Document:

ex4_5.htm

 Exhibit 4.5 

 

 

 SERVICING AGREEMENT 

 

 by and among 

 

 ROYAL BANK OF CANADA 

 

 as Seller, Servicer and Cash Manager 

 

 and 

 

 RBC COVERED BOND GUARANTOR 

 LIMITED PARTNERSHIP 

 

 as Guarantor LP 

 

 and 

 

 COMPUTER SHARE TRUST COMPANY OF CANADA 

 

 as Bond Trustee 

 

 

 

 October 25, 2007 

 

    

    

    

 

 TABLE OF CONTENTS 

 

	   	  Page 
	   	   
	
 ARTICLE 1 –  DEFINITIONS AND INTERPRETATION 

	 2 
	   	   
	
 ARTICLE 2 –  APPOINTMENT OF SERVICER 

	 2 
	   	   
	
 ARTICLE 3 –  THE SERVICES 

	 3 
	   	   
	
 ARTICLE 4 –  GUARANTOR LP VARIABLE RATE 

	 6 
	   	   
	
 ARTICLE 5 –  ADMINISTRATION OF MORTGAGES 

	 8 
	   	   
	
 ARTICLE 6 –  NO LIABILITY 

	 10 
	   	   
	
 ARTICLE 7 –  NEW LOANS 

	 10 
	   	   
	
 ARTICLE 8 –  PRODUCT SWITCHES AND FURTHER ADVANCES 

	 10 
	   	   
	
 ARTICLE 9 –  REDEMPTION OF MORTGAGES 

	 11 
	   	   
	
 ARTICLE 10 –  POWERS OF ATTORNEY 

	 11 
	   	   
	
 ARTICLE 11 –  COSTS AND EXPENSES 

	 12 
	   	   
	
 ARTICLE 12 –  INFORMATION 

	 13 
	   	   
	
 ARTICLE 13 –  INSURANCE 

	 16 
	   	   
	
 ARTICLE 14 –  DATA PROTECTION 

	 17 
	   	   
	
 ARTICLE 15 –  COVENANTS OF SERVICER 

	 17 
	   	   
	
 ARTICLE 16 –  SERVICES NON-EXCLUSIVE 

	 18 
	   	   
	
 ARTICLE 17 –  TERMINATION 

	 18 
	   	   
	
 ARTICLE 18 –  FURTHER ASSURANCE 

	 21 
	   	   
	
 ARTICLE 19 –  MISCELLANEOUS 

	 22 
	   	   
	
 ARTICLE 20 –  CONFIDENTIALITY 

	 22 
	   	   
	
 ARTICLE 21 –  NOTICES 

	 23 
	   	   
	
 ARTICLE 22 –  VARIATION AND WAIVER 

	 24 
	   	   
	
 ARTICLE 23 –  NO PARTNERSHIP 

	 24 
	   	   
	
 ARTICLE 24 –  ASSIGNMENT 

	 25 
	   	   
	
 ARTICLE 25 –  CHANGE OF BOND TRUSTEE 

	 25 
	   	   
	
 ARTICLE 26 –  AMENDMENTS 

	 25 
	   	   
	
 ARTICLE 27 –  NON-PETITION 

	 26 
	   	   
	
 ARTICLE 28 –  COUNTERPARTS AND SEVERABILITY 

	 26 
	   	   
	
 ARTICLE 29 –  GOVERNING LAW 

	 26 
	
 Schedule 

	   
	   	   
	
 1.      The Services 

	 28 

 

    

    

    

 

 SERVICING AGREEMENT 

 

 THIS SERVICING AGREEMENT (this “Agreement”) is made as of this 25th day of October, 2007. 

 

 BY AND AMONG: 

 

	
    

	
 ROYAL BANK OF CANADA (hereinafter referred to as the “Bank”), a bank named in Schedule I to the Bank Act (Canada), whose executive office is at Royal Bank Plaza, South Tower, 8th Floor, 200 Bay Street, Toronto, Ontario, Canada M5J 2J5, as Seller (the “Seller”), as Servicer (the “Servicer”) and as Cash Manager (the “Cash Manager”) 

 

	
    

	
 - and - 

 

	
    

	
 RBC COVERED BOND GUARANTOR LIMITED PARTNERSHIP, a limited partnership formed under the laws of the Province of Ontario, whose registered office is at the Royal Bank Plaza, South Tower, 9th Floor, 200 Bay Street, Toronto, Ontario, Canada, M5J 2J5 by its managing general partner RBC COVERED BOND GP INC. (hereinafter referred to as the “Guarantor LP”) 

 

	
    

	
 - and - 

 

	
    

	
 COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company formed under the laws of Canada whose registered office is at 100 University Avenue, 9th Floor, North Tower, Toronto, Ontario, Canada M5J 2Y1 in its capacity as the Bond Trustee (hereinafter the “Bond Trustee”). 

 

 WHEREAS: 

 

	
 (A) 

	
 The Servicer carries on the business of, inter alia, administering mortgage loans secured on residential properties within Canada. 

 

	
 (B) 

	
 By the Mortgage Sale Agreement, the Seller has agreed to sell the Initial Covered Bond Portfolio of Loans and their Related Security to the Guarantor LP on a fully serviced basis and to from time to time sell additional Loans and their Related Security to the Guarantor LP. 

 

	
 (C) 

	
 As part of the sale of the Loans on a fully serviced basis, the Servicer has agreed to service the Loans and their Related Security in the Covered Bond Portfolio for the Guarantor LP on the terms and subject to the conditions contained in this Agreement  (as the same may be amended and/or restated from time to time). 

 

 THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the respective covenants, representations, agreements and warranties of the parties contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties covenant and agree as follows: 

 

    

    

    

 

 ARTICLE 1 –  

 DEFINITIONS AND INTERPRETATION 

 

	
 1.1 

	
 The Master Definitions and Construction Agreement made between the parties to the Transaction Documents on October 25, 2007 (as the same may be amended, varied or supplemented from time to time with the consent of the parties to the Master Definitions and Construction Agreement) is expressly and specifically incorporated into this Agreement and, accordingly, the expressions defined in the Master Definitions and Construction Agreement (as so amended, varied or supplemented) shall, except where the context otherwise requires and save where otherwise defined herein, have the same meanings in this Agreement, including the recitals hereto and this Agreement shall be construed in accordance with the interpretation provisions set out in Section 2 of the Master Definitions and Construction Agreement. 

 

	
 1.2 

	
 Save as expressly provided herein, any warranties or undertakings provided under this Agreement are made to each other party to this Agreement. 

 

	
 1.3 

	
 In the event that an additional or substitute servicer or a New Seller become(s) party to this Agreement references herein to Servicer and Seller, as applicable, shall include such additional or substitute servicer or New Seller, as applicable, unless otherwise specified or required  by the context in which such terms are used in this Agreement and references to Loans and their Related Security herein shall be deemed to refer in respect of each Servicer or Seller party hereto, to those Loans and their Related Security sold by such Seller or Servicer to the Guarantor LP and not to the Loans and their Related Security sold by any other Seller or Servicer to the Guarantor LP. 

 

 

 ARTICLE 2 –  

 APPOINTMENT OF SERVICER 

 

	
 2.1 

	
 Subject to Sections 2.3 and 4.5, and until terminated pursuant to Article 18, the Guarantor LP hereby confirms the appointment of the Servicer as its lawful agent on its behalf to service the Loans and their Related Security in the Covered Bond Portfolio, to exercise the rights, powers and discretions of the Guarantor LP, and to perform the duties of the Guarantor LP, under and in relation to those Loans and their Related Security.  The Servicer hereby accepts such appointment on the terms and subject to the conditions of this Agreement.  The Bond Trustee consents to the appointment of the Servicer on the terms of and subject to the conditions of this Agreement. 

 

	
 2.2 

	
 For the avoidance of doubt and in connection with the rights, powers and discretions conferred under Section 2.1, during the continuance of its appointment hereunder, the Servicer shall, subject to the terms and conditions of this Agreement, the Mortgage Terms, the Mortgage Sale Agreement, the Security Agreement and the Guarantor LP Agreement, have the full power, authority and right to do or cause to be done any and all things, not inconsistent with the sale, transfer and assignment of the Loans and their Related Security to the Guarantor LP, which it reasonably considers necessary, convenient or incidental to the servicing of the Loans and their Related Security or the exercise of such rights, powers and discretions, provided however that neither the Guarantor LP nor its Partners shall be required or obliged at any time to enter into any transaction or to comply with any directions which the Servicer may give with respect to the operating and financial policies of the Guarantor LP and the Servicer hereby acknowledges that all powers to determine such policies (including the determination of whether or not any particular policy is for the benefit of the Guarantor LP) are, and shall at all times remain, vested in the Guarantor LP (and its Partners) and none of the provisions of this Agreement shall be construed in a manner inconsistent with this proviso. 

 

    

 - 2 - 

    

 

	
 2.3 

	
 The confirmation of appointment pursuant to Section 2.1 is conditional upon an initial purchase of Loans and their Related Security by the Guarantor LP from the Seller having taken place under the Mortgage Sale Agreement and shall take effect upon and from the first Purchase Date under the Mortgage Sale Agreement automatically without any further action on the part of any person. 

 

 ARTICLE 3 –  

 THE SERVICES 

 

	
 3.1 

	
 General 

 

	
    

	
 (a) 

	
 The duty of the Servicer shall be to provide the services set out in this Agreement including Schedule 1 hereto (the “Services”). 

 

	
    

	
 (b) 

	
 If and when the Servicer is requested to confirm or state the capacity in which it is servicing the Loans and their Related Security sold by a Seller to the Guarantor LP and related matters pursuant to this Agreement by any Borrower or any third party not being a party to this Agreement and to whom the Servicer is obliged by law to disclose such information, the Servicer shall confirm or state that it is acting in its capacity as servicer of the Loans and their Related Security sold by the relevant Seller to the Guarantor LP and related matters as agent for and on behalf of the Guarantor LP and not on its own behalf. 

 

	
 3.2 

	
 Sub-contracts 

 

	
    

	
 (a) 

	
 The Servicer may sub-contract or delegate the performance of all or any of its powers and obligations under this Agreement, provided that (but subject to Section 3.2(b)): 

 

	
    

	
 (i) 

	
 the prior written consent of the Guarantor LP and the Bond Trustee to the proposed arrangement (including, if the Guarantor LP and the Bond Trustee consider it necessary, approving any contract which sets out the terms on which such arrangements are to be made) has been obtained, which consent shall not be unreasonably withheld, and written notification of such sub-contracting or delegation has been given to each of the Rating Agencies; 

 

	
    

	
 (ii) 

	
 where the arrangements involve the custody or control of any Loan and Related Security Files relating to the Covered Bond Portfolio for the purpose of performing any delegated Services the sub-contractor or delegate has executed an acknowledgement in form and substance acceptable to the Guarantor LP and the Bond Trustee, acting reasonably, to the effect that any such Loan and Related Security Files are and will be held to the order of the Guarantor LP and the Bond Trustee or as the Guarantor LP and the Bond Trustee shall otherwise direct; 

 

    

 - 3 - 

    

 

	
    

	
 (iii) 

	
 where the arrangements involve or may involve the receipt by the sub-contractor or delegate of monies belonging to the Guarantor LP which, in accordance with this Agreement the sub-contractor or delegate has executed a declaration in form and substance acceptable to the Guarantor LP(or the Cash Manager on its behalf) that any such monies held by it or to its order are held in trust for the Guarantor LP and will be paid forthwith to the Cash Manager prior to a downgrade in the ratings of the Cash Manager by the Rating Agencies below the Cash Management Deposit Ratings and following a downgrade of the ratings of the Cash Manager by the Rating Agencies below the Cash Management Deposit Ratings into the GIC Account; 

 

	
    

	
 (iv) 

	
 any such sub-contractor or delegate has executed a written waiver of any Security Interest arising in connection with such delegated Services (to the extent that such Security Interest relates to the Covered Bond Portfolio or any amount referred to in (iii) above); and 

 

	
    

	
 (v) 

	
 neither the Bond Trustee nor the Guarantor LP shall have any liability for any costs, charges or expenses payable to or incurred by such sub-contractor or delegate or arising from the entering into, the continuance or the termination of any such arrangement. 

 

	
    

	
 (b) 

	
 The provisos to Section 3.2(a)(i), (ii) and (iii) shall not apply: 

 

	
    

	
 (i) 

	
 to the engagement by the Servicer of: 

 

	
    

	
 (A) 

	
 any receiver, solicitor, insurance broker, valuer, surveyor, accountant, estate agent, insolvency practitioner, auctioneer, bailiff, sheriff officer, debt counsellor, tracing agent, property management agent, licensed conveyancer, qualified conveyancer or other professional adviser acting as such; or 

 

	
    

	
 (B) 

	
 any locksmith, builder or other contractor acting as such in relation to a Property, 

 

 in any such case being a person or persons whom the Servicer would be willing to appoint in respect of its own mortgages in connection with the performance by the Servicer of any of its obligations or functions or in connection with the exercise of its powers under this Agreement; or 

 

	
    

	
 (ii) 

	
 to any delegation to any wholly-owned subsidiary of the Servicer or the Seller from time to time. 

 

    

 - 4 - 

    

 

	
    

	
 (c) 

	
 The Guarantor LP and the Bond Trustee may by notice in writing require the Servicer to assign to the Guarantor LP any rights which the Servicer may have against any sub-contractor or delegate arising from the performance of services by such person relating to any matter contemplated by this Agreement and the Servicer acknowledges that such rights assigned to the Guarantor LP will be exercised by the Guarantor LP subject to the terms of the Guarantor LP Agreement and the Security Agreement. 

 

	
    

	
 (d) 

	
 Notwithstanding any sub-contracting or delegation of the performance of its obligations under this Agreement, the Servicer shall not thereby be released or discharged from any liability hereunder and shall remain responsible for the performance of all of the obligations of the Servicer under this Agreement, and the performance or non-performance or the manner of performance of any sub-contractor or delegate of any of the Services shall not affect the Servicer's obligations under this Agreement. 

 

	
 3.3 

	
 Liability of Servicer 

 

 The Servicer, solely in its capacity as Servicer, shall indemnify the Guarantor LP on demand on an after-tax basis for any loss, liability, claim, expense or damage suffered or incurred by the Guarantor LP in respect of the negligence or wilful default of the Servicer in carrying out its functions, as Servicer, under this Agreement or the other Transaction Documents to which it is a party as Servicer to the extent such negligence or wilful default results in a breach by the Servicer of the terms and provisions of this Agreement or the other Transaction Documents in relation to such functions as Servicer.  For the avoidance of doubt, the Servicer shall not be liable in respect of any loss, liability, claim, expense or damage suffered or incurred by the Guarantor LP and/or any other Person as a result of the performance by the Servicer of the Services in accordance with the standards of a Reasonable and Prudent Mortgage Lender. 

 

	
 3.4 

	
 Perfection of the Sale of Loans to the Guarantor LP 

 

	
    

	
 (a) 

	
 Subject to Section 7.1 of the Mortgage Sale Agreement the Servicer shall, within 60 Days of the happening of any of the events referred to in Section 7.1 of the Mortgage Sale Agreement, take such steps and procure the doing of all or any acts, matters or things as may be necessary, based on the advice of counsel, to Perfect on behalf of the Seller (pursuant to and in reliance in the Seller Assignment(s) and Seller Power(s) of Attorney) the sale, transfer and assignments of the Purchased Loans and their Related Security then in the Covered Bond Portfolio in accordance with Section 7.1 of the Mortgage Sale Agreement or shall provide sufficient information to the Guarantor LP and the Bond Trustee to enable the Guarantor LP or the Bond Trustee to Perfect or cause to be Perfected on behalf of the Seller (pursuant to and in reliance in the Seller Assignment(s) and Seller Power(s) of Attorney) such sales, transfers and assignments. 

 

	
    

	
 (b) 

	
 Subject to Section 3.4(a) of this Agreement and Section 7.1 of the Mortgage Sale Agreement, prior to the happening of any of the events referred to in Section 7.1, the Servicer shall not be required to notify any person of the Guarantor LP’s interest in any Loans or their Related Security in the Covered Bond Portfolio. 

 

    

 - 5 - 

    

 

 ARTICLE 4 –  

 GUARANTOR LP VARIABLE RATE 

 

	
 4.1 

	
 Subject to Section 4.5, the Guarantor LP hereby grants the Servicer full right, liberty and authority from time to time, subject to and in accordance with the relevant Mortgage Terms, to determine and set the Guarantor LP Variable Rate chargeable to Borrowers in relation to those Variable Rate Loans sold by the Seller to the Guarantor LP in the Covered Bond Portfolio for which the reference rate of interest or margins may from time to time be set by the Guarantor LP at a rate or margin other than the Seller’s Variable Rate of Interest.  In exercising such right, liberty and authority to set the Guarantor LP Variable Rate the Servicer undertakes to each of the other parties to this Agreement that it shall set the Guarantor LP Variable Rate in accordance with the Seller’s Policy and shall not at any time set or maintain the Guarantor LP Variable Rate at a rate which is higher than the then prevailing Seller’s Variable Rate (in respect of the same type of Loans, if applicable), except as described in this Article 4.  Prior to the occurrence of (i) a Covered Bond Guarantee Activation Event, or (ii) a Servicer Event of Default, the Servicer will not at any time without the prior consent of the Guarantor LP, set or maintain the Guarantor LP Variable Rate at a rate which is higher than (although it may be lower than or equal to) the then prevailing Seller’s Variable Rate which applies to the similar type of loans owned by the Seller. 

 

	
 4.2 

	
 The Servicer shall (i) take the steps rendered necessary by the relevant Mortgage Terms and applicable law to bring each change in such rate or rates of interest to the attention of the relevant Borrowers, whether due to a change in the Guarantor LP Variable Rate or as a consequence of any provisions of the Mortgage Terms; and (ii) notify the Guarantor LP and the Bond Trustee in writing as soon as reasonably practicable of any change in the Guarantor LP Variable Rate, provided that posting of any change in the Seller’s Variable Rate on the website of the Seller shall be deemed to constitute notice to the Guarantor LP and the Bond Trustee of a change in the Guarantor LP Variable Rate (except to the extent that the Guarantor LP Variable Rate has been set at a rate other than the Seller Variable Rate in accordance with the terms if this Article 4).  All costs arising in relation to such a notification of a change in such rate or rates of interest shall be borne by the Servicer. 

 

	
 4.3 

	
 (a) 

	
 Prior to the occurrence of an Issuer Event of Default, the Servicer shall no later than two days (provided that such day is a Business Day and, if not, on the immediately preceding Business Day) prior to the first Guarantor LP Payment Date following the relevant Guarantor LP Calculation Period, determine, having regard to the aggregate of: 

 

	
    

	
 (i) 

	
 the income which the Guarantor LP would expect to receive during the next succeeding Guarantor LP Payment Period (the “Relevant Interest Period”); 

 

	
    

	
 (ii) 

	
 the Guarantor LP Variable Rate and the Seller’s Variable Rate set for the Relevant Interest Period in respect of the Loans; and 

 

	
    

	
 (iii) 

	
 the other resources available to the Guarantor LP including the relevant Interest Rate Swap Agreements, the relevant Covered Bond Swap Agreements and the Reserve Fund, 

 

    

 - 6 - 

    

 

 whether the Guarantor LP would receive an amount of income during the relevant Interest Period which when aggregated with the funds otherwise available to the Guarantor LP is less than the amount which is the aggregate of (1) the amount of interest which would be payable under the Covered Bond Guarantee and relevant amounts which would be payable to the Covered Bond Swap Providers under the Covered Bond Swap Agreements in respect of all Covered Bonds on each Guarantor LP Payment Date of each Series of Covered Bonds falling at the end of each relevant Interest Period and (2) the other senior expenses payable by the Guarantor LP ranking in priority thereto in accordance with the relevant Priority of Payments applicable prior to a Guarantor LP Event of Default (the “Guarantor LP Obligation Shortfall Test”). 

 

	
    

	
 (b) 

	
 If the Servicer determines that the Guarantor LP Obligation Shortfall Test will not be met, it will within one Business Day of such determination give written notice to the Guarantor LP and the Bond Trustee of the amount by which the Guarantor LP Obligation Shortfall Test will not be met and the Seller and the Guarantor LP shall use all reasonable efforts to ensure that the Guarantor LP Obligation Shortfall Test will be met for the Relevant Interest Period, including by the Seller making Advances under the Intercompany Loan, selling New Loans and their Related Security to the Guarantor LP, or making a Capital Contribution to the Guarantor LP. For greater certainty there shall be no obligation on the Servicer to adjust the Guarantor LP Variable Rate to ensure the Guarantor LP Obligation Shortfall Test will be met for the Relevant Interest Period. 

 

	
 4.4 

	
 (a) 

	
 Following an Issuer Event of Default, the Servicer shall determine on each Calculation Date, having regard to the aggregate of: 

 

	
    

	
 (i) 

	
 the Guarantor LP Variable Rate and the Seller’s Variable Rates set for the Relevant Interest Period in respect of the Loans; and 

 

	
    

	
 (ii) 

	
 the other resources available to the Guarantor LP under the relevant Interest Rate Swap Agreements, 

 

 whether the Guarantor LP would receive an aggregate amount of interest on the Loans and amounts under the relevant Interest Rate Swap Agreements during the relevant Guarantor LP Payment Period (the “Post Issuer Event of Default Yield Shortfall Test”). 

 

	
    

	
 (b) 

	
 If the Servicer determines that the Post Issuer Event of Default Yield Shortfall Test will not be met, it will within one Business Day of such determination give written notice to the Guarantor LP and the Bond Trustee of the amount of the shortfall and the Guarantor LP Variable Rate which would (taking into account the applicable Mortgage Terms), in the Servicer's reasonable opinion, need to be set in order for the Post Issuer Event of Default Yield Shortfall Test to be met, having regard to the date(s) (which shall be specified in the notice) on which such change to the Guarantor LP Variable Rate would take effect and at all times acting in accordance with the standards of a Reasonable and Prudent Mortgage Lender as regards the competing interests of Borrowers with Variable Rate Loans. 

 

    

 - 7 - 

    

 

	
    

	
 (c) 

	
 If the Guarantor LP or the Bond Trustee notify the Servicer that, having regard to the obligations of the Guarantor LP, the Guarantor LP Variable Rate should be changed as set out in the notice referred to in Section 4.4(b), the Servicer shall take all steps which are necessary, including publishing any notice which is required in accordance with the Mortgage Terms, to effect such change in the Guarantor LP Variable Rate on the date(s) specified in the notice referred to in Section 4.4(b). 

 

	
 4.5 

	
 The Guarantor LP and the Bond Trustee may terminate the authority of the Servicer to determine the Guarantor LP Variable Rate pursuant to the terms of this Article 4 on or after the occurrence of a Servicer Event of Default, in which case the Guarantor LP and the Bond Trustee shall set the Guarantor LP Variable Rate and/or any replacement Servicer appointed in accordance with the terms of this Agreement will have the right to set the Guarantor LP’s Variable Rate in accordance with this Article 4. 

 

 ARTICLE 5 –  

 ADMINISTRATION OF MORTGAGES 

 

	
 5.1 

	
 Direct Debiting Scheme 

 

	
    

	
 (a) 

	
 For the purposes of collecting amounts due from Borrowers under the Loans and their Related Security sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio, the Servicer in accordance with this Agreement will, unless otherwise agreed to in writing with the Guarantor LP, act or cause another Person approved in writing by the Guarantor LP (such approval not to be unreasonably withheld) to act as collection agent for the Guarantor LP under a scheme for either the manual or automated debiting of bank accounts (the “Direct Debiting System”) provided such Direct Debiting Scheme is operated in accordance with policies and procedures which would be acceptable to a Reasonable and Prudent Mortgage Lender. 

 

	
    

	
 (b) 

	
 If at any time the Servicer shall receive notice whether under the Direct Debiting Scheme or otherwise that any amount or part thereof which was paid in or collected under the Direct Debiting System and which has been transferred to the Cash Manager or the Guarantor LP Accounts, as the case may be, has not been received as cleared funds or has otherwise been recalled, the Servicer shall notify the Cash Manager and instruct the Cash Manager to, and the Cash Manager shall, forthwith return or debit the Guarantor LP Accounts and transfer to the Servicer or credit such account as the Servicer may direct in writing for the whole or any part of such amount and an amount equal to any costs which are not recoverable by the Servicer from the relevant Borrower and incurred by the Servicer as a result of such shortfall provided that no amount returned by the Cash Manager or debited from the Guarantor LP Accounts for the credit of the collection accounts in respect of any shortfall may be made on or after a Calculation Date in respect of the relevant period between that Calculation Date and the next Guarantor LP Payment Date unless sufficient funds are available after providing or making provision for all payments to be made on the next succeeding Guarantor LP Payment Date.  In the event any such amount is not repaid prior to the relevant Guarantor LP Payment Date, the Guarantor LP shall on or after such Guarantor LP Payment Date, transfer, or cause to be transferred on its behalf, from the Cash Manager or the Guarantor LP Accounts to the Servicer or such account as the Servicer may direct in writing an amount equal to such shortfall, subject to the Guarantor LP having sufficient funds available to it to do so or the Servicer shall deduct an amount equal to such shortfall from payments otherwise to the Guarantor LP (or the Cash Manager on its behalf) by the Borrowers in respect of Principal Receipts and Revenue Receipts received under the Loans. 

 

    

 - 8 - 

    

 

	
 5.2 

	
 Administration and Enforcement of Mortgages 

 

 The Servicer shall provide the Services and carry out its specific obligations under this Agreement in accordance with the relevant Seller's Policy. 

 

	
 5.3 

	
 Records 

 

 The Servicer shall keep and maintain records in relation to the Loans sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio, on a Loan by Loan basis, for the purposes of identifying amounts paid by each Borrower, any amount due from a Borrower and the principal balance (and, if different, the total balance) from time to time outstanding on a Borrower's account and such other records as would be kept by a Reasonable and Prudent Mortgage Lender.  The Servicer will provide such information to the Guarantor LP and/or the Bond Trustee or to their order at all reasonable times upon reasonable notice subject to the Servicer being reasonably capable of providing such information without significant additional cost and subject to the provisions of applicable law and other applicable legislation from time to time and provided that no duty of confidence and no industry code of practice will or may be breached thereby. 

 

	
 5.4 

	
 Trust 

 

 If the Servicer, solely in its capacity (including in its capacity as agent for the Guarantor LP) as Servicer hereunder, receives any Collections in respect of the Loans and their Related Security in the Covered Bond Portfolio following the Purchase Date in respect of such Loans and their Related Security, to which the Guarantor LP is entitled and which is to be paid to the Cash Manager or the Guarantor LP Accounts, as the case may be, it will hold such monies in trust for the Guarantor LP and shall keep such money distinguishable from all other monies held by the Servicer and shall, as soon as reasonably practicable and in any event within the time limits referred to in Section 5.1, transfer such monies to the Cash Manager prior to a downgrade in the ratings of the Cash Manager by the Rating Agencies below the Cash Management Deposit Ratings and following a downgrade of the ratings of the Cash Manager by the Rating Agencies below the Cash Management Deposit Ratings into the GIC Account. All other sums received by the Servicer in respect of the Loans sold by a Seller to the Guarantor LP and their Related Security shall be held by the Servicer for itself. 

 

    

 - 9 - 

    

 

 ARTICLE 6 –  

 NO LIABILITY 

 

	
 6.1 

	
 The Servicer, in its capacity as Servicer, shall have no liability for any obligation of a Borrower under any Loan comprised in the Covered Bond Portfolio or any Related Security and nothing herein shall constitute a guarantee, or similar obligation, by the Servicer, in such capacity, of any Loan, any Related Security or any Borrower. 

 

	
 6.2 

	
 Save as otherwise provided in this Agreement, the Servicer, in its capacity as Servicer, shall have no liability for the obligations of the Guarantor LP under any of the Transaction Documents or otherwise and nothing herein shall constitute a guarantee, or similar obligation, by the Servicer, in such capacity, of the Guarantor LP in respect of any of those obligations. 

 

 ARTICLE 7 –  

 NEW LOANS 

 

	
 7.1 

	
 The Covered Bond Portfolio may be augmented from time to time by the sale to the Guarantor LP on any Purchase Date of New Loans and their Related Security by the Seller (or another Person) in accordance with the Mortgage Sale Agreement, which sales will in all cases be subject to the terms set out in the Mortgage Sale Agreement. 

 

	
 7.2 

	
 In the event the Guarantor LP acquires New Loans from a Person other than the Seller, the Servicer shall not be under any obligation to service such New Loans under the terms of this Agreement. However, the Servicer may agree to service such New Loans, subject to such amendments to the terms hereof, including without limitation, with respect to fees and reimbursement for costs of providing the Services in respect of such New Loans, as the Servicer, the Guarantor LP, the Bond Trustee and the seller of such New Loans, may agree, in accordance with Section 22 hereof. 

 

 ARTICLE 8 –  

 PRODUCT SWITCHES AND FURTHER ADVANCES 

 

	
 8.1 

	
 The Seller hereby agrees with each of the parties hereto that (i) the Servicer shall be entitled to accept, in its sole discretion, any application for a Product Switch or Additional Loan Advance, and the Seller upon a direction from the Servicer shall (if the Seller is other than the Servicer) make any Further Advance, in respect of any Loan in the Covered Bond Portfolio sold by the Seller to the Guarantor LP; and (ii) if required by the Guarantor LP in writing, the Seller shall repurchase the relevant Loan and its Related Security from the Guarantor LP for its Fair Market Value as of the Calculation Date following the date on which the relevant Product Switch or Further Advance occurred, if the relevant Product Switch or Further Advance, as the case may be, results in paragraphs (c) to (e) of the Eligibility Criteria not being satisfied in respect of any such Loan on the next Calculation Date. 

 

	
 8.2 

	
 For greater certainty, any Further Advance in respect of any Loan in the Covered Bond Portfolio sold by the Seller to the Guarantor LP shall be funded by the Seller in accordance with the terms of the Intercompany Loan Agreement and the Guarantor LP Agreement and the Guarantor LP shall have no other obligation to make any Further Advance. 

 

	
 8.3 

	
 The Servicer shall notify the Seller (if other than the Servicer) and the Guarantor LP (or the Cash Manager on its behalf) following acceptance by the Servicer of any application for a Product Switch or Additional Loan Advance. 

 

    

 - 10 - 

    

 

	
 8.4 

	
 The Servicer shall act in accordance with the policies of procedures of the Seller relating to Product Switches, Additional Loan Advances and Further Advances in accepting applications from Borrowers for Product Switches and Additional Loan Advances and in permitting any Further Advance to Borrowers in respect of Loans in the Covered Bond Portfolio in accordance with Section 8.1. For greater certainty any such Additional Loan Advance or other Further Advance shall be funded by the Seller in accordance to Section 8.2. 

 

 ARTICLE 9 –  

 REDEMPTION OF MORTGAGES 

 

	
 9.1 

	
 Upon receipt of repayment in full of all sums due in relation to Loans in the Covered Bond Portfolio sold by the Seller to the Guarantor LP secured by a Mortgage and/or other Related Security comprised in the Covered Bond Portfolio, the Servicer shall, and is hereby authorized by the Seller and the Guarantor LP to, in the name of the Seller or the Guarantor LP, execute a receipt, discharge or other relevant document releasing the Mortgage at the applicable land registry office, land titles office or similar place of public record in which the related Mortgage is registered and any such other or further instrument or deed of satisfaction regarding such Mortgage and/or the Related Security as it considers to be necessary or advisable to release the relevant conveyancing deeds and documents, if any, which make up the title to such Property and the security for the Loan to the person or persons entitled thereto. The foregoing shall be in addition to any right of the Servicer under Article 10 to grant postponements and partial releases or discharges in respect of any Loan in the Covered Bond Portfolio sold by the Seller to the Guarantor LP. 

 

	
 9.2 

	
 The Servicer undertakes that prior to any actual release by it of the relevant documents as described in Section 9.1 above it will take such steps as would be taken by a Reasonable and Prudent Mortgage Lender to satisfy itself that such documents are being released to the person or persons entitled thereto. 

 

	
 9.3 

	
 Following any Enforcement Procedures taken by the Servicer as part of its performance of the Services hereunder, if upon completion of such Enforcement Procedures, an amount in excess of all sums due by the relevant Borrower to the Guarantor LP in respect of or related to the relevant Loan pursuant to the Mortgage Terms is recovered or received, the Servicer will cause the balance, after discharge of any sums due by the Borrower in respect thereof, to be paid to the person or persons next entitled thereto in accordance with the Mortgage Terms and applicable laws. 

 

 ARTICLE 10 –  

 POWERS OF ATTORNEY 

 

	
 10.1 

	
 For good and valuable consideration and as security for the interests of the Guarantor LP hereunder, each of the Guarantor LP and the Seller (solely in respect of Loans in the Covered Bond Portfolio sold by the Seller to the Guarantor LP) hereby appoint the Servicer as its attorney on its behalf, and in its own or the attorney's name, for the following purposes: 

 

    

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 (a) 

	
 executing all documents and doing all such acts and things which in the reasonable opinion of the Servicer are necessary or desirable for the efficient provision of the Services hereunder including without limitation in connection with exercising its rights, powers and discretion pursuant to Article 4 with respect to fixing the Guarantor LP Variable Rate; and 

 

	
    

	
 (b) 

	
 without limiting Section 10.1(a), executing and delivering any and all instruments of satisfaction, cancellation or Registrable Transfer, or of partial or full postponement, release or discharge, and all other comparable instruments, with respect to the Loans comprised in the Covered Bond Portfolio and their Related Security, to the extent permitted under and in compliance with applicable laws, to commence enforcement proceedings with respect to such Loans and their Related Security, to demand and receive payment of all monies owing in respect of such Loans and their Related Security, to give releases and discharges therefor, to arrange settlements and compromises in accordance with sound collection practices and to enforce any and all rights incidental to such Loans and their Related Security, including without limitation any documents to be executed by the Servicer in accordance with Article 9, 

 

 provided that, for the avoidance of doubt, this power of attorney shall not authorize the Servicer to sell any of the Loans in the Covered Bond Portfolio and/or their Related Security except as specifically authorized in the Transaction Documents.  For the avoidance of further doubt, neither the Seller (if other than the Bank or the Bank in its capacity as Seller) nor the Guarantor LP shall be liable or responsible for the acts of the Servicer or any failure by the Servicer to act under or in respect of this power of attorney. 

 

	
 10.2 

	
 The appointment contained in Section 10. shall be irrevocable unless and until the termination of the appointment of the Servicer pursuant to Section 17 of this Agreement following which the appointments contained in Section 10.1 shall be automatically revoked. 

 

 ARTICLE 11 – 

 COSTS AND EXPENSES 

 

	
 11.1 

	
 The Servicer hereby acknowledges that each Loan in the Covered Bond Portfolio and its Related Security sold by the Seller to the Guarantor LP is a serviced interest, and that, except as and to the extent expressly provided for herein or in the Mortgage Sale Agreement, the Guarantor LP shall not have any obligation or liability to the Servicer on account of costs, expenses, disbursements, charges, or fees of the Servicer, the sole responsibility in that connection being that of the Servicer. 

 

    

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 11.2 

	
 Notwithstanding Section 11.1, in the event the Servicer is replaced in accordance with the terms of this Agreement by a person other than the Bank or the Bank, in its capacity as servicer agrees to provide the Services in respect of Loans and their Related Security in the Covered Bond Portfolio sold to the Guarantor LP by a Seller other than the Bank, unless otherwise agreed by the parties hereto, the Guarantor LP will on each Guarantor LP Payment Date reimburse the Servicer, in accordance with the relevant Priorities of Payment, for all out-of-pocket costs, expenses, disbursements, charges and fees (together with any amounts in respect of GST due thereon) properly incurred by the Servicer in the performance of the Services including any such expenses, disbursements, charges or fees not reimbursed to the Servicer on any previous Guarantor LP Payment Date and the Servicer shall supply the Guarantor LP (or the Cash Manager on its behalf) with a copy of an appropriate GST invoice issued by the person making the supply. In the circumstances set forth in this Section 11.2, the Servicer will use reasonable endeavours in accordance with the standards of a Reasonable and Prudent Mortgage Lender to recover from the relevant Borrowers all costs and expenses incurred by the Servicer which are properly recoverable from those Borrowers under the relevant Mortgage Terms. 

 

 ARTICLE 12 –  

 INFORMATION 

 

	
 12.1 

	
 Maintenance of Records 

 

	
    

	
 (a) 

	
 Subject to Section 14, the Servicer shall keep the Loan and Related Security Files relating to the Loans and their Related Security sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio in safe custody and shall not without the prior written consent of the Guarantor LP part with possession, custody or control of them otherwise than to a sub-contractor or delegate appointed pursuant to Section 3.2 or to a solicitor, licensed conveyancer, qualified conveyancer or authorized practitioner, subject to such undertakings as would be acceptable to a Reasonable and Prudent Mortgage Lender in similar circumstances.  Further, the Servicer shall take appropriate technical and organizational measures against the unauthorized or unlawful processing of personal data and against accidental loss or destruction of, or damage to personal data. 

 

	
    

	
 (b) 

	
 The Loan and Related Security Files relating to the Loans and their Related Security sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio shall be kept in such manner so that a computer record is maintained of their location and they are identifiable and retrievable by reference to an account number and pool identifier and identifiable and distinguishable from the conveyancing deeds and documents which make up the title and security relating to properties and mortgages outside of the Covered Bond Portfolio for which the Servicer is mortgagee or acts as servicer. 

 

	
    

	
 (c) 

	
 In the event of the ratings of the Servicer by the Rating Agencies fall below the Servicer Replacement Ratings, the Servicer shall use reasonable endeavours to ensure that the Loan and Related Security Files relating to the Loans and their Related Security in the Covered Bond Portfolio are identified as distinct from the conveyancing deeds and documents which make up the title and security of other properties and mortgages which do not form part of the Covered Bond Portfolio. 

 

    

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 (d) 

	
 The Servicer shall provide access or ensure that access is provided to the Loan and Related Security Files and other records relating to the administration of the Loans and their Related Security in the Covered Bond Portfolio to the Guarantor LP and its agents upon reasonable notice (given the nature of the information and/or documentation requested) during normal office hours.  The Servicer acknowledges that the Loan and Related Security Files relating to the Loans and their Related Security sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio in its possession, custody or control will be held to the order of the Guarantor LP and, pursuant to the Security Agreement, the Bond Trustee and that it has, in its capacity as Servicer, no beneficial interest therein and the Servicer irrevocably waives any rights or any Security Interest which it might have therein or to which it might at any time be entitled. 

 

	
    

	
 (e) 

	
 The Servicer shall maintain a register of the Covered Bond Portfolio to include, amongst other things, such records as are necessary to enforce each Mortgage in the Covered Bond Portfolio and, where relevant, any other Related Security and the Servicer shall maintain duplicate computer records with respect to the Loans and their Related Security in the Covered Bond Portfolio at a location separate from that in which the original computer records are stored and in an environment conducive to the safe storage of electronic media, such records to be held to the order of the Guarantor LP and to be replaced by a revised duplicate as and when the original records are revised. 

 

	
    

	
 (f) 

	
 The Servicer shall keep the Guarantor LP informed of the location of the Loan and Related Security Files and duplicate computer records. 

 

	
    

	
 (g) 

	
 The Servicer shall, within a reasonable period following the termination of the appointment of the Servicer pursuant to Section 18 of this Agreement, deliver all Loan and Related Security Files relating to the Loans and their Related Security in the Covered Bond Portfolio to or to the order of the Guarantor LP and the Bond Trustee or to such person as the Guarantor LP and the Bond Trustee may elect as a substitute servicer in accordance with the terms of this Agreement, upon written request by the Guarantor LP made at any time on or after notice of, or on or after, termination of the appointment of the Servicer pursuant to Section 18 of this Agreement and shall prior to delivery thereof cooperate with such person in providing such information and documentation as may be necessary for such person to provide the Services with respect to the Loans and their Related Security in the Covered Bond Portfolio. 

 

	
 12.2 

	
 Use of I.T. Systems 

 

	
    

	
 (a) 

	
 The Servicer covenants that at the date hereof in respect of the software which is used by the Servicer in providing the Services, it shall for the duration of this Agreement: 

 

	
    

	
 (i) 

	
 ensure that it has in place all necessary licences and/or consents from the respective licensor or licensors (if any) of such software; and 

 

    

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 (ii) 

	
 except in so far as it would breach any other of its legal obligations, grant to any person to whom it may sub-contract or delegate the performance of all or any of its powers and obligations under this Agreement and/or to such person as the Guarantor LP elects as a substitute servicer in accordance with the terms of this Agreement a licence to use any proprietary software together with any updates which may be made thereto from time to time. 

 

	
    

	
 (b) 

	
 The Servicer shall maintain the information technology systems used by the Servicer in providing the Services in accordance with the standards of a Reasonable and Prudent Mortgage Lender. 

 

	
    

	
 (c) 

	
 The Servicer shall pass to any person to whom it may sub-contract or delegate the performance of all or any of its powers and obligations under this Agreement and/or to such person as the Guarantor LP elects as a substitute servicer in accordance with the terms of this Agreement the benefit of any warranties in relation to the software insofar as the same are capable of assignment. 

 

	
 12.3 

	
 Access to Books and Records 

 

 Subject to all applicable laws, the Servicer shall permit the Guarantor LP (and its auditors) and the Bond Trustee and any other person nominated by the Guarantor LP (to whom the Servicer has no reasonable objection) upon reasonable notice (given the nature of the information and/or documentation requested) during normal office hours to have access, or procure that such person or persons are granted access, to all books of record and account (including, for the avoidance of doubt, the Loan and Related Security Files) relating to the administration of the Loans and their Related Security sold by each Seller to the Guarantor LP comprised in the Covered Bond Portfolio and related matters in accordance with this Agreement. 

 

	
 12.4 

	
 Information Covenants 

 

	
    

	
 (a) 

	
 The Servicer shall assist the Cash Manager in the production of the Monthly Asset Coverage Reports. 

 

	
    

	
 (b) 

	
 The Servicer shall take reasonable steps to notify the Rating Agencies in writing of the details of any proposed material change in the valuation procedures or policies applied or to be applied in relation to Properties by it in connection with its mortgage business (details of which change may be included in a report provided under paragraph (a)) and, such other information relating to its mortgage business and financial condition as the Rating Agencies may reasonably request in connection with the ratings of any Covered Bonds then outstanding, provided that such request does not adversely interfere with the Servicer's day to day provision of the Services under the other terms of this Agreement.  For greater certainty, any failure by the Guarantor LP to deliver any such notice prior to making any such proposed change shall not limit the ability of the Servicer to proceed with any such change or constitute a breach of the obligations of the Servicer hereunder. 

 

    

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 (c) 

	
 The Servicer shall provide the Guarantor LP (or the Cash Manager on its behalf) monthly with a report stored upon electronic media including, but not limited to, a CD-ROM in a form acceptable to the Guarantor LP containing information regarding the Loans then comprised in the Covered Bond Portfolio including, but not limited to, details of the relevant account number, the relevant Borrower's name and the postal code of the relevant Property and the funding date of the relevant Mortgage. 

 

	
    

	
 (d) 

	
 The Servicer shall, subject to applicable laws and the Servicer Privacy Policies, at the request of the Guarantor LP and the Bond Trustee, furnish the Guarantor LP,  the Bond Trustee and the Rating Agencies with such other information relating to its business and financial condition as it may be reasonable for the Guarantor LP and the Bond Trustee (as appropriate) to request in connection with the ratings of any Covered Bonds issued under the Programme by the Rating Agencies and other matters contemplated by the Programme, provided that the Guarantor LP or the Bond Trustee (as appropriate) shall not make such a request more than once every three months unless, in the belief of the Guarantor LP or the Bond Trustee (as appropriate), a Guarantor LP Event of Default or a Servicer Termination Event shall have occurred and is continuing or may reasonably be expected to occur. 

 

 ARTICLE 13 –  

 INSURANCE 

 

	
 13.1 

	
 The Servicer shall (i) act in accordance with the Seller’s Policy to maintain the Guarantor LP as an additional insured under the policies of insurance, if any, carried by such Servicer in respect of third party liability, fire and all perils, and extended coverage claims applicable to or relating to the Loans and their Related Security and (ii) if applicable, act in accordance with the Seller’s Policy to settle all losses in the event of damage to or destruction by fire or other insured casualty of any Property. Any amounts received by the Servicer in respect of any such policy of insurance shall be held and dealt with by the Servicer in accordance with Section 5.4 of this Agreement. 

 

    

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 ARTICLE 14 –  

 DATA PROTECTION 

 

	
 14.1 

	
 Each of the parties hereto shall maintain privacy policies and procedures consistent with the terms of this Agreement and compliant with all Applicable Privacy Laws. In all cases and without limiting the foregoing, each such party shall comply with Applicable Privacy Laws in the performance of its obligations under this Agreement.  For greater certainty, and without limiting the foregoing, the Servicer shall have in place and maintain, policies (“Servicer Privacy Policies”) governing the collection, use, disclosure, management and security of Personal Information, including, without limitation, an outline of the procedure and reasonable measures that the Servicer has in place to maintain the security of such Personal Information. From time to time, but not more often than once per annum, the Guarantor LP may, by request in writing to Servicer, request that the Servicer provide and the Service shall, promptly following a receipt of such request, provide to the Guarantor LP a certificate of an officer of the Servicer certifying the Servicer's maintenance of, and compliance with, the Servicer Privacy Policies. 

 

 

 

 ARTICLE 15 –  

 COVENANTS OF SERVICER 

 

	
 15.1 

	
 The Servicer hereby covenants with and undertakes to each of the Guarantor LP and the Bond Trustee that without prejudice to any of its specific obligations hereunder it will: 

 

	
    

	
 (a) 

	
 administer the Loans and their Related Security as if the same had not been sold to the Guarantor LP but had remained on the books of the Seller and, in the event the Servicer agrees, subject to Article 7, to service New Loans and their Related Security sold by New Sellers to the Guarantor LP, New Loans as if such New Loans and their Related Security had been Loans and their Related Security of the Seller which had remained on the books of the Servicer; 

 

	
    

	
 (b) 

	
 provide the Services in such manner and with the same level of skill, care and diligence as would a Reasonable and Prudent Mortgage Lender; 

 

	
    

	
 (c) 

	
 comply with any proper directions, orders and instructions which the Guarantor LP may from time to time give to it in accordance with the provisions of this Agreement; 

 

	
    

	
 (d) 

	
 keep in force all licences, approvals, authorizations and consents which may be necessary in connection with the performance of the Services and prepare and submit on a timely basis all necessary applications and requests for any further approval, authorization, consent or licence required in connection with the performance of the Services; 

 

	
    

	
 (e) 

	
 save as otherwise agreed with the Guarantor LP, provide free of charge to the Guarantor LP, office space, facilities, equipment and staff sufficient to enable the Guarantor LP to fulfil its obligations under this Agreement; 

 

	
    

	
 (f) 

	
 not knowingly fail to comply with any legal requirements in the performance of the Services; 

 

    

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 (g) 

	
 make all payments required to be made by it pursuant to this Agreement on the due date for payment thereof in CAD in immediately available funds for value on such day without set-off (including, without limitation, in respect of any fees owed to it) or counterclaim; 

 

	
    

	
 (h) 

	
 forthwith and in any event prior to the next Guarantor LP Payment Date after becoming aware of any event which may reasonably give rise to an obligation of the Seller to repurchase any Loan sold to the Guarantor LP in the Covered Bond Portfolio pursuant to the Mortgage Sale Agreement, notify the Guarantor LP in writing of such event; and 

 

	
    

	
 (i) 

	
 within 60 days of the ratings of the Servicer by the Rating Agencies falling below the Servicer Replacement Ratings, use reasonable efforts to enter into a master servicing agreement with a third party in such form as the Guarantor LP and the Bond Trustee shall reasonably require; and 

 

	
    

	
 (j) 

	
 within 5 Business Days of notification from the Guarantor LP of the identity of any proposed New Seller, the Servicer shall provide the Rating Agencies with such details of that proposed New Seller as may be reasonably required by the Rating Agencies. 

 

	
 15.2 

	
 The covenants of the Servicer in Section 15.1 shall remain in force until this Agreement is terminated in respect of the relevant Servicer but without prejudice to any right or remedy of the Guarantor LP, the Bond Trustee and/or the Seller arising from breach of any such covenant prior to the date of termination of this Agreement. 

 

 ARTICLE 16 –  

 SERVICES NON-EXCLUSIVE 

 

	
 16.1 

	
 Nothing in this Agreement shall prevent the Servicer from rendering or performing services similar to those provided for in this Agreement to or for itself or other persons, firms or companies or from carrying on business similar to or in competition with the business of the Guarantor LP. 

 

 ARTICLE 17 –  

 TERMINATION 

 

	
 17.1 

	
 If any of the following events (each, a “Servicer Termination Event” and, in relation to the events referred to in Sections 17.1(a) to (c) , a “Servicer Event of Default”) shall occur: 

 

	
    

	
 (a) 

	
 default is made by the Servicer in the payment on the due date of any payment due and payable by it under this Agreement and such default continues unremedied for a period of five (5) Business Days after the earlier of the Servicer becoming aware of such default and receipt by the Servicer of written notice from  the Bond Trustee and the Guarantor LP requiring the same to be remedied; 

 

    

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 (b) 

	
 default is made by the Servicer in the performance or observance of any of its other covenants and obligations under this Agreement, which in the reasonable opinion of the Bond Trustee is materially prejudicial to the interests of the Covered Bondholders from time to time and such default continues unremedied for a period of 30 Toronto Business Days after the earlier of the Servicer becoming aware of such default and receipt by the Servicer of written notice from the Guarantor LP and the Bond Trustee requiring the same to be remedied; 

 

	
    

	
 (c) 

	
 the ratings of the Servicer by the Ratings Agencies falling below the Servicer Replacement Ratings and the Servicer not obtaining Rating Agency Confirmation in respect thereof by, for example, taking certain remedial measures which may include providing collateral for or arranging for its obligations under the Servicing Agreement to be guaranteed by an entity with rating(s) required by the relevant Rating Agencies, or taking such other action as it may agree with the relevant Rating Agencies; 

 

	
    

	
 (d) 

	
 the occurrence of an Insolvency Event in relation to the Servicer or any credit support provider in respect of the Servicer; or 

 

	
    

	
 (e) 

	
 the Guarantor LP resolves, after due consideration and acting reasonably, that the appointment of the Servicer should be terminated provided that a substitute servicer for which Rating Agency Confirmation has been received has entered into a servicing agreement with the parties hereto (excluding the Servicer) on terms and conditions substantially similar to the terms and conditions contained herein, and for which Rating Agency Confirmation has been received, 

 

 then the Guarantor LP and the Bond Trustee may at once or at any time thereafter while such default continues by notice in writing to the Servicer terminate its appointment as Servicer under this Agreement with effect from a date (not earlier than the date of the notice) specified in the notice.  Upon the termination of the Servicer as servicer under this Agreement, the Guarantor LP and the Bond Trustee shall use their reasonable endeavours to appoint a substitute servicer that satisfies the conditions set forth in Sections 17.2(c), (d), (e) and (f). 

 

	
 17.2 

	
 The appointment of the Servicer under this Agreement may be terminated by the Servicer upon the expiry of not less than 12 months' notice of termination given by the Servicer to the Bond Trustee and the Guarantor LP provided that: 

 

	
    

	
 (a) 

	
 the Guarantor LP and the Bond Trustee consent in writing to such termination; 

 

	
    

	
 (b) 

	
 a substitute servicer shall be appointed, such appointment to be effective not later than the date of such termination and the Servicer shall notify the Rating Agencies in writing of the identity of such substitute servicer; 

 

	
    

	
 (c) 

	
 such substitute servicer is qualified to act as such; 

 

	
    

	
 (d) 

	
 such substitute servicer has a management team with experience of administering mortgages of residential property in Canada and is approved by the Guarantor LP; 

 

    

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 (e) 

	
 such substitute servicer enters into an agreement substantially on the same terms as the relevant provisions of this Agreement, except as to fees, and the Servicer shall not be released from its obligations under the relevant provisions of this Agreement until such substitute servicer has entered into such new agreement; and 

 

	
    

	
 (f) 

	
 Rating Agency Confirmation has been received therefore, unless the termination is otherwise agreed by an Extraordinary Resolution of the holders of the Covered Bonds. 

 

	
 17.3 

	
 On and after termination of the appointment of the Servicer under this Agreement pursuant to this Article 18, all authority and power of the Servicer under this Agreement shall be terminated and be of no further effect and the Servicer shall not thereafter hold itself out in any way as the agent of the Guarantor LP pursuant to this Agreement. 

 

	
 17.4 

	
 Upon termination of the appointment of the Servicer under this Agreement pursuant to this Section 17, the Servicer shall: 

 

	
    

	
 (a) 

	
 deliver forthwith (if practicable, on the date of receipt by the Servicer), at the expense of the Servicer, any monies then held by the Servicer on behalf of the Guarantor LP and within a reasonable period deliver (and in each case in the meantime hold in trust for, and to the order of, the Guarantor LP and the Bond Trustee) to the Guarantor LP or as it shall direct the Loan and Related Security Files, all books of account, papers, records, registers, correspondence and documents in its possession or under its control relating to the affairs of or belonging to the Guarantor LP and the Loans and any Related Security in the Covered Bond Portfolio and any other assets of the Guarantor LP and prior to delivery thereof cooperate in providing such information and documentation as may be necessary to provide the Services with respect to the Loans and their Related Security in the Covered Bond Portfolio; 

 

	
    

	
 (b) 

	
 take such further action as the Guarantor LP and the Bond Trustee may reasonably direct at the expense of the Guarantor LP (including in relation to the appointment of a substitute servicer); 

 

	
    

	
 (c) 

	
 provide all relevant information contained on computer records in the form of magnetic tape, together with details of the layout of the files encoded on such magnetic tapes;  and 

 

	
    

	
 (d) 

	
 co-operate and consult with and assist the Guarantor LP, the Bond Trustee and their nominees (which shall, for the avoidance of doubt, include any new servicer appointed by any of them) for the purposes of explaining the file layouts and the format of the magnetic tapes generally containing such computer records on the computer system of the Guarantor LP or such nominee. 

 

	
 17.5 

	
 The Servicer shall deliver to the Guarantor LP and the Bond Trustee as soon as reasonably practicable but in any event within 5 Business Days of becoming aware thereof a notice of any Servicer Termination Event or any event which with the giving of notice or lapse of time or certification would constitute the same.  Such notification shall specify which event in Section 17 has occurred and was the cause of such Servicer Termination Event (or any event which with the giving of notice or lapse of time or certification would constitute a Servicer Termination Event), a description of such Servicer Termination Event, and, if relevant, a reference to the provision in this Agreement or the other Transaction Documents which the Servicer has breached. 

 

    

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 17.6 

	
 Termination of this Agreement or the appointment of the Servicer under this Agreement shall be without prejudice to the liabilities of the Guarantor LP to the Servicer or vice versa incurred before the date of such termination.  The Servicer shall have no right of set-off or any lien in respect of such amounts against amounts held by it on behalf of the Guarantor LP. 

 

	
 17.7 

	
 This Agreement shall terminate at such time as the Guarantor LP has no further interest in any of the Loans or the Mortgages or any other Related Security sold by each Seller to the Guarantor LP which have been comprised in the Covered Bond Portfolio. 

 

	
 17.8 

	
 On termination of the appointment of the Servicer under the provisions of this Section 17, the Servicer shall, if so entitled pursuant to the terms of Article 11, be entitled to receive all fees and other monies accrued up to the date of termination, if any, but shall not be entitled to any other or further compensation.  Such monies so receivable by the Servicer shall be paid by the Guarantor LP on the dates on which they would otherwise have fallen due hereunder.  For the avoidance of doubt, such termination shall not affect the Servicer’s rights to receive payment of all amounts (if any) due to it from the Guarantor LP other than under this Agreement. 

 

	
 17.9 

	
 Any provision of this Agreement which is stated to continue after termination of the Agreement shall remain in full force and effect notwithstanding termination. 

 

 ARTICLE 18 – 

 FURTHER ASSURANCE 

 

	
 18.1 

	
 The parties hereto agree that they will co-operate fully to do all such further acts and things and execute any further documents as may be necessary or desirable to give full effect to the arrangements contemplated by this Agreement. 

 

	
 18.2 

	
 Without prejudice to the generality of Section 18.1, the Guarantor LP shall upon request by the Servicer forthwith give to the Servicer such further powers of attorney or other written authorizations, mandates or instruments as are necessary to enable the Servicer to perform the Services. 

 

	
 18.3 

	
 Nothing herein contained shall impose any obligation or liability on the Guarantor LP to assume or perform any of the obligations of the Servicer hereunder or render it liable for any breach thereof. 

 

    

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 ARTICLE 19 –  

 MISCELLANEOUS 

 

	
 19.1 

	
 Subject to Article 11 and Section 19.2, in the event that the funds available to the Guarantor LP on any Guarantor LP Payment Date are not sufficient to satisfy in full the aggregate amount,  if any, payable to the Servicer by the Guarantor LP on such Guarantor LP Payment Date, then the amount, if any, payable to the Servicer on such Guarantor LP Payment Date shall be reduced by the amount of the shortfall and such shortfall shall (subject always to the provisions of this Section 19) be payable on the immediately succeeding Guarantor LP Payment Date. 

 

	
 19.2 

	
 In the event that: 

 

	
    

	
 (a) 

	
 after repayment in full of all amounts due under the Covered Bonds; or 

 

	
    

	
 (b) 

	
 after the service of a Guarantor LP Acceleration Notice and payment of all other prior claims, 

 

 the remaining sums available to the Guarantor LP or remaining proceeds of enforcement are insufficient to satisfy in full the outstanding fees or other claims of the Servicer, such fees shall be reduced by the amount of the deficiency. 

 

	
 19.3 

	
 Each of the Sellers and the Servicer agrees that it will not: 

 

	
    

	
 (a) 

	
 set off or purport to set off any amount which the Guarantor LP or the Bank is or will become obliged to pay to it under any of the Transaction Documents against any amount from time to time standing to the credit of or to be credited to an Guarantor LP Account or in any other account prior to transfer to an Guarantor LP Account; or 

 

	
    

	
 (b) 

	
 make or exercise any claims or demands, any rights of counterclaim or any other equities against or withhold payment of any and all sums of money which may at any time and from time to time be standing to the credit of a Guarantor LP Account. 

 

	
 19.4 

	
 Notwithstanding any other provisions of this Agreement, all obligations to, and rights of, the Guarantor LP under or in connection with this Agreement (other than its obligations under Section 20) shall automatically terminate upon the discharge in full of all amounts owing by it under the Intercompany Loan Agreement, provided that this shall be without prejudice to any claims in respect of such obligations and rights arising on or prior to such date. 

 

 ARTICLE 20 –  

 CONFIDENTIALITY 

 

	
 20.1 

	
 During the continuance of this Agreement or after its termination, the Guarantor LP shall use its best endeavours not to disclose to any person, firm or company whatsoever any information relating to the business, finances or other matters of a confidential nature of any other party hereto of which it may exclusively by virtue of being party to the Transaction Documents have become possessed and shall use all reasonable endeavours to prevent any such disclosure as aforesaid, provided however that the provisions of this Section 20 shall not apply: 

 

	
    

	
 (a) 

	
 to any information already known to the Guarantor LP otherwise than as a result of entering into any of the Transaction Documents; 

 

    

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 (b) 

	
 to any information subsequently received by the Guarantor LP which it would otherwise be free to disclose; 

 

	
    

	
 (c) 

	
 to any information which is or becomes public knowledge otherwise than as a result of the conduct of the Guarantor LP; 

 

	
    

	
 (d) 

	
 to any extent that the Guarantor LP is required to disclose the same pursuant to any Transaction Document or any law or order of any court or pursuant to any direction, request or requirement (whether or not having the force of law) of any central bank or any governmental or other authority (including, without limitation, any official bank examiners or regulators); 

 

	
    

	
 (e) 

	
 to the extent that the Guarantor LP needs to disclose the same for determining the existence of, or declaring, an Guarantor LP Event of Default or a Servicer Termination Event, the protection or enforcement of any of its rights under any of the Transaction Documents or in connection herewith or therewith or for the purpose of discharging, in such manner as it thinks fit, its duties under or in connection with such agreements in each case to such persons as require to be informed of such information for such purposes; or 

 

	
    

	
 (f) 

	
 in relation to any information disclosed to the professional advisers of the Guarantor LP or (in connection with any review of the current ratings of any Covered Bonds issued under the Programme or with a prospective rating of any debt to be issued by the Bank) to any credit rating agency or any prospective new servicer. 

 

 ARTICLE 21 –  

 NOTICES 

 

 Any notice, direction or other communication given under this Agreement shall be in writing and given by delivering it or sending it by prepaid first class mail to the registered office of such person set forth above unless an alternative address is provided below, in which case delivery shall be to the address provided below, or by facsimile transmission to facsimile number set forth below, as applicable: 

 

 (a)           in the case of the Bank as Servicer, Seller and Bank to: 

 

 Royal Bank of Canada 

 Royal Bank Plaza, South Tower 

 14th Floor, 200 Bay Street 

 Toronto, Ontario 

 Canada  M5J 2J5 

 Attention: Ann Milne, Senior Manager 

 Facsimile number: (416) 974-6056 

 

    

 - 23 - 

    

 

 (b)           in the case of the Guarantor LP to: 

 

 RBC Covered Bond Guarantor Limited Partnership 

 Royal Bank Plaza, South Tower 

 14th Floor, 200 Bay Street 

 Toronto, Ontario 

 Canada  M5J 2J5 

 Attention: Ann Milne, Senior Manager 

 Facsimile number: (416) 974-6056 

 

 (c)           in the case of the Bond Trustee to: 

 

 Computershare Trust Company of Canada 

 100 University Avenue 

 9th Floor, North Tower 

 Toronto, Ontario 

 Canada  M5J 2Y1 

 

 Attention: Manager, Corporate Trust 

 Facsimile number: (416) 981-9777 

 

 Any such communication will be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time) and otherwise on the next Business Day, (ii) in the case of first class post, when it would be received in the ordinary course of the post, or (ii) if transmitted by facsimile transmission on the Business Day following the date of transmission provided the transmitter receives a confirmation of successful transmission. Any party may change its address for notice, or facsimile contact information for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such party at its changed address, or facsimile contact information, as applicable. 

 

 ARTICLE 22 –  

 VARIATION AND WAIVER 

 

 No variation or waiver of this Agreement shall be effective unless it is in writing and signed by (or by some person duly authorized by) each of the parties hereto.  No single or partial exercise of, or failure or delay in exercising, any right under this Agreement shall constitute a waiver or preclude any other or further exercise of that or any other right. 

 

 ARTICLE 23 –  

 NO PARTNERSHIP 

 

 It is hereby acknowledged and agreed by the parties that nothing in this Agreement shall be construed as giving rise to any partnership between any of the parties. 

 

    

 - 24 - 

    

 

 ARTICLE 24 –  

 ASSIGNMENT 

 

	
 24.1 

	
 The Servicer may not assign or transfer any of its rights and obligations under this Agreement without the prior written consent of the Guarantor LP and Rating Agency Confirmation having been received in respect thereof.  For greater certainty, nothing in this Section 24.1 shall affect the rights of the Servicer under Section 3.2. 

 

	
 24.2 

	
 The Servicer acknowledges that the Guarantor LP has, pursuant to the Security Agreement, inter alia, assigned by way of security all its rights, title, interest and benefit, present and future, in and to, all sums from time to time standing to the credit of the Guarantor LP Accounts and all of its rights under this Agreement to the Bond Trustee (for itself and on behalf of the Secured Creditors). 

 

 ARTICLE 25 –  

 CHANGE OF BOND TRUSTEE 

 

	
 25.1 

	
 If there is any change in the identity of the Bond Trustee in accordance with the Trust Deed, the Servicer, each Seller and the Guarantor LP shall execute such documents and take such action as the successor Bond Trustee and the outgoing Bond Trustee may reasonably require for the purpose of vesting in the successor Bond Trustee the rights and obligations of the outgoing Bond Trustee under this Agreement and releasing the outgoing Bond Trustee from its future obligations under this Agreement. 

 

	
 25.2 

	
 It is hereby acknowledged and agreed that by its execution of this Agreement the Bond Trustee shall not assume or have any of the obligations or liabilities of the Servicer, each Seller or the Guarantor LP under this Agreement and that the Bond Trustee has agreed to become a party to this Agreement for the purpose only of taking the benefit of this Agreement and agreeing to amendments to this Agreement pursuant to Section 26.  For the avoidance of doubt, the parties to this Agreement acknowledge that the rights and obligations of the Bond Trustee are governed by the Trust Deed and Security Agreement.  Any liberty or right which may be exercised or determination which may be made under this Agreement by the Bond Trustee may be exercised or made in the Bond Trustee's absolute discretion without any obligation to give reasons therefore and the Bond Trustee shall not be responsible for any liability occasioned by so acting if acting pursuant to Section 18 of the Trust Deed without prejudice to its obligation to act reasonably where so required pursuant to the terms of the Transaction Documents. 

 

 ARTICLE 26 –  

 AMENDMENTS 

 

	
 26.1 

	
 Any amendments to this Agreement will be made only with the prior written consent of each party to this Agreement.  Each proposed amendment or waiver of this Agreement that is considered by the Guarantor LP to be a material amendment or waiver shall be subject to Rating Agency Confirmation and the Guarantor LP (or the Cash Manager on its behalf) shall deliver notice to the Rating Agencies of any amendment or waiver which does not require Rating Agency Confirmation provided that failure to deliver such notice shall not constitute a breach of the obligations of the Guarantor LP under this Agreement. 

 

    

 - 25 - 

    

 

 ARTICLE 27 – 

 NON-PETITION 

 

	
 27.1 

	
 The Seller, Servicer and Cash Manager agree that they shall not institute or join any other Person or entity in instituting against, or with respect to, the Guarantor LP, or any of the general partners of the Guarantor LP, any bankruptcy or insolvency event so long as any Covered Bonds issued by the Issuer under the Programme shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Covered Bonds shall have been outstanding.  The foregoing provision shall survive the termination of this Agreement by any of the parties hereto. 

 

 ARTICLE 28 –  

 COUNTERPARTS AND SEVERABILITY 

 

	
 28.1 

	
 This Agreement may be executed in any number of counterparts (manually or by facsimile) and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. 

 

	
 28.2 

	
 Where any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations under this Agreement, or of such provision or obligation in any other jurisdiction, shall not be affected or impaired thereby. 

 

 ARTICLE 29 –  

 GOVERNING LAW 

 

	
 29.1 

	
 This Agreement shall be governed by, and construed in accordance with, the law of the Province of Ontario (without giving effect to the conflict of laws principles thereof). 

 

	
 29.2 

	
 Any legal action or proceeding with respect to this agreement may be brought in the courts of the Province of Ontario and by execution and delivery of this Agreement, each of the Purchaser, tae Seller and the Seller consents, to the non-exclusive jurisdiction of those courts. Each of the Purchaser, the Seller and the Seller irrevocably waives, to the maximum extent permitted by law, any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement or any document related hereto. The Purchaser, the Seller and the Seller each waive personal service of any claim, notice of motion or application, summons, complaint or other process, which may be made by any other means permitted by Ontario law. 

 

 [The remainder of this page is intentionally left blank] 

 

    

 - 26 - 

    

 

 IN WITNESS WHEREOF the parties have caused this Agreement to be executed as a deed the day and year first before written. 

 

	    	    	
 ROYAL BANK OF CANADA 

	   	   	   
	    	    	
 Per: 

	    
	    	    	    	
 Name: 

	    	    	    	
 Title: 

 

	    	    	
 RBC COVERED BOND GUARANTOR  

 LIMITED PARTNERSHIP, acting by its  

 managing general partner RBC COVERED  

 BOND GP INC. 

	   	   	   
	    	    	
 Per: 

	    
	    	    	    	
 Name: 

	    	    	    	
 Title: 

 

	    	    	
 COMPUTERSHARE TRUST COMPANY  

 OF CANADA, as Bond Trustee 

	   	   	   
	    	    	
 Per: 

	    
	    	    	    	
 Name: 

	    	    	    	
 Title: 

	    	    	    	    
	    	    	
 Per: 

	    
	    	    	    	
 Name: 

	    	    	    	
 Title: 

 

    

    

    

 

 SCHEDULE 1 

 

 THE SERVICES 

 

 

 In addition to the Services set out in the body of this Agreement, the Servicer shall: 

 

	
 (a) 

	
 keep records and books of account on behalf of the Guarantor LP in relation to the Loans and their Related Security in the Covered Bond Portfolio; 

 

	
 (b) 

	
 keep any records necessary for all Taxation; 

 

	
 (c) 

	
 assist the auditors, if applicable, of the Guarantor LP and provide information to them upon reasonable request; 

 

	
 (d) 

	
 take all other action and do all other things which it would be reasonable to expect a Reasonable and Prudent Mortgage Lender to do in administering its loans and their related security; and 

 

	
 (e) 

	
 take such Enforcement Procedure in respect of the Loans and their Related Security as it would be reasonable to expect a Reasonable and Prudent Mortgage Lender to take in administering its Loans and their Related Security; and 

 

	
 (f) 

	
 act as collection agent for the Guarantor LP under the Direct Debiting Scheme in accordance with the provisions of this Agreement.ex4_7.htm

 Exhibit 4.7 

 

 AMENDED AND RESTATED INTERCOMPANY LOAN AGREEMENT 

 between 

 RBC COVERED BOND GUARANTOR LIMITED PARTNERSHIP 

 as the Guarantor LP 

 and 

 

 ROYAL BANK OF CANADA 

 as the Issuer and as Cash Manager 

 April 6, 2011 

 

    

    

    

 

 TABLE OF CONTENTS 

	 Section  	   	 Page 
	   	   	   
	
 1. 

	
 Interpretation 

	
 2 

	
 2. 

	
 The Intercompany Loan 

	
 2 

	
 3. 

	
 Purpose and Nature of Intercompany Loan 

	
 2 

	
 4. 

	
 Conditions Precedent 

	
 4 

	
 5. 

	
 Advance 

	
 4 

	
 6. 

	
 Interest 

	
 6 

	
 7. 

	
 Repayment 

	
 7 

	
 8. 

	
 Taxes 

	
 8 

	
 9. 

	
 Illegality 

	
 9 

	
 10. 

	
 Mitigation 

	
 9 

	
 11. 

	
 Payments 

	
 10 

	
 12. 

	
 Further Provisions 

	
 10 

	
 13. 

	
 Governing Law 

	
 13 

	    	    	    
	
 Schedule 

	    
	    	    	    
	
 1. 

	
 Advance Request 

	
 1 

	
 2. 

	
 Asset Coverage Test 

	
 2 

 

  

 

 

 

    

 - i - 

    

 

 AMENDED AND RESTATED 

 INTERCOMPANY LOAN AGREEMENT 

 THIS AMENDED AND RESTATED INTERCOMPANY LOAN AGREEMENT (this “Agreement”) is dated as of this 6th day of April, 2011. 

 

 BETWEEN: 

 

	
 (a) 

	
 RBC Covered Bond Guarantor Limited Partnership, a limited partnership existing under the law of the Province of Ontario, whose registered office is at Royal Bank Plaza, South Tower, 9th Tower, 200 Bay Street, Toronto, Ontario acting by its managing general partner RBC Covered Bond GP Inc. (referred to herein as the “Guarantor LP”); and 

 

	
 (b) 

	
 Royal Bank of Canada, a bank named in Schedule I to the Bank Act (Canada), whose executive office is at Royal Bank Plaza, South Tower, 8th Floor, 200 Bay Street, Toronto, Ontario, Canada M5J 2J5, as the Issuer (referred to herein as the “Issuer”) and as the Cash Manager (hereinafter referred to as the “Cash Manager”). 

 

 WHEREAS: 

 

	
 (A) 

	
 The parties hereto are parties to an Intercompany Loan Agreement, dated as of October 25, 2007 (the “Original Intercompany Loan Agreement”). 

 

	
 (B) 

	
 From time to time the Issuer has and will issue Covered Bonds pursuant to the Programme (as defined herein). 

 

	
 (C) 

	
 The Issuer has made available to the Guarantor LP, on an unsecured basis, an aggregate amount of Cdn $25,000,000,000 (the “Total Credit Commitment”), pursuant to the terms of the Original Intercompany Loan Agreement, for use by the Guarantor LP for other purposes permitted by the Original Intercompany Loan Agreement. 

 

	
 (D) 

	
 A portion of the Total Credit Commitment equal to the amount, if any, by which the Total Credit Commitment exceeds the amount of the Guarantee Loan (as defined herein) on the immediately preceding Calculation Date (such amount, from time to time, the “Revolving Commitment”, and referred to as part of the Total Credit Commitment, as the “Commitments”) has been made available by the Issuer on an unsecured revolving basis, to the Guarantor LP to be used by the Guarantor LP for the purposes permitted by the terms of the Original Intercompany Loan Agreement. 

 

	
 (E) 

	
 The parties hereto desire to amend and restate the Original Intercompany Loan Agreement on the terms set forth herein, and amending and restating such Original Intercompany Loan Agreement in accordance with the terms of Section 12.7 of the Original Intercompany Loan Agreement by entering into this Agreement, to align the term of this Agreement with the annual renewal of the Programme and set out, among other things, the agreement between the Issuer and the Guarantor LP in relation to the lending of amounts to the Guarantor LP for the purposes permitted by this Agreement, including the purchase of Loans and their Related Security. 

 

    

 - 1 - 

    

 

 IT IS AGREED as follows: 

 

	
 1. 

	
 INTERPRETATION 

 

	
    

	
 1.1 

	
 The amended and restated master definitions and construction agreement dated as of April 6, 2011 (the “Master Definitions and Construction Agreement”) between the parties to the Transaction Documents (as defined therein), as the same may be amended, varied or supplemented from time to time with the consent of the parties thereto, is expressly and specifically incorporated into this Agreement and, accordingly, the expressions defined in the Master Definitions and Construction Agreement (as so amended, varied or supplemented) shall, except where the context otherwise requires and save where otherwise defined herein, have the same meanings in this Agreement, including the recitals hereto and this Agreement shall be construed in accordance with the interpretation provisions set out in Section 2 of the Master  Definitions and Construction Agreement. 

 

	
    

	
 1.2 

	
 All Advances (as defined in the Original Intercompany Loan Agreement) and accrued and unpaid amounts (including interest and fees) owing by the Guarantor LP to the Issuer under the Original Intercompany Loan Agreement that have not been paid on or prior to the date of this Agreement shall continue as Advances (as defined below) and accrued and unpaid amounts hereunder as of the date of this Agreement and shall be payable on the dates such amounts would have been payable pursuant to the Original Intercompany Loan Agreement, and from and after the date of this Agreement, interest, fees and other amounts shall accrue as provided under this Agreement. 

 

	
    

	
 1.3 

	
 This Agreement shall amend and restate the Original Intercompany Loan Agreement in its entirety, with the parties hereby agreeing that on the date of this Agreement, the rights and obligations of the parties under the Original Intercompany Loan Agreement shall be subsumed and governed by this Agreement. 

 

	
    

	
 1.4 

	
 Following the date of this Agreement, the Intercompany Loan, Advances and Commitments under the Original Intercompany Loan Agreement shall no longer be in effect and thereafter only the Intercompany Loan, Advances and Commitments under this Agreement shall be outstanding until otherwise terminated in accordance with the terms hereof. 

 

	
 2. 

	
 THE INTERCOMPANY LOAN 

 

 Subject to the terms of this Agreement, the Issuer agrees to make available to the Guarantor LP an Intercompany Loan (the “Intercompany Loan”) in an aggregate amount equal to the Total Credit Commitment.  On any Business Day, the Guarantor LP may request that advances (each an “Advance” and collectively “Advances”) denominated in Canadian Dollars under the Intercompany Loan be made available to it, subject to the terms of this Agreement, on such Business Day (each such date, a “Drawdown Date”). 

 

	
 3. 

	
 PURPOSE AND NATURE OF INTERCOMPANY LOAN 

 

	
    

	
 3.1 

	
 Application of Advances by Guarantor LP 

 

 Each Advance may only be used by the Guarantor LP: 

 

	
    

	
 (a) 

	
 to purchase Loans and their Related Security from Seller in accordance with the terms of the Mortgage Sale Agreement; and/or 

 

    

 - 2 - 

    

 

	
    

	
 (b) 

	
 to invest in Substitute Assets (in an amount up to but not exceeding the limit prescribed in Section 9.8 of the Guarantor LP Agreement) and make investments in Authorized Investments; and/or 

 

	
    

	
 (c) 

	
 subject to written confirmation from the Guarantor LP that the Asset Coverage Test is met on the relevant Issue Date (both before and immediately following the making of the relevant Advance), to make a Capital Distribution to any Seller (in its capacity as Partner) by way of distribution of that Partner’s equity in the Guarantor LP in an amount equal to the Advance or any part thereof, which shall be paid to the Partner on the relevant next Payment Date by wire transfer or as otherwise directed by the Partner; and/or 

 

	
    

	
 (d) 

	
 to make a deposit of the proceeds in the GIC Account (including, without limitation, to fund the Reserve Fund to an amount not exceeding the limit prescribed in Section 6.1 of the Guarantor LP Agreement). 

 

	
    

	
 3.2 

	
 Guarantee Loan and Demand Loan 

 

 The aggregate principal amount of Advances outstanding at any time shall be recorded in the Intercompany Loan Ledger in accordance with Section 5.4 and deemed to be comprised of: 

 

	
    

	
 (a) 

	
 a guarantee loan (the “Guarantee Loan”) portion in an amount equal to: 

 

            (X/Y) * Z 

 

 where, 

 

 X = the Adjusted Aggregate Loan Amount (see Schedule 2 for reference) at such time, but where “A” in the calculation of such amount is equal to the aggregate True Balance of the Loans in the Covered Bond Portfolio for the purposes of determining X; 

 

 Y = the maximum Canadian Dollar Equivalent of aggregate Principal Amount Outstanding of Covered Bonds that could be issued by the Issuer without contravening the Asset Coverage Test at such time based on the assets of the Guarantor LP at such time; and 

 

 Z = the actual Canadian Dollar Equivalent of aggregate Principal Amount Outstanding of the Covered Bonds at such time, 

 

 and 

 

	
    

	
 (b) 

	
 a demand loan (the “Demand Loan”) portion in the amount, if any, by which the aggregate principal amount of the Advances outstanding at that time exceeds the amount of the Guarantee Loan at such time. 

 

	
    

	
 3.3 

	
 Revolving Intercompany Loan 

 

 Any amount under the Revolving Commitment repaid hereunder may be re-borrowed provided that (i) such re-borrowing is for the purposes set out in Section 3.1(b), (ii) each of the conditions set forth in Section 4 have been satisfied, (iii) such re-borrowing does not result in the Guarantor LP being unable to satisfy the Asset Coverage Test on a pro forma basis following such re-borrowing and the application of the proceeds thereof; and (iv) the aggregate outstanding amount of Advances after giving effect to such re-borrowing does not exceed the principal amount of the Covered Bond Portfolio unless the proceeds of such re-borrowing are being used to acquire Loans and their Related Security or to invest in Substitution Assets. 

 

    

 - 3 - 

    

 

	
    

	
 3.4 

	
 Maturity and Extension of Revolving Commitment 

 

 Unless otherwise agreed in writing between the Guarantor LP and the Issuer, the Revolving Commitment shall expire and terminate, and all Advances together with accrued and unpaid interest thereon shall become immediately payable on, the date that is 364 days after the date of this Agreement (or 364 days after the effective date of the most recent extension pursuant to this Section 3.4) unless (i) no more than 90 and no less than 60 days prior to such expiry and termination date, the Guarantor LP requests by notice in writing that the Issuer extend its Revolving Commitment for a further period of 364 days effective as of the date such commitment would otherwise expire and terminate, and (ii) no less than 30 days prior to such expiry and termination date, the Issuer has accepted such request by notice in writing to the Guarantor LP.  For certainty, Revolving Commitment may be extended pursuant to this Section 3.4 one or more times. 

 

	
    

	
 3.5 

	
 No obligation to monitor 

 

 Without prejudice to the obligations of the Guarantor LP under this Section 3, neither the Issuer nor the Bond Trustee nor any of the Secured Creditors shall be obliged to concern themselves as to the application of amounts drawn by the Guarantor LP under this Agreement. 

 

	
 4. 

	
 CONDITIONS PRECEDENT 

 

	
    

	
 4.1 

	
 Conditions Precedent for Advances 

 

 Save as the Issuer and the Guarantor LP may otherwise agree, each Advance will not be available unless on the date of the proposed Advance: 

 

	
    

	
 (a) 

	
 the Issuer shall have received a copy of a resolution duly passed by the board of directors of the managing partner of the Guarantor LP authorizing its execution, delivery and performance on behalf of Guarantor LP of this Agreement, such copy to be certified by an officer of such managing partner; and 

 

	
    

	
 (b) 

	
 such Advance does not result in the Guarantor LP being unable to satisfy the Asset Coverage Test on a pro forma basis following such Advance and the application of the proceeds thereof; and 

 

	
    

	
 (c) 

	
 the aggregate outstanding amount of Advances after giving effect to such Advance does not exceed the Total Credit Commitment; and 

 

	
    

	
 (d) 

	
 no Issuer Event of Default, Guarantor LP Event of Default or Demand Loan Repayment Event has occurred. 

 

	
 5. 

	
 ADVANCES 

 

    

 - 4 - 

    

 

	
    

	
 5.1 

	
 Giving of Advance Requests 

 

 Not later than 10:00 a.m. (Toronto Time) on each Drawdown Date (or such later time as may be agreed in writing between the Guarantor LP and the Issuer), the Guarantor LP shall give to the Issuer a duly completed request for Advance in writing (each an “Advance Request”) completed in the form attached hereto as Schedule 1 specifying whether such request is for an Advance under the Initial Advance Commitment (the “Initial Advance Commitment”) or an Advance under the Revolving Commitment (each such Advance, a “Revolving Advance”).  Each Advance Request is irrevocable and (subject to the terms of this Agreement) obliges the Guarantor LP to borrow the whole amount specified in the Advance Request on the relevant Drawdown Date upon the terms and subject to the conditions of this Agreement. 

 

	
    

	
 5.2 

	
 Advances 

 

 On receipt of an Advance Request from the Guarantor LP and if the conditions set out in Section 4 (Conditions Precedent) have been met, the Issuer shall make the Advances available to the Guarantor LP on the Drawdown Date. 

 

	
    

	
 5.3 

	
 Deemed Advances 

 

	
    

	
 (a) 

	
 If: 

 

	
    

	
 (i) 

	
 a Borrower takes a Payment Holiday in respect of a Loan in the Covered Bond Portfolio in accordance with the relevant Mortgage Conditions and each of the Deemed Advance Preconditions (as defined below) are satisfied at such time, the amount equal to the unpaid interest and principal associated with that Payment Holiday and any such payment shall be deemed to constitute a Revolving Advance; or 

 

	
    

	
 (ii) 

	
 there is any increase in the True Balance of a Loan due to the Seller making a Further Advance or Line of Credit Loan Drawing to a Borrower occurs, such increase shall be deemed to constitute a Revolving Advance if each of the Deemed Advance Preconditions set out below are satisfied at such time; or 

 

	
    

	
 (iii) 

	
 on any Calculation Date, there is an increase in the Outstanding Principal Balance of Loans in the immediately preceding Calculation Period (being the period between the last most recent Calculation Date and the current Calculation Date) due to Capitalized Interest and/or Capitalized Arrears accruing on a Loan shall be deemed to constitute a Revolving Advance if each of the Deemed Advance Preconditions set out below are satisfied at such time. 

 

	
    

	
 (b) 

	
 The preconditions to a Deemed Advance are the following (collectively the “Deemed Advance Preconditions”): 

 

	
    

	
 (iv) 

	
 the aggregate amount of all Revolving Advances outstanding at such time after giving effect to such Deemed Advance does not exceed the Revolving Commitment; and 

 

	
    

	
 (v) 

	
 such Deemed Advance does not result in the Guarantor LP being unable to satisfy the Asset Coverage Test on a pro forma basis following such deemed Advance; and 

 

	
    

	
 (vi) 

	
 the aggregate outstanding amount of Advances after giving effect to such deemed Advance does not exceed the Total Credit Commitment; and 

 

	
    

	
 (vii) 

	
 no Issuer Event of Default, Guarantor LP Event of Default or Demand Loan Repayment Event has occurred. 

 

    

 - 5 - 

    

 

	
    

	
 5.4 

	
 Intercompany Loan Ledger 

 

 The Cash Manager shall ensure that each Advance (including deemed Advances), each repayment, all payments of interest and repayments of principal of each Advance hereunder and the amount of the Guarantee Loan and Demand Loan at each Calculation Date are recorded in the Intercompany Loan Ledger at the appropriate time (which in the case of the amount of the Guarantee Loan and the Demand Loan at least two days prior to the Guarantor LP Payment Date following such Calculation Date). 

 

	
 6. 

	
 INTEREST 

 

	
    

	
 6.1 

	
 Interest Periods 

 

	
    

	
 (a) 

	
 Each loan interest period (each a “Loan Interest Period”) will correspond to each Calculation Period and each date on which interest is payable hereunder (each a “Loan Interest Payment Date”) will correspond to each Guarantor LP Payment Date, provided that the Loan Interest Period for any Advance made during a Calculation Period shall commence on the date of such Advance. 

 

	
    

	
 (b) 

	
 Whenever it is necessary to compute an amount of interest in respect of an Advance for any period (including any Loan Interest Period), such interest shall be calculated on the basis of actual days elapsed in a 365 day year. 

 

	
    

	
 (c) 

	
 Subject to the applicable Priority of Payments, interest payable in respect of an Advance shall be payable in respect of the preceding Loan Interest Period for such Advance on each Loan Interest Payment Date following the Drawdown Date of that Advance. 

 

	
    

	
 6.2 

	
 Interest Rate 

 

	
    

	
 (a) 

	
 Subject to the applicable Priority of Payment, the rate of interest payable in respect of each Advance for each Loan Interest Period in respect of that Advance shall be the rate per annum notified in writing by the Issuer to the Guarantor LP from time to time. 

 

	
    

	
 (b) 

	
 With respect to each Loan Interest Period, the Issuer shall, as soon as practicable following the relevant Loan Interest Period, determine and notify the Cash Manager, the Guarantor LP and the Bond Trustee of the Canadian Dollar amount (the “Intercompany Loan Interest Amount”), in each case, payable in respect of such Loan Interest Period.  The Intercompany Loan Interest Amount in respect of each Advance shall be determined by applying the applicable rate of interest (determined in accordance with sub-section (a)) to the outstanding principal balance of the relevant Advance, multiplying the result of that calculation by the actual number of days in the applicable Loan Interest Period divided by 365 days and rounding the resultant figure to the nearest penny (half a penny being rounded upwards) provided that the amount of interest hereunder payable in respect of any Loan Interest Period shall not exceed the amount received by the Guarantor LP pursuant to the Interest Rate Swap Agreement less the sum of (i) 2 basis points of the aggregate principal amount of the Advances then outstanding and (ii) an amount equal to the amount of the Guarantor LP Expenses for the corresponding Guarantor LP Calculation Period. 

 

    

 - 6 - 

    

 

	
    

	
 (c) 

	
 All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Section 6, shall (in the absence of wilful default, bad faith or proven error) be binding on the Guarantor LP and the Cash Manager and (in such absence as aforesaid) no liability to the Guarantor LP shall attach to the Cash Manager or the Issuer in connection with the exercise or non-exercise by them or any of them of their powers, duties and discretions hereunder. 

 

	
    

	
 (d) 

	
 Solely for the purposes of the Interest Act (Canada), whenever the amount of interest payable hereunder in respect of any Loan Interest Period is not the amount obtained by applying the applicable rate of interest to the outstanding principal balance of the relevant Advance and multiplying the result of that calculation by the actual number of days in the applicable Loan Interest Period divided by 365 days, the annual rate of interest payable hereunder in respect of such Loan Interest Period is equivalent to the product obtained when (i) the amount of interest payable hereunder in respect of such Loan Interest Period is divided by the sum of the daily average aggregate amount of Advances outstanding hereunder and the result of such division is multiplied by (ii) 365 divided by the number of calendar days in such Loan Interest Period. 

 

	
 7. 

	
 REPAYMENT 

 

	
    

	
 7.1 

	
 Repayment of Demand Loan on Demand 

 

 Subject to the applicable Priorities of Payment, the principal amount of the Demand Loan (or any portion thereof for which demand is made by the Issuer in accordance with this Section) shall be due and payable by the Guarantor LP no later than the first Business Day following the date that is 60 days after the demand is made therefor by the Issuer by notice in writing to the Guarantor LP unless on such Business Day: 

 

	
    

	
 (a) 

	
 a Demand Loan Repayment Event has occurred and is continuing (in which case payment shall be made in accordance with Section 7.2); or 

 

	
    

	
 (b) 

	
 the Asset Coverage Test, as calculated by the Cash Manager, will not be satisfied after giving effect to such repayment; in which case only the amount, it any, which could be repaid while remaining in compliance with the Asset Coverage Test shall be due and payable on such Business Day; or 

 

	
    

	
 (c) 

	
 an Asset Coverage Test Breach Notice has been given on or prior to such Business Day and has not been revoked. 

 

	
    

	
 7.2 

	
 Mandatory Repayment Upon Demand Loan Repayment Event 

 

	
    

	
 (a) 

	
 Subject to Section (b) below, the Guarantor LP shall repay the amount, if any, by which the Demand Loan exceeds the Demand Loan Contingent Amount on the first Guarantor LP Payment Date following 60 days after the earlier of the date on which: 

 

    

 - 7 - 

    

 

	
    

	
 (i) 

	
 the Issuer is required to assign the Interest Rate Swap Agreement to a third party (or while Fitch is a Rating Agency, the Issuer fails to meet the ratings (being F2/BBB+) set out in Section 5(k)(ii)(3) of the ISDA Schedule to the Interest Rate Swap Agreement Master Agreement); and 

 

	
    

	
 (ii) 

	
 an Issuer Event of Default has occurred, notice of an Issuer Acceleration Notice has been given to the Issuer and notice of a Notice to Pay has been given to the Guarantor LP 

 

 (each of (i) and (ii) above a “Demand Loan Repayment Event”). 

 

	
    

	
 (b) 

	
 Following a Demand Loan Repayment Event, the Guarantor LP shall repay the full amount of the then outstanding Demand Loan on the date on which the Asset Percentage is next calculated (whether or not such calculation is a scheduled calculation or a calculation made at the request of the Issuer) provided that the Asset Coverage Test, as calculated by the Cash Manager, is met on the date of repayment after giving effect to such repayment. 

 

	
    

	
 7.3 

	
 Payments under Guarantee discharge obligations of Guarantor LP under this Agreement 

 

 To the extent that the Guarantor LP makes, or there is made on its behalf, a payment under the Covered Bond Guarantee, the Issuer will on such payment being made become indebted to the Guarantor LP for an amount equal to such payment. Any amounts owing by the Issuer to the Guarantor LP in respect of amounts paid by the Guarantor LP under the Covered Bond Guarantee shall be setoff automatically (and without any action being required by the Guarantor LP, the Issuer or the Bond Trustee) against any amounts repayable by the Guarantor LP under the terms of the Intercompany Loan Agreement.  The amount setoff shall be the Canadian Dollar Equivalent of the relevant payment made by the Guarantor LP under the Covered Bond Guarantee, which amount shall be applied to reduce amounts repayable under the Intercompany Loan in the following order of priority: 

 

	
    

	
 (a) 

	
 first, to reduce and discharge any amounts due and payable by the Guarantor LP to the Issuer under this Agreement other than interest and principal; 

 

	
    

	
 (b) 

	
 second, to reduce and discharge interest (including accrued interest) due and unpaid on the outstanding principal balance of the Advances; and 

 

	
    

	
 (c) 

	
 third, to reduce and discharge the outstanding principal balance of the Advances. 

 

	
    

	
 7.4 

	
 Repayment of Guaranteed Loan 

 

 The Guaranteed Loan shall be repaid in accordance with the applicable Priority of Payments and is subordinated to the Demand Loan in accordance with such Priority of Payments. 

 

	
 8. 

	
 TAXES 

 

	
    

	
 8.1 

	
 No gross up 

 

 All payments by the Guarantor LP under this Agreement shall be made without any deduction or withholding for or on account of and free and clear of, any Taxes, except to the extent that the Guarantor LP is required by law to make payment subject to any Taxes. 

 

    

 - 8 - 

    

 

	
    

	
 8.2 

	
 Not a Non-Resident 

 

 The Guarantor LP represents and warrants to the Issuer that it is, and covenants that it will at all times remain, a person that is not a non-resident of Canada for the purposes of the Income Tax Act (Canada). 

 

	
    

	
 8.3 

	
 Tax receipts 

 

 All Taxes required by law to be deducted or withheld by the Guarantor LP from any amounts paid or payable under this Agreement shall be paid by the Guarantor LP when due and the Guarantor LP shall, within 90 days of the payment being made, deliver to the Issuer evidence satisfactory to the Issuer (including all relevant Tax receipts) that the payment has been duly remitted to the appropriate authority. 

 

	
 9. 

	
 ILLEGALITY 

 

 If, at any time, it is unlawful for the Issuer to make, fund or allow to remain outstanding an Advance made or to be made by it under this Agreement, then the Issuer shall, promptly after becoming aware of the same, deliver to the Guarantor LP, the Bond Trustee and the Rating Agencies a legal opinion to that effect from reputable counsel and  the Issuer may require the Guarantor LP to prepay, on any Guarantor LP Payment Date, having given not more than 60 days’ and not less than 30 days’ notice (or such shorter period as may be required by any relevant law) prior written notice to the Guarantor LP and the Bond Trustee, and while the relevant circumstances continue, the applicable Advance(s) without penalty or premium but subject to Article 5 (Exercise of Certain Rights) of the Security Agreement and Section 10 (Mitigation) of this Agreement. 

 

	
 10. 

	
 MITIGATION 

 

 If circumstances arise in respect of the Issuer which would, or would upon the giving of notice, result in the prepayment of the Advances pursuant to Section 9 (Illegality), then, without in any way limiting, reducing or otherwise qualifying the obligations of the Guarantor LP under this Agreement, the Issuer shall: 

 

	
    

	
 (a) 

	
 promptly upon becoming aware of the circumstances, notify the Bond Trustee, the Guarantor LP and the Rating Agencies; and 

 

	
    

	
 (b) 

	
 upon written request from the Guarantor LP, take such steps as may be practical to mitigate the effects of those circumstances including (without limitation) the assignment of all its rights under this Agreement to, and assumption of all its obligations under this Agreement by, another company satisfactory to the Bond Trustee, which is willing to participate in the relevant Advances in its place and which is not subject to any illegality as referred to in Section 9 (Illegality), 

 

 provided that no such transfer or assignment and transfer may be permitted unless the Rating Agency Confirmation has been received in respect of such transfer or assignment as a result and the Guarantor LP indemnifies (subject to Article 5 of the Security Agreement) the Issuer for any reasonable costs and expenses properly incurred by them as a result of such transfer or assignment. 

 

    

 - 9 - 

    

 

	
 11. 

	
 PAYMENTS 

 

	
    

	
 11.1 

	
 Payment 

 

 Subject to the applicable Priorities of Payment all amounts to be paid to the Issuer under this Agreement shall be paid in Canadian Dollars for value by the Guarantor LP to such account as is notified to the Guarantor LP by the Issuer for this purpose by not less than 5 Business Days prior notice on each Guarantor LP Payment Date. 

 

	
    

	
 11.2 

	
 Alternative payment arrangements 

 

 If, at any time, it shall become impracticable (by reason of any action of any governmental authority or any change in law, exchange control regulations or any similar event) for the Guarantor LP to make any payments under this Agreement in the manner specified in Section 12.1 (Payment), then the Guarantor LP shall make such alternative arrangements for the payment direct to the Issuer of amounts due under this Agreement as are acceptable to the Issuer and the Bond Trustee (acting reasonably). 

 

	
 12. 

	
 FURTHER PROVISIONS 

 

	
    

	
 12.1 

	
 No set-off by the Issuer 

 

 The Issuer agrees that it will advance the Advances to the Guarantor LP (subject to the terms of this Agreement, including without limitation, Sections 4 and 5) without set-off (including, without limitation, in respect of any amounts owed to it under any other Advance or in its capacity as a Partner in the Guarantor LP or in any other capacity under any of the Transaction Documents to which it is a party) or counterclaim. 

 

	
    

	
 12.2 

	
 Evidence of indebtedness 

 

 In any proceeding, action or claim relating to this Agreement a statement as to any amount due to the Issuer under this Agreement shall, unless otherwise provided in this Agreement, be prima facie evidence that such amount is in fact due and payable. 

 

	
    

	
 12.3 

	
 Rights cumulative, waivers 

 

 The respective rights of the Guarantor LP and the Issuer under this Agreement: 

 

	
    

	
 (a) 

	
 may be exercised as often as necessary; 

 

	
    

	
 (b) 

	
 are cumulative and not exclusive of its rights under the general law; and 

 

	
    

	
 (c) 

	
 may be waived only in writing and specifically. 

 

 Delay in exercising or non-exercise of any such right is not a waiver of that right. 

 

	
    

	
 12.4 

	
 Severability 

 

 The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not in any way affect or impair: 

 

    

 - 10 - 

    

 

	
    

	
 (a) 

	
 the validity or enforceability in that jurisdiction of any other provision of this Agreement; or 

 

	
    

	
 (b) 

	
 the validity or enforceability in other jurisdictions of that or any other provision of this Agreement. 

 

	
    

	
 12.5 

	
 Notices 

 

	
    

	
 (a) 

	
 Any notice, direction or other communication given under this Agreement shall be in writing and given by delivering it or sending it by prepaid first class mail to the registered office of such person set forth above unless an alternative address is provided below, in which case delivery shall be to the address provided below, or by facsimile transmission to facsimile number set forth below, as applicable: 

 

 (i)            in the case of the Guarantor LP, to: 

 

 RBC Covered Bond Guarantor Limited Partnership 

 155 Wellington Street West, 14th Floor 

 Toronto, Ontario 

 Canada M5V 3K7 

 Attention: Ann Milne, Senior Manager 

 Facsimile number: (416) 976-6056 

 

 (ii)           in the case of the Issuer or the Cash Manager, to: 

 

 Royal Bank of Canada 

 RBC Centre 

 14th Floor 

 155 Wellington Street West 

 Toronto, Ontario 

 Canada M5V 3K7 

 Attention: Daniel Little, Senior Manager 

 Facsimile number: (416) 974-1368; 

	
    

	
 (b) 

	
 Any such communication will be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time) and otherwise on the next Business Day, (ii) in the case of first class post, when it would be received in the ordinary course of the post, or (ii) if transmitted by facsimile transmission on the Business Day following the date of transmission provided the transmitter receives a confirmation of successful transmission. 

 

	
    

	
 (c) 

	
 Any party may change its address for notice, or facsimile contact information for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such party at its changed address, or facsimile contact information, as applicable. 

 

    

 - 11 - 

    

 

	
    

	
 12.6 

	
 Assignment 

 

 None of the Issuer, the Guarantor LP nor the Cash Manager may assign or transfer any of its rights or obligations under this Agreement, except as provided for in the Transaction Documents, including the pledge of rights under the Security Agreement by the Guarantor LP, and unless the Guarantor LP has obtained Rating Agency Confirmation for any such assignment. 

 

	
    

	
 12.7 

	
 Amendments and Variation 

 

 Subject to the terms of Section 7.3 of the Security Agreement, any amendments to this Agreement will be made only with the prior written consent of each party to this Agreement provided, for certainty, no such consent shall be required in connection with the amendment or other change to the rate of interest on Advances payable hereunder.  No waiver of this Agreement shall be effective unless it is in writing and signed by (or by some person duly authorised by) each of the parties. Each proposed amendment or waiver of this Agreement that is considered by the Guarantor LP to be a material amendment or waiver shall be subject to Rating Agency Confirmation and the Guarantor LP (or the Cash Manager on its behalf) shall deliver notice to the Rating Agencies of any amendment or waiver which does not require Rating Agency Confirmation provided that failure to deliver such notice shall not constitute a breach of the obligations of the Guarantor LP under this Agreement.  No single or partial exercise of, or failure or delay in exercising, any right under this Agreement shall constitute a waiver or preclude any other or further exercise of that or any other right. 

 

	
    

	
 12.8 

	
 Non-Petition 

 

 The Issuer and Cash Manager agree that they shall not institute or join any other Person or entity in instituting against, or with respect to, the Guarantor LP, or any of the general partners of the Guarantor LP, any bankruptcy or insolvency event so long as any Covered Bonds issued by the Issuer under the Programme shall be outstanding or there shall not have elapsed one year plus one day since the last day on which any such Covered Bonds shall have been outstanding.  The foregoing provision shall survive the termination of this Agreement by any of the parties hereto. 

 

	
    

	
 12.9 

	
 Counterparts 

 

 This Agreement may be signed (manually or by facsimile) and delivered in more than one counterpart all of which, taken together, shall constitute one and the same Agreement. 

 

	
    

	
 12.10 

	
 Third Party Rights 

 

 This Agreement does not create any right which is enforceable by any person who is not a party to this Agreement. 

 

	
    

	
 12.11 

	
 Limitation of Liability 

 

 The Guarantor LP is a limited partnership formed under the Limited Partnerships Act (Ontario), a limited partner of which is, except as expressly required by law, only liable for any of its liabilities or any of its losses to the extent of the amount that the limited partner has contributed or agreed to contribute to its capital. 

 

    

 - 12 - 

    

 

	
 13. 

	
 GOVERNING LAW 

 

 This Agreement is governed by and shall be construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. 

 

 

 [The remainder of this page intentionally left blank.] 

 

 

 

 

 

 

    

 - 13 - 

    

 

 IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed on the day and year appearing on Page 1. 

	    	
 RBC COVERED BOND GUARANTOR  

 LIMITED PARTNERSHIP, acting by its  

 managing general partner RBC COVERED  

 BOND GP INC. 

	   	   
	    	    	
 Per: 

	    
	    	    	    	
 Name: David Power 

	    	    	    	
 Title: President 

 

	    	
 ROYAL BANK OF CANADA 

	   	   
	    	    	
 Per: 

	    
	    	    	    	
 Name: James Salem 

	    	    	    	
 Title: Senior Vice-President and Treasurer 

	    	    	    	    
	    	    	
 Per: 

	    
	    	    	    	
 Name: David Power 

	    	    	    	
 Title: Vice-President, Corporate Treasury 

    

 - 14 - 

    

 

 SCHEDULE 1 

 

 ADVANCE REQUEST 

 

 From:       RBC Covered Bond Guarantor Limited Partnership (“Guarantor LP”) 

 

 To:           Royal Bank of Canada (the “Issuer”) 

 

 Date:        [    ] 

 

 Dear Sirs, 

 

 We refer to the amended and restated intercompany loan agreement between ourselves and you (as from time to time amended, varied, novated or supplemented (the “Intercompany Loan Agreement”)) originally entered into on October 25, 2007 and amended and restated as of April 6, 2011 whereby an Intercompany Loan was made available to us.  Terms defined in the Intercompany Loan Agreement shall have the same meaning in this Advance Request. 

 

 We hereby give you notice that, pursuant to the Intercompany Loan Agreement and upon the terms and subject to the conditions contained therein, we wish the following Advance to be made available to us as follows: 

 

	
 (a) 

	
 [List Advances specifying type.] 

 

	
 (b) 

	
 Aggregate Amount: [  ]. 

 

	
 (c) 

	
 Drawdown Date: [   ]. 

 

 We confirm that as of the date hereof: 

 

	
    

	
 (i) 

	
 the undersigned has delivered a copy of a resolution duly passed by the board of directors of the managing general partner of the Guarantor LP authorizing its execution, delivery and performance on behalf of Guarantor LP of the Intercompany Loan Agreement certified by an officer of the managing general partner; 

 

	
    

	
 (ii) 

	
 the aggregate principal amount of the Advance requested herein will not result in the Guarantor LP being unable to satisfy the Asset Coverage Test on a pro forma basis following such Advance and the application of the proceeds thereof; 

 

	
    

	
 (iii) 

	
 the aggregate outstanding amount of Advances after giving effect to the Advance requested herein does not exceed the Total Credit Commitment; and 

 

	
    

	
 (iv) 

	
 no Issuer Event of Default, Guarantor LP Event of Default or Demand Loan Repayment Event has occurred. 

 

 The net proceeds of this drawdown should be credited to our account numbered [            ] with the [        ]. 

 

 Yours faithfully, 

	    	
 RBC Covered Bond Guarantor Limited  

 Partnership, acting by its general partner  

 RBC COVERED BOND GP INC. 

 

	    	    	
 Per: 

	    
	    	    	    	
 Name: 

	    	    	    	
 Title: 

    

    

    

 

 SCHEDULE 2 

 Asset Coverage Test 

 (included for reference only) 

 N.B. The parties to this Intercompany Loan Agreement agree this Schedule 2 is included for reference only. To the extent of any inconsistency between this Schedule 2 and the Asset Coverage Test as set out in Schedule 2 to the Guarantor LP Agreement, the terms of Schedule 2 to the Guarantor LP Agreement shall govern. For defined terms used and not otherwise defined herein see the Master Definition and Construction Agreement. 

	
 (a) 

	
 The “Asset Coverage Test” is met if the Adjusted Aggregate Loan Amount (as defined below) shall be in an amount at least equal to the Canadian Dollar Equivalent of the aggregate Principal Amount Outstanding of the Covered Bonds as calculated on the relevant Calculation Date. For greater certainty, references in this Schedule to “immediately preceding Calculation Date” and “previous Calculation Date” are to the Calculation Period ending on the Calculation Date. 

 

	
 (b) 

	
 For the purposes of the Asset Coverage Test the “Adjusted Aggregate Loan Amount” means the amount calculated as at each Calculation Date as follows: 

 

 A+B+C+D-Z 

 

 where, 

 

 A          =         the lower of (i) and (ii), where: 

 

 (i)         =           the sum of the “LTV Adjusted True Balance” of each Loan in the Covered Bond Portfolio, which shall be the lower of (1) the actual True Balance of the relevant Loan in the Covered Bond Portfolio on such Calculation Date, and (2) the Latest Valuation relating to that Loan multiplied by M (where for all Loans that are less than three months in arrears or not in arrears, M = 80% (or such higher percentage as may be agreed by the Rating Agencies with respect to insured Loans) and for all Non-Performing Loans M = 0), 

 

 minus 

 

 the aggregate sum of the following deemed reductions to the aggregate LTV Adjusted True Balance of the Loans in the Covered Bond Portfolio if any of the following occurred during the previous Calculation Period: 

 

 (1)           a Loan or its Related Security was, in the immediately preceding Calculation Period, in breach of the Representations and Warranties contained in the Mortgage Sale Agreement or subject to any other obligation of the Seller to repurchase the relevant Loan and its Related Security, and in each case the Seller has not repurchased the Loan or Loans of the relevant Borrower and its or their Related Security to the extent required by the terms of the Mortgage Sale Agreement. In this event, the aggregate LTV Adjusted True Balance of the Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the LTV Adjusted True Balance of the relevant Loan or Loans on such Calculation Date of the relevant Borrower; and/or 

 

 - 2 - 

    

    

 

 (2)           the Seller, in any preceding Calculation Period, was in breach of any other material warranty under the Mortgage Sale Agreement and/or the Servicer was, in any preceding Calculation Period, in breach of a material term of the Servicing Agreement. In this event, the aggregate LTV Adjusted True Balance of the Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the resulting financial loss incurred by the Guarantor LP in the immediately preceding Calculation Period (such financial loss to be calculated by the Cash Manager without double counting and to be reduced by any amount paid (in cash or in kind) to the Guarantor LP by the Seller to indemnify the Partnerhsip for such financial loss); 

 

 AND 

 

 (ii)        =           the aggregate “Asset Percentage Adjusted True Balance” of the Loans in the Covered Bond Portfolio which in relation to each Loan shall be the lower of (1) the actual True Balance of the relevant Loan as calculated on such Calculation Date, and (2) the Latest Valuation relating to that Loan multiplied by N (where for all Loans that are less than three months in arrears or not in arrears, N = 1 and for all Non-Performing Loans N = 0); 

 

 minus 

 

 the aggregate sum of the following deemed reductions to the aggregate Asset Percentage Adjusted True Balance of the Loans in the Covered Bond Portfolio if any of the following occurred during the previous Calculation Period: 

 

 (1)           a Loan or its Related Security was, in the immediately preceding Calculation Period, in breach of the Representations and Warranties contained in the Mortgage Sale Agreement or subject to any other obligation of the Seller to repurchase the relevant Loan and its Related Security, and in each case the Seller has not repurchased the Loan or Loans of the relevant Borrower and its or their Related Security to the extent required by the terms of the Mortgage Sale Agreement. In this event, the aggregate Asset Percentage Adjusted True Balance of the Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the Asset Percentage Adjusted True Balance of the relevant Loan or Loans on such Calculation Date of the relevant Borrower; and/or 

 

 (2)           the Seller, in any preceding Calculation Period, was in breach of any other material warranty under the Mortgage Sale Agreement and/or the Servicer was, in the immediately preceding Calculation Period, in breach of a material term of the Servicing Agreement. In this event, the aggregate Asset Percentage Adjusted True Balance of the Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the resulting financial loss incurred by the Guarantor LP in the immediately preceding Calculation Period (such financial loss to be calculated by the Cash Manager without double counting and to be reduced by any amount paid (in cash or in kind) to the Guarantor LP by the Seller to indemnify the Guarantor LP for such financial loss), 

 

 the result of the calculation in this paragraph (ii) being multiplied by the Asset Percentage (as defined below); 

 

 AND 

 

 (iii) With respect to any such calculations, any Loan included in the Covered Bond Portfolio secured on a Property which also secures one or more other Loans included in the Covered Bond Portfolio, any breach of the Loan Representations and Warranties in respect of one such Loan will be deemed to be a breach in respect of all such Loans in the Covered Bond Portfolio secured on the same Property; 

 

 B          =           the aggregate amount of any Principal Receipts on the Loans in the Covered Bond Portfolio up to such Calculation Date (as recorded in the Principal Ledger) which have not been applied as at such Calculation Date to acquire further Loans and their Related Security or otherwise applied in accordance with the Article 6 (Priorities of Payments) and/or the other Transaction Documents; 

 

 C          =           the aggregate amount of any Cash Capital Contributions made by the Partners (as recorded in the Capital Account Ledger for each Partner of the Guarantor LP) or proceeds advanced under the Intercompany Loan Agreement which have not been applied as at such Calculation Date to acquire further Loans and their Related Security or otherwise applied in accordance with Article 6 (Priorities of Payments) and/or the other Transaction Documents; 

 

 D             =               the aggregate outstanding principal balance of any Substitute Assets and/or Authorized Investments, as applicable; 

 

 Z           =           the weighted average remaining maturity expressed in years of all Covered Bonds then outstanding multiplied by the Canadian Dollar Equivalent of the aggregate Principal Amount Outstanding of the Covered Bonds multiplied by the Negative Carry Factor where the “Negative Carry Factor” is (i) .5% if the weighted average margin of the interest rate payable on the Covered Bonds is less or equal to  .1% per annum, or (ii) .5% plus that margin minus .1%, if that margin is greater than .1% per annum (provided that if the weighted average remaining maturity is less than one, the weighted average shall be deemed, for the purposes of this calculation, to be one). 

 

 

 

  - 3 -

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