company as the owner thereof. The Servicer shall maintain in
      the
      Servicing File a copy (which may be in microfiche form) of the contents of
      each
      Mortgage Loan File and the originals of the required documents in each Mortgage
      Loan File not delivered to the Company. The possession of the Servicing File
      by
      the Servicer is at the will of the Company for the sole purpose of servicing
      the
      related Mortgage Loan, pursuant to this Agreement, and such retention and
      possession by the Servicer is in its capacity as Servicer only and at the
      election of the Company. The Servicer shall release its custody of the contents
      of any Servicing File only in accordance with written instructions from the
      Company or other termination of the Servicer with respect to the related
      Mortgage Loans, unless such release is required as incidental to the Servicer's
      servicing of the Mortgage Loans pursuant to this Agreement.

     

    The
      Servicer shall be responsible for maintaining, and shall maintain, a complete
      set of books and records (including electronic records) for each Mortgage Loan
      which shall be marked clearly to reflect the ownership of each Mortgage Loan
      by
      the Company. In particular, the Servicer shall maintain in its possession,
      available for inspection by the Company during normal business hours, and shall
      deliver to the Company upon reasonable notice, evidence of compliance with
      all
      federal, provincial and local laws, rules and regulations, and requirements
      of
      CMHC, documentation evidencing insurance coverage and eligibility of any
      condominium project for approval by CMHC and periodic inspection reports as
      required by Section 2.12
      and
      Accepted Servicing Practices.

     

    To
      the
      extent that original documents are not required for purposes of realisation
      of
      Liquidation Proceeds or Insurance Proceeds, documents maintained by the Servicer
      may be in the form of microfilm or microfiche so long as the Servicer complies
      with the requirements of Accepted Servicing Practices.

     

    The
      Servicer shall keep at its servicing office books and records (including
      electronic records) in which, subject to such reasonable regulations as it
      may
      prescribe, the Servicer shall note transfers of Mortgage Loans. No transfer
      of a
      Mortgage Loan may be made unless such transfer is in compliance with the terms
      hereof. For the purposes of this Agreement, the Servicer shall be under no
      obligation to deal with any person with respect to this Agreement or the
      Mortgage Loans unless the books and records show such person as the owner of
      the
      Mortgage Loan. The Company may, subject to the terms of this Agreement, sell
      or
      transfer one or more of the Mortgaged Loan. The Company also shall advise the
      Servicer of the transfer. Upon receipt of notice of the transfer, the Servicer
      shall record the ownership of the Mortgage Loans of such assignee in its books
      and records, and shall release the Company from its obligations hereunder with
      respect to the Mortgage Loans sold or transferred.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              iNDEMNIFICATION
                AND ASSIGNMENT

            

    

     

    
      	
              8.1

            	
              Indemnification

            

    

     

    The
      Servicer agrees to indemnify and hold the Company harmless from any liability,
      claim, loss or damage (including, without limitation, any reasonable legal
      fees,
      judgements or expenses relating to such liability, claim, loss or damage) to
      the
      Company directly or indirectly resulting from the Servicer's failure to observe
      and perform any or all of Servicer's duties, obligations, covenants, agreements,
      warranties or representations contained in this Agreement or the Servicer's
      failure to comply with all applicable requirements with respect to the transfer
      of servicing rights as set forth herein.

     

    The
      Servicer shall notify the Company as soon as reasonably possible if a claim
      is
      made by a third party with respect to this Agreement.

     

    
      	
              8.2

            	
              Limitation
                on Liability of Servicer and
                Others

            

    

     

    Neither
      the Servicer nor any of the directors, officers, employees or agents of the
      Servicer shall be under any liability to the Company for any action taken or
      for
      refraining from the taking of any action in good faith pursuant to this
      Agreement, or for errors in judgement, provided, however, that this provision
      shall not protect the Servicer or any such person against any breach of
      warranties or representations made herein, or failure to perform its obligations
      in material compliance with any standard of care set forth in this Agreement,
      or
      any liability which would otherwise be imposed by reason of any breach of the
      terms and conditions of this Agreement. The Servicer and any director, officer,
      employee or agent of the Servicer may rely in good faith on any document of
      any
      kind prima
      facie
      properly
      executed and submitted by any person with respect to any matter arising
      hereunder. The Servicer shall not be under any obligation to appear in,
      prosecute or defend any legal action which is not incidental to its duties
      to
      service the Mortgage Loans in accordance with this Agreement and which in its
      opinion may involve it in any expense or liability, provided, however, that
      the
      Servicer may, with the prior written consent of the Company, undertake any
      such
      action which it may deem necessary or desirable in respect to this Agreement
      and
      the rights and duties of the parties hereto. In such event, the Servicer shall
      be entitled to reimbursement from the Company of the reasonable legal expenses
      and costs of such action.

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

       

    

    
      	
              8.3

            	
              Limitation
                on Registration and Assignment by
                Servicer

            

    

     

    The
      Company has entered into this Agreement with the Servicer in reliance upon
      the
      representations as to the adequacy of its servicing facilities, plant,
      personnel, records and procedures, its integrity, reputation and financial
      standing, and the continuance thereof. Therefore, the Servicer shall not
      (i) assign this Agreement or the servicing hereunder or (ii) delegate
      any substantial part of its rights or duties hereunder without the prior written
      consent of the Company, which consent shall not be unreasonably withheld or
      conditioned provided that (a) any delegation of such rights or duties shall
      not release the Servicer from its obligations hereunder and the Servicer shall
      remain responsible hereunder for all acts and omissions of any delegee as if
      such acts or omissions were those of the Servicer and (b) any such assignee
      or designee shall satisfy the requirements for a successor or surviving person
      set forth in Section 8.5
      and
      Section 8.6
      hereof.
      The Servicer shall notify the Company in writing at least 30 days prior to
      selling or otherwise disposing of all or substantially all of its assets and
      receipt of such notice shall entitle the Company to terminate this Agreement,
      without payment of any termination fee, except as set forth in
      Section 8.5
      hereof.

     

    The
      Servicer shall not resign from the obligations and duties hereby imposed on
      it
      except by mutual consent of the Servicer and the Company or upon the
      determination that its duties hereunder are no longer permissible under
      applicable law and such incapacity cannot be cured by the Servicer. Any such
      determination permitting the resignation of the Servicer shall be evidenced
      by
      an opinion of counsel of the Servicer to such effect delivered to the Company
      which opinion of counsel shall be in form and substance acceptable to the
      Company. No such resignation shall become effective until a successor approved
      by the CMHC shall have assumed the Servicer's responsibilities and obligations
      hereunder in the manner provided in Section 8.6.

     

    Without
      in any way limiting the generality of this Section 8.3,
      in the
      event that the Servicer either shall assign this Agreement or the servicing
      responsibilities hereunder or delegate its duties hereunder or any portion
      thereof without (i) satisfying the requirements set forth herein or
      (ii) the prior written consent of the Company, then the Company shall have
      the right to terminate this Agreement as set forth in Section 6.4,
      without
      any payment of any penalty or damages and without any liability whatsoever
      to
      the Servicer (other than with respect to accrued but unpaid Servicing Fees
      and
      Servicing Advances remaining unpaid) or any third party.

     

    
      	
              8.4

            	
              Assignment
                by the Company

            

    

     

    The
      Company shall have the right, without the consent of the Servicer, to assign,
      in
      whole or in part, its interest under this Agreement with respect to some or
      all
      of the Mortgage Loans and designate any person to exercise any rights of the
      Company hereunder, by executing an assignment and assumption agreement and
      the
      assignee or designee shall accede to the rights and obligations hereunder of
      the
      Company with respect to such Mortgage Loans. All references to the Company
      in
      this Agreement shall be deemed to include its assignee or designee.

     

    
      	
              8.5

            	
              Merger
                or Consolidation of the
                Servicer

            

    

     

    The
      Servicer will keep in full effect its existence and rights as a bank under
      the
      laws of its jurisdiction of incorporation except as permitted
      herein.

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

       

    

    Any
      person into which the Servicer may be merged or consolidated, or any corporation
      resulting from any merger, conversion or consolidation to which the Servicer
      shall be a party, or any person succeeding to the business of the Servicer,
      shall be the successor of the Servicer hereunder, without the execution or
      filing of any paper or any further act on the part of any of the parties hereto,
      anything herein to the contrary notwithstanding; provided, however, that the
      successor or surviving person shall be (i) obligated to service the
      Mortgage Loans in accordance with this Agreement and Required Servicing
      Practices, (ii) an institution whose deposits are insured by CDIC and
      (iii) a CMHC-approved servicer in good standing.

     

    
      	
              8.6

            	
              Successor
                to the Servicer

            

    

     

    Prior
      to
      termination of Servicer's responsibilities and duties under this Agreement
      pursuant to Sections 2.14,
      6.1,
      6.4,
      8.3
      or
11.1,
      the
      Company shall appoint a successor which shall succeed to all rights and assume
      all of the responsibilities, duties and liabilities of the Servicer under this
      Agreement. In connection with such appointment and assumption, the Company
      may
      make such arrangements for the compensation of such successor out of payments
      on
      Mortgage Loans as it and such successor shall agree. In the event that the
      Servicer's duties, responsibilities and liabilities under this Agreement should
      be terminated pursuant to the aforementioned sections, the Servicer shall
      discharge such duties and responsibilities during the period from the date
      it
      acquires knowledge of such termination until the effective date thereof with
      the
      same degree of diligence and prudence which it is obligated to exercise under
      this Agreement, and shall take no action whatsoever that might impair or
      prejudice the rights or financial condition of its successor. The resignation
      or
      removal of Servicer pursuant to the aforementioned Sections shall not become
      effective until a successor shall be appointed pursuant to this
      Section 8.6
      and
      shall in no event relieve the Servicer of the representations, warranties and
      covenants made pursuant to and the remedies available to the Company with
      respect thereto, it being understood and agreed that the provisions of
      Article 10
      shall be
      applicable to the Servicer notwithstanding any such resignation or termination
      of the Servicer, or the termination of this Agreement.

     

    Any
      successor appointed as provided herein shall execute, acknowledge and deliver
      to
      the Servicer and to the Company, an instrument accepting such appointment,
      whereupon such successor shall become fully vested with all the rights, powers,
      duties, responsibilities, obligations and liabilities of the Servicer, with
      like
      effect as if originally named as a party to this Agreement. Any termination
      of
      this Agreement pursuant to Sections 2.14,
      6.1,
      6.4,
      8.3
      or
11.1
      shall
      not affect any claims that the Company may have against the Servicer arising
      prior to any such termination or resignation.

     

    The
      Servicer shall timely deliver to the successor the funds in the Custodial
      Account and the Escrow Account and the Mortgage Loan Files and related documents
      and statements held by it hereunder and the Servicer shall account for all
      funds. The Servicer shall execute and deliver such instruments and do such
      other
      things all as may reasonably be required to more fully and definitely vest
      and
      confirm in the successor all such rights, powers, duties, responsibilities,
      obligations and liabilities of the Servicer. The successor shall make
      arrangements as it may deem appropriate to reimburse the Servicer for amounts
      the Servicer actually expended pursuant to this Agreement which the successor
      is
      entitled to retain hereunder and which would otherwise have been recovered
      by
      the Service pursuant to this Agreement but for the appointment of the successor
      servicer.

     

    Upon
      a
      successor's acceptance of appointment as such, the Servicer shall notify by
      mail
      the Company of such appointment.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

       

    

    
      	
              9.

            	
              REPRESENTATIONS,
                WARRANTIES AND COVENANTS OF THE
                COMPANY

            

    

     

    As
      of the
      date hereof, the Company warrants and represents to, and covenants and agrees
      with, the Servicer as follows:

     

    
      	
              9.1

            	
              Due
                Organization and Authority

            

    

     

    The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of Maryland. The Company has the full corporate power and
      authority to execute and deliver this Agreement and to perform in accordance
      therewith; the execution, delivery and performance of this Agreement by the
      Company and the consummation of the transactions contemplated hereby have been
      duly and validly authorized; this Agreement evidences the valid, binding and
      enforceable obligation of the Company; and all requisite corporation action
      has
      been taken by the Company to make this Agreement valid and binding upon the
      Company in accordance with its terms.

     

    
      	
              9.2

            	
              No
                Conflicts

            

    

     

    Neither
      the execution and delivery of this Agreement, nor the fulfilment of or
      compliance with the terms and conditions of this Agreement, will conflict with
      or result in a breach of any of the terms, conditions or provisions of the
      Company's charter or by-laws or any legal restrictions or any agreement or
      instrument to which the Company is now a party or by which it is bound, or
      constitute a default or result in an acceleration under any of the foregoing,
      or
      result in the violation of any law, rule, regulation, order, judgement or decree
      to which the Company or its property is subject.

     

    
      	
              9.3

            	
              Ability
                to Perform

            

    

     

    The
      Company does not believe, nor does it have any reason or cause to believe,
      that
      it cannot perform each and every covenant made by it in this
      Agreement.

     

    
      	
              9.4

            	
              No
                Litigation Pending

            

    

     

    There
      is
      no action, suit proceeding or investigation pending or threatened against the
      Company, before any court, administrative agency or other tribunal asserting
      the
      invalidity of this Agreement, seeking to prevent the consummation of any of
      the
      transactions contemplated by this Agreement or which, either in any one instance
      or in the aggregate, may result in any material adverse change in the business,
      operations, financial condition, properties or assets of the Company, or in
      any
      material impairment of the right or ability of the Company to carry on its
      business substantially as now conducted, or in any material liability on the
      part of the Company, or which would draw into question the validity of this
      Agreement or of any action taken or to be taken in connection with the
      obligations of the Company contemplated herein.

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

       

    

    
      	
              9.5

            	
              No
                Consent Required

            

    

     

    No
      consent, approval, authorization or order of any court or governmental agency
      or
      body is required for the execution, delivery and performance by the Company
      of,
      or compliance by the Company with, this Agreement as evidenced by the
      consummation of the transactions contemplated by this Agreement, or if required,
      such approval has been obtained prior to the date hereof.

     

    
      	
              10.

            	
              REPRESENTATIONS
                AND WARRANTIES OF SERVICER

            

    

     

    As
      of the
      date hereof, the Servicer warrants and represents to, and covenants and agrees
      with, the Company as follows:

     

    
      	
              10.1

            	
              Qualification
                as a REIT

            

    

     

    The
      Servicer shall not take any action which would cause the Company not to qualify
      as a REIT under the Internal
      Revenue Code of 1986,
      as
      amended.

     

    
      	
              10.2

            	
              Due
                Organization and Authority

            

    

     

    The
      Servicer is a Canadian chartered bank duly organized, validly existing and
      in
      good standing under the laws of Canada, and is licensed, qualified and in good
      standing in each jurisdiction where a Mortgaged Property is located if
      applicable laws require licensing or qualification in order to conduct business
      of the type conducted by the Servicer, and in any event the Servicer is in
      compliance with the laws of any such jurisdiction to the extent necessary to
      ensure the enforceability of the related Mortgage Loan in accordance with the
      terms of this Agreement; the Servicer has the full corporate power and authority
      to execute and deliver this Agreement and to perform in accordance herewith;
      the
      execution, delivery and performance of this Agreement (including all instruments
      of transfer to be delivered pursuant to this Agreement) by the Servicer and
      the
      consummation of the transactions contemplated hereby have been duly and validly
      authorized; this Agreement evidences the valid, legal, binding and enforceable
      obligation of the Servicer subject to bankruptcy laws and other similar laws
      of
      general application affecting rights of creditors, including those respecting
      the availability of specific performance, none of which will materially
      interfere with the realisation of the benefits provided thereunder, and all
      requisite corporate action has been taken by the Servicer to make this Agreement
      valid and binding upon the Servicer in accordance with its terms.

     

    
      	
              10.3

            	
              Ordinary
                Course of Business

            

    

     

    The
      consummation of the transactions contemplated by this Agreement are in the
      ordinary course of business of the Servicer.

     

    
      	
              10.4

            	
              No
                Conflicts

            

    

     

    Neither
      the execution and delivery of this Agreement, nor the fulfilment of or
      compliance with the terms and conditions of this Agreement, will conflict with
      or result in a breach of any of the terms, conditions or provisions of the
      Servicer's charter or by-laws or any legal restriction or any agreement or
      instrument to which the Servicer is now a party or by which it is bound, or
      constitute a default or result in an acceleration under any of the foregoing,
      or
      result in the violation of any law, rule, regulation, order, judgement or decree
      to which the Servicer or its property is subject, or impair the ability of
      the
      Company to realize on the Mortgage Loans, impair the value of the Mortgage
      Loans, or impair the ability of the Company to realize the full amount of any
      mortgage insurance benefits accruing pursuant to this Agreement.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

       

    

    
      	
              10.5

            	
              Ability
                to Service

            

    

     

    The
      Servicer is an approved servicer of CMHC residential mortgage loans in
      accordance with the NHA, with the facilities, procedures and experienced
      personnel necessary for the sound servicing of mortgage loans of the same type
      as the Mortgage Loans. The Servicer is duly qualified, licensed, registered
      and
      otherwise authorized under all applicable federal, provincial and municipal
      laws, regulations and by-laws, if applicable, and is in good standing to
      enforce, originate, sell mortgage loans to, and service mortgage loans in the
      jurisdictions wherein the Mortgaged Properties are located and no event has
      occurred, including but not limited to a change in insurance coverage, which
      would make the Servicer unable to comply with either CMHC eligibility
      requirements or which would require notification to CMHC.

     

    
      	
              10.6

            	
              Ability
                to Perform

            

    

     

    The
      Servicer can and shall perform each and every covenant contained in this
      Agreement.

     

    
      	
              10.7

            	
              No
                Litigation Pending

            

    

     

    There
      is
      no action, suit, proceeding or investigation pending or threatened against
      the
      Servicer, before any court, administrative agency or other tribunal asserting
      the invalidity of this Agreement, seeking to prevent the consummation of any
      of
      the transactions contemplated by this Agreement or which, either in any one
      instance or in the aggregate, may result in any material adverse change in
      the
      business, operations, financial condition, properties or assets of the Servicer,
      or in any material impairment of the right or ability of the Servicer to carry
      on its business substantially as now conducted, or in any material liability
      on
      the part of the Servicer, or which would draw into question the validity of
      this
      Agreement or the Mortgage Loans or of any action taken or to be taken in
      connection with the obligations of the Servicer contemplated herein, or which
      would be likely to impair materially the ability of the Servicer to perform
      under the terms of this Agreement.

     

    
      	
              10.8

            	
              No
                Consent Required

            

    

     

    No
      consent, approval, authorization or order of any court or governmental agency
      or
      body is required for the execution, delivery and performance by the Servicer
      of
      or compliance by the Servicer with this Agreement or the servicing of the
      Mortgage Loans as evidenced by the consummation of the transactions contemplated
      by this Agreement, or if required, such approval has been obtained prior to
      the
      date hereof.

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

       

    

    
      	
              10.9

            	
              No
                Untrue Information

            

    

     

    Neither
      this Agreement nor any statement, tape, diskette, form, report or other document
      furnished or to be furnished pursuant to this Agreement or in connection with
      the transactions contemplated hereby contains any untrue statement of fact
      or
      omits to state a fact necessary to make the statements contained therein not
      misleading.

     

    
      	
              10.10

            	
              Reasonable
                Servicing Fee

            

    

     

    The
      Servicer acknowledges and agrees that the Servicing Fee represents reasonable
      compensation for performing such services and that the entire Servicing Fee
      shall be treated by the Servicer, for accounting and tax purposes, as
      compensation for the servicing and administration of the Mortgage Loans pursuant
      to this Agreement.

     

    
      	
              10.11

            	
              Conflict
                of Interest

            

    

     

    The
      Servicer agrees that it shall service the Mortgage Loans hereunder solely with
      a
      view toward the interests of the Company, and without regard to the interests
      of
      the Seller or its other affiliates.

     

    
      	
              10.12

            	
              Confirmation
                of Original Servicing
                Agreement

            

    

     

    The
      Servicer represents and warrants that all the Mortgage Loans assigned by the
      Purchaser in favour of the Company on or before the date hereof have been
      serviced and administered by the Servicer in accordance with the terms and
      conditions of the Original Servicing Agreement and that it has fulfilled all
      of
      its obligations under the Original Servicing Agreement up to and including
      the
      date hereof.

     

    
      	
              11.

            	
              DEFAULT

            

    

     

    
      	
              11.1

            	
              Events
                of Default

            

    

     

    The
      following shall constitute an Event of Default under this Agreement on the
      part
      of the Servicer:

     

    
      	 	
              11.1.1

            	
              any
                failure by the Servicer to remit to the Company any payment required
                to be
                made under the terms of this Agreement which continues unremedied
                for a
                period of five (5) Business Days after the date upon which written
                notice of such failure, requiring the same to be remedied, shall
                have been
                given to the Servicer by the Company;
                or

            

    

     

    
      	 	
              11.1.2

            	
              the
                failure by the Servicer to duly observe or perform in any material
                respect
                any other of the covenants or agreements on the part of the Servicer
                set
                forth in this Agreement which continues unremedied for a period of
                thirty (30) days (except that such number of days shall be
                fifteen (15) in the case of a failure to pay any premium for any
                insurance policy required to be maintained under this Agreement)
                after the
                date on which written notice of such failure, requiring the same
                to be
                remedied, shall have been given to the Servicer by the Company;
                or

            

    

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              11.1.3

            	
              a
                decree or order of a court or agency or supervisory authority having
                jurisdiction for the appointment of a receiver or liquidator in any
                insolvency, bankruptcy, similar proceedings, or for the winding-up
                or
                liquidation of its affairs, shall have been entered against the Servicer
                and such decree or order shall have remained in force undischarged
                or
                unstayed for a period of sixty (60) days;
                or

            

    

     

    
      	 	
              11.1.4

            	
              the
                Servicer shall consent to the appointment of a receiver or liquidator
                in
                any insolvency, bankruptcy, or similar proceedings of or relating
                to the
                Servicer of or relating to all or substantially all of its property;
                or

            

    

     

    
      	 	
              11.1.5

            	
              the
                Servicer shall admit in writing its inability to pay its debts generally
                as they become due, file a petition to take advantage of any applicable
                insolvency or reorganization statute, make an assignment for the
                benefit
                of its creditors, or voluntarily suspend payment of its obligations;
                or

            

    

     

    
      	 	
              11.1.6

            	
              the
                Servicer loses temporarily or permanently its qualification as an
                approved
                lender under the NHA.

            

    

     

    
      	 	
              11.1.7

            	
              the
                Servicer, without the consent of the Company (other than as permitted
                by
                Sections 8.3
                or
                8.5
                hereof), attempts to assign this Agreement or the servicing
                responsibilities hereunder or to delegate any substantial part of
                its
                duties hereunder or any portion thereof;
                or

            

    

     

    
      	 	
              11.1.8

            	
              the
                Servicer fails to maintain its licence to do business or service
                residential mortgage loans in any jurisdiction where the Mortgaged
                Properties are located and such failure results in a material adverse
                effect on the Mortgage Loans, the servicing of the Mortgage Loans,
                or the
                Company's rights with respect to the Mortgage
                Loans.

            

    

     

    
      	 	
              11.1.9

            	
              The
                Servicer carries out servicing, administration or other duties and
                obligations imposed on it under this Agreement without first seeking
                and
                obtaining, in writing, instructions, directions or confirmation from
                the
                Company as required by Section 2
                of
                this Agreement.

            

    

     

    In
      each
      and every such case, so long as an Event of Default shall not have been
      remedied, in addition to whatsoever rights the Company may have at law or equity
      to damages, including injunctive relief and specific performance, the Company,
      by notice in writing to the Servicer, may terminate without compensation or
      reimbursement (other than Servicing Fees previously earned but remaining unpaid
      and Servicing Advances remaining unreimbursed) all the rights and obligations
      of
      the Servicer under this Agreement and in and to the Mortgage Loans and the
      proceeds thereof.

     

    Upon
      receipt by the Servicer of such written notice, all authority and power of
      the
      Servicer under this Agreement, whether with respect to the Mortgage Loans or
      otherwise, shall pass to and be vested in the successor appointed pursuant
      to
      Section 8.6.
      Upon
      written request from the Company, the Servicer shall prepare, execute and
      deliver any and all documents and other instruments reasonably requested by
      the
      Company, place in such successor's possession all Mortgage Loan Files (to the
      extent not properly delivered to the Company by the Servicer previously), and
      do
      or accomplish all other acts or things necessary or appropriate to effect the
      purposes of such notice of termination, whether to complete the transfer and
      endorsement or assignment of the Mortgage Loans and related documents, or
      otherwise, at the Servicer's sole expense. The Servicer agrees to reasonably
      cooperate with the Company and such successor in effecting the termination
      of
      the Servicer's responsibilities and rights hereunder, including, without
      limitation, the transfer to such successor for administration by it of all
      cash
      amounts which shall at the time be credited by the Servicer to the Custodial
      Account or Escrow Account or thereafter received with respect to the Mortgage
      Loans.

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

       

    

    
      	
              11.2

            	
              Waiver
                of Defaults

            

    

     

    The
      Company may waive any default by the Servicer in the performance of its
      obligations hereunder and its consequences. Upon any such waiver of a past
      default, such default shall cease to exist, and any Event of Default arising
      therefrom shall be deemed to have been remedied for every purpose of this
      Agreement. No such waiver shall extend to any subsequent or other default or
      impair any right consequent thereon except to the extent expressly so
      waived.

     

    
      	
              12.

            	
              MISCELLANEOUS
                PROVISIONS

            

    

     

    
      	
              12.1

            	
              Notices

            

    

     

    All
      notices, requests, demands and other communications which are required or
      permitted to be given under this Agreement shall be in writing and shall be
      deemed to have been duly given upon the delivery or mailing thereof, as the
      case
      may be, sent by registered or certified mail, return receipt
      requested:

     

    
      	 	
              12.1.1

            	
              If
                to the Company to:

            

    

     

    NB
      CAPITAL CORPORATION

    65
      East -
      55th Street

    New
      York,
      NEW YORK 10022

    U.S.A.

     

    Attention:
      Chairman of the Board and President

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

       

    

    
      	 	
              12.1.2

            	
              If
                to the Servicer to:

            

    

     

    NATIONAL
      BANK OF CANADA

    600
      de La
      Gauchetière Street West

    Montreal,
      Quebec

    H3B
      4L2

     

    Attention:
      Vice-President and Chief Accountant

     

    
      	
              12.2

            	
              Waivers

            

    

     

    Either
      the Servicer or the Company may upon consent of all parties, by written notice
      to the others:

     

    
      	 	
              12.2.1

            	
              waive
                compliance with any of the terms, conditions or covenants required
                to be
                complied with by the others hereunder;
                and

            

    

     

    
      	 	
              12.2.2

            	
              waive
                or modify performance of any of the obligations of the others
                hereunder.

            

    

     

    The
      waiver by any party hereto of a breach of any provisions of this Agreement
      shall
      not operate or be construed as a waiver of any other subsequent
      breach.

     

    
      	
              12.3

            	
              Entire
                Agreement — Amendment

            

    

     

    This
      Agreement constitutes the entire agreement between the parties with respect
      to
      servicing of the Mortgage Loans. This Agreement may be amended and any provision
      hereof waived but, only in writing signed by the party against whom such
      enforcement is sought.

     

    
      	
              12.4

            	
              Execution
                — Binding Effect

            

    

     

    This
      Agreement may be executed in one or more counterparts and by different parties
      hereto on separate counterparts, each of which, when so executed, shall be
      deemed to be an original; such counterparts, together, shall constitute one
      and
      the same agreement. Subject to Sections 8.3
      and
8.4,
      this
      Agreement shall inure to the benefit of and be binding upon the Servicer and
      the
      Company and their respective successors and assigns.

     

    
      	
              12.5

            	
              Headings

            

    

     

    Headings
      of the Articles and Sections in this Agreement are for reference purposes only
      and shall not be deemed to have any substantive effect.

     

    
      	
              12.6

            	
              Governing
                Law

            

    

     

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      Province of Québec and the obligations, rights and remedies hereunder shall be
      determined in accordance with the substantive laws of the Province of
      Québec.

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

       

    

    Each
      of
      the parties hereto irrevocably and unconditionally submits, for itself and
      its
      property, to the non exclusive jurisdiction of the Quebec courts, and any
      appellate court thereof, in any action or proceeding arising out of or relating
      to this Agreement, or for recognition or enforcement of any judgment, and each
      of the parties hereto hereby irrevocably and unconditionally agrees that all
      claims in respect of any such action or proceeding may be heard and determined
      in such court. Each of the parties hereto agrees that a final judgment in any
      such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      Nothing in this Agreement shall affect any right that any party may otherwise
      have to bring any action or proceeding relating to this Agreement in the courts
      of any jurisdiction. Each of the parties hereto irrevocably and unconditionally
      waives, to the fullest extent it may legally and effectively do so, any
      objection they may now or hereafter have to the laying of venue of any suit,
      action or proceeding arising out of or relating to this Agreement in the courts
      of the Province of Quebec. Each of the parties hereto hereby irrevocably waives,
      to the fullest extent permitted by law, the defence of an inconvenient forum
      to
      the maintenance of such action or proceeding in any such court. The Company
      hereby irrevocably appoints National
      Bank Trust Inc.,
      1100 University Street, Montreal, Québec, Canada, H3B 2G7
      ("Company's
      Process Agent"),
      as
      its agent to receive, on behalf of the Company, service of copies of the summons
      and complaint and any other process that may be served in any such action or
      proceeding. Any such service may be made by mailing or delivering a copy of
      such
      process, in care of the Company's Process Agent at the Company's Process Agent's
      above address. The Company hereby irrevocably authorizes and directs its agent
      to accept such service on its behalf. The parties hereto hereby agree that
      the
      final judgment in any such action or proceeding shall be conclusive and may
      be
      in force in any other jurisdiction by suit on the judgment or in any other
      manner provided by law.

     

    
      	
              12.7

            	
              Relationship
                of Parties

            

    

     

    Nothing
      herein contained shall be deemed or construed to create a partnership or joint
      venture between the parties. The duties and responsibilities of the Servicer
      shall be rendered by it as a provider of services and not as a general purpose
      agent of the Company. The Servicer shall have full control of all of its acts,
      doings, proceedings, relating to or requisite in connection with the discharge
      of its duties and responsibilities under this Agreement.

     

    
      	
              12.8

            	
              Quebec
                Sales Tax and Goods and Services
                Tax

            

    

     

    The
      Servicer shall collect from the Company the Goods and Services Tax
      ("GST")
      and
      the Quebec Sales Tax ("QST")
      on the
      Servicing Fee, and shall remit them to the appropriate tax authorities, if
      applicable.

     

    
      	
              12.9

            	
              Severability
                of Provisions

            

    

     

    If
      any
      one or more of the covenants, agreements, provisions or terms of this Agreement
      shall be held invalid for any reason whatsoever, then such covenants,
      agreements, provisions or terms shall be deemed severable from the remaining
      covenants, agreements, provisions or terms of this Agreement and shall in no
      way
      affect the validity or enforceability of the other provisions of this
      Agreement.

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

       

    

    
      	
              12.10

            	
              Recordation
                of Assignments of Mortgage

            

    

     

    Until
      the
      Company or its assignee registers its title to the Mortgage Loans, the Seller
      will hold the registered title to the Mortgage Loans for and on behalf of the
      Company and its assignee. Notwithstanding any provision herein to the contrary,
      in the event that any of the issued and outstanding senior, unsecured
      indebtedness of National Bank of Canada is rated "Baa3," or less, by Moody's
      Investors Service, Inc., or "BBB-," or less, by Standard & Poor's Ratings
      Services, the Servicer will promptly cause any mortgage loans to which the
      Servicer holds title on behalf of the Company, to be registered in the name
      of
      the Company.

     

    
      	
              12.11

            	
              Exhibits

            

    

     

    The
      exhibits to this Agreement are hereby incorporated and made a part hereon and
      are integral parts of this Agreement.

     

    
      	
              12.12

            	
              English
                Language

            

    

     

    The
      parties hereto confirm that the present Agreement has been drawn up in the
      English language at their request. Les parties aux présentes confirment que la
      présente convention a été rédigée en langue anglaise à leur
      demande.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      written above.

     

    NB
      CAPITAL CORPORATION

    

    By: 
      /s/ Donna Goral

    
      
Donna
      Goral

    

    

    NATIONAL
      BANK OF CANADA

    

    By: 
      /s/ Jean Dagenais

    
      

    

    Jean
      Dagenais

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    EXHIBIT 1

     

    Custodial
      Account Certification

     

    _______________________________,
      l

     

    National
      Bank of Canada hereby certified that it has established the account described
      below as a Custodial Account pursuant to Section 2.4
      of the
      Servicing Agreement, dated as of l,
      l.

     

    
      	Title of Account: 	 	National Bank of Canada., in trust for
              NB Capital Corporation, and various
              Mortgagors
	 	 	 
	Depository: 	 	 
	Account Number: 	 	 

    

     

    Address
      of Depository at which the Account is maintained: 

     

    
      

    

     

    
      

    

     

    
      	 NATIONAL BANK OF
              CANADA	 	 	 
	 	 	 	 
	By:  	 	 	 
	
              
                
 

            	 	 	
            
	Name: 	 	 	 
	
              
                
 

            	 	 	 
	Title:	 	 	 
	
              
                

              

            	 	 	 

    

     
      
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    EXHIBIT 2

     

    Custodial
      Account Letter Agreement

     

    _______________________________,
      l

     

    To: __________________________________________________
      (the "Depository")

     

    As
      Servicer under the Servicing Agreement dated as of l,
      l
      (the "Agreement"),
      we
      hereby authorize and request you to establish an account, as a Custodial Account
      pursuant to Section 2.4
      of the
      Agreement, to be designated as "National Bank of Canada, in trust for
      NB Capital Corporation and various Mortgagors". All deposits in the account
      shall be subject to withdrawal therefrom by order signed by National Bank of
      Canada. This letter is submitted to you in duplicate. Please execute and return
      one original to us.

     

    
      	NATIONAL BANK OF
              CANADA	 	 	 
	 	 	 	 
	
              By:
                

            	 	 	 
	
              
                

              

            	 	 	 
	Name:	 	 	 
	
              
                

              

            	 	 	
            
	
              Title: 

            	 	 	 
	
              
                

              

            	 	 	 

    

     

    The
      undersigned, as Depository, hereby certified that the above described account
      has been established under Account Number _______________________________,
      at
      the office of the Depository indicated above, and agrees to honour withdrawals
      on such account as provided above.

     

    
       

      
        	DEPOSITORY	 	 	 
	 	 	 	 
	
                By:
                  

              	 	 	 
	
                
                  

                

              	 	 	 
	Name:	 	 	 
	
                
                  
 

              	 	 	
              
	
                Title: 

              	 	 	 
	
                
                  
 

              	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT 3

     

    Escrow
      Account Certification

     

    _______________________________,
      l

     

     

    National
      Bank of Canada hereby certified that it has established the account described
      below as an Escrow Account pursuant to Section 2.6
      of the
      Servicing Agreement, dated as of l,
      l.

    
       

      
        	Title of Account:	 	National Bank of Canada., in trust
                for
                NB Capital Corporation, and various Mortgagors
	 	 	 
	
                Depository:

              	 	 
	
                Account
                  Number:

              	 	 

      

    

     

    Address
      of Depository at which the Account is maintained:

     

    
      

    

     

    
      
 

    
      	NATIONAL BANK OF
              CANADA	 	 	 
	 	 	 	 
	By:	 	 	 
	
              
                
 

            	 	 	 
	Name: 	 	 	
            
	
              
                

              

            	 	 	 
	Title:	 	 	 
	
              
                
  

            	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT 4

     

    Escrow
      Account Letter Agreement

     

    _______________________________,
      l

     

    To: __________________________________________________
      (the "Depository")

     

    As
      Servicer under the Servicing Agreement dated as of l,
      l
      (the "Agreement"),
      we
      hereby authorize and request you to establish an account, as an Escrow Account
      pursuant to Section 2.6
      of the
      Agreement, to be designated as "National Bank of Canada, in trust for
      NB Capital Corporation and various Mortgagors". All deposits in the account
      shall be subject to withdrawal therefrom by order signed by National Bank of
      Canada. This letter is submitted to you in duplicate. Please execute and return
      one original to us.

     

    
      	
              NATIONAL BANK OF CANADA

            	 	 	 
	 	 	 	 
	
              By:

            	 	 	 
	
              
                
 

            	 	 	 
	Name:	 	 	
            
	
              
                

              

            	 	 	 
	Title:	 	 	 
	
              
                

              

            	 	 	 

    

     

    The
      undersigned, as Depository, hereby certified that the above described account
      has been established under Account Number _______________________________,
      at
      the office of the Depository indicated above, and agrees to honour withdrawals
      on such account as provided above.

     

    
       

      
        	
                DEPOSITORY

              	 	 	 
	 	 	 	 
	
                By:

              	 	 	 
	
                
                  
 

              	 	 	 
	Name:	 	 	
              
	
                
                  

                

              	 	 	 
	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00120-of-00352.parquet"}]]