Document:

ex4_11.htm

Exhibit 4.11

 

 

 

 

AMENDED AND RESTATED CASH MANAGEMENT AGREEMENT

 

by and among

 

ROYAL BANK OF CANADA

 

as Cash Manager, Seller, Servicer and the Bank

 

and

 

RBC COVERED BOND GUARANTOR LIMITED PARTNERSHIP

 

as Guarantor LP

 

and

 

COMPUTERSHARE TRUST COMPANY OF CANADA

 

as Bond Trustee

 

 

 

 

 

June 24, 2013

 

  

  

  

 

Contents

 

	
Section

	  	
Page

 

	 	
1.

	
DEFINITIONS AND INTERPRETATION

	
2

	 	 	 	 
	 	
2.

	
APPOINTMENT OF CASH MANAGER

	
2

	 	 	 	 
	 	
3.

	
THE CASH MANAGEMENT SERVICES

	
3

	 	 	 	 
	 	
4.

	
PAYMENTS, ACCOUNTS, LEDGERS

	
5

	 	 	 	 
	 	
5.

	
THIRD PARTY AMOUNTS

	
9

	 	 	 	 
	 	
6.

	
INTEREST RATE SWAP AGREEMENTS

	
9

	 	 	 	 
	 	
7.

	
COVERED BOND SWAP AGREEMENT

	
9

	 	 	 	 
	 	
8.

	
NO LIABILITY

	
10

	 	 	 	 
	 	
9.

	
INFORMATION

	
10

	 	 	 	 
	 	
10.

	
REMUNERATION

	
12

	 	 	 	 
	 	
11.

	
COSTS AND EXPENSES

	
12

	 	 	 	 
	 	
12.

	
COVENANTS OF CASH MANAGER

	
13

	 	 	 	 
	 	
13.

	
SERVICES NON-EXCLUSIVE

	
14

	 	 	 	 
	 	
14.

	
TERMINATION

	
14

	 	 	 	 
	 	
15.

	
FURTHER ASSURANCE, NO SET-OFF

	
16

	 	 	 	 
	 	
16.

	
BOND TRUSTEE

	
17

	 	 	 	 
	 	
17.

	
CONFIDENTIALITY

	
17

	 	 	 	 
	 	
18.

	
NOTICES

	
18

	 	 	 	 
	 	
19.

	
AMENDMENTS, VARIATION AND WAIVER

	
19

	 	 	 	 
	 	
20.

	
NON-PETITION

	
19

	 	 	 	 
	 	
21.

	
NO PARTNERSHIP, PROTECTION OF CERTAIN PARTIES

	
19

	 	 	 	 
	 	
22.

	
ASSIGNMENT

	
20

	 	 	 	 
	 	
23.

	
LIABILITY OF LIMITED PARTNERS

	
20

	 	 	 	 
	 	
24.

	
COUNTERPARTS

	
20

	 	 	 	 
	 	
25.

	
GOVERNING LAW

	
20

 

	 	
SCHEDULE 1

	  	
The Cash Management Services

	 	
SCHEDULE 2

	  	
Cash Management and Maintenance of Ledgers

 

  

  

  

 

AMENDED AND RESTATED CASH MANAGEMENT AGREEMENT

 

THIS CASH MANAGEMENT AGREEMENT (this “Agreement”) initially made the 25th day of October, 2007 and amended and restated on this 24th day of June, 2013.

 

BY AND AMONG:

 

	
(1)

	
Royal Bank of Canada (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, in its capacity as Cash Manager (hereinafter the “Cash Manager”), as Seller and Servicer (hereinafter “Seller”, “Servicer”);

 

	
(2)

	
RBC Covered Bond Guarantor Limited Partnership, a limited partnership formed under the laws of the Province of Ontario, whose principal office of the Partnership is located at 155 Wellington Street, West, 14th Floor, Toronto, Ontario, Canada M5V 3K7 by its general partner RBC Covered Bond GP Inc. (hereinafter the “Guarantor LP”); and,

 

	
(3)

	
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)

	
Under the terms of the Programme, the Issuer will issue Covered Bonds on each Issue Date;

 

	
(B)

	
The net proceeds of the issue of each Tranche of Covered Bonds will be added to the general funds of the Issuer;

 

	
(C)

	
The Guarantor LP will borrow funds under the Intercompany Loan, subject to the terms of the Intercompany Loan Agreement;

 

	
(D)

	
The Guarantor LP will use proceeds from the Intercompany Loan to purchase the Initial Covered Bond Portfolio consisting of Loans and their Related Security from the Seller in accordance with the terms of the Mortgage Sale Agreement and use additional advances (i) to purchase additional Loans and their Related Security for inclusion in the Covered Bond Portfolio pursuant to the terms of the Mortgage Sale Agreement; and/or (ii) to invest in Substitute Assets in an amount not exceeding the prescribed limit; and/or (iii) subject to complying with the Asset Coverage Test to make Capital Distributions to the Limited Partner; and/or (iv) to make deposits of the proceeds in the Guarantor LP Accounts (including, without limitation, to fund the Reserve Fund to an amount not exceeding the prescribed limit).

 

	
(E)

	
The Guarantor LP has agreed to guarantee payments of interest and principal under the Covered Bonds pursuant to the terms of the Covered Bond Guarantee.

 

	
(F)

	
The Cash Manager is willing to provide Cash Management Services (as hereinafter defined) to the Guarantor LP, the Bond Trustee, and in respect of the preparation of Investor Reports, the Bank, on the terms and subject to the conditions contained herein.

 

	
(G)

	
The parties entered into a Cash Management Agreement dated October 25, 2007 (the “Prior Cash Management Agreement”) and the parties now desire to amend and restate in its entirety the terms of the Prior Cash Management Agreement by entering into this Agreement, such amendment and restatement having been made in accordance with Section 19 of the Prior Cash Management Agreement.

 

  

1

  

 

NOW THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and agreements herein set forth, the parties agree as follows:

 

	
1.

	
DEFINITIONS AND INTERPRETATION

 

	
  

	
1.1

	
The amended and restated master definitions and construction agreement dated June 24, 2013 made between, inter alia, the parties to this Agreement (as the same may be amended, varied or supplemented from time to time with the consent of the parties thereto) (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 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.

	
2.

	
APPOINTMENT OF CASH MANAGER

 

	
  

	
2.1

	
Appointment

 

From the date hereof, until termination of this Agreement pursuant to Section 14 hereof, the Guarantor LP and the Bond Trustee (according to their respective estates and interests), and the Bank in respect of the preparation of Investor Reports in accordance with Section 9.4(a),  each hereby appoints the Cash Manager as its lawful agent to provide the Cash Management Services set out in this Agreement and the Cash Manager hereby accepts such appointment on the terms and subject to the conditions of this Agreement.

 

	
  

	
2.2

	
Duties prescribed by Transaction Documents

 

For greater certainty and in connection with the appointment made pursuant to Section 2.1 hereof save as expressly provided elsewhere in this Agreement, nothing herein shall be construed so as to give the Cash Manager any powers, rights, authorities, directions or obligations other than as specified in this Agreement and the other Transaction Documents.

 

	
  

	
2.3

	
Qualifications of the Cash Manager

 

The Cash Manager represents, warrants and covenants as follows, and acknowledges that the Guarantor LP and the Bond Trustee are relying on such representations, warranties and covenants in entering into, and performing their obligations under, this Agreement:

 

	
(a)

	
It possesses the necessary experience, qualifications, facilities and other resources to perform its responsibilities under this Agreement;

 

	
(b)

	
It meets or exceeds the minimum standards, if any, prescribed by the Rating Agencies, and meets or exceeds the Cash Manager Ratings;

 

	
(c)

	
It is duly organized and validly existing under the laws of the jurisdiction of its organization or incorporation and, if relevant under such laws, in good standing;

 

	
(d)

	
If regulated, it is in regulatory good standing;

 

	
(e)

	
It is in material compliance with its internal policies and procedures (including risk management policies), if any, relevant to its contractual relationship with, or the Cash Management Services provided to, the Guarantor LP;

 

  

2

  

 

	
(f)

	
It is in material compliance with all laws, regulations and rules applicable to the Cash Manager relevant to its contractual relationship with, or the cash Management Services provided to, the Guarantor LP; and

 

	
(g)

	
It shall comply with, and perform its obligations under, the provisions of the Guide, and of the Transaction Documents to which it is a party, in each case applicable to it.

 

	
3.

	
THE CASH MANAGEMENT SERVICES

 

	
  

	
3.1

	
General

 

The Cash Manager shall provide the services set out in this Agreement and the Schedules annexed hereto and forming part of this agreement (collectively, the “Cash Management Services”).

 

	
  

	
3.2

	
Approvals and authorizations

 

The Cash Manager shall maintain, or cause to be maintained, all approvals, authorizations, consents and licences required in connection with the business of the Guarantor LP and shall prepare and submit, or cause to be prepared and submitted, on behalf of the Guarantor LP, all necessary applications and requests for any further approvals, authorizations, consents or licences which may be required in connection with the business of the Guarantor LP and shall, so far as it is reasonably able to do so, perform the Cash Management Services in such a way as not to prejudice the continuation of any such approvals, authorizations, consents or licences.

 

	
  

	
3.3

	
Compliance with Transaction Documents, etc.

 

The Cash Management Services shall include the Cash Manager using all reasonable efforts to cause the Guarantor LP to comply with all applicable legal requirements, the provisions of the Guide and with the terms of the Transaction Documents to which the Guarantor LP is a party, provided always that the Cash Manager, solely in its capacity as cash manager, shall not be required to lend or provide any sum to the Guarantor LP and shall have no liability whatsoever to the Guarantor LP, the Bond Trustee or any other person, in its capacity as cash manager, other than to the extent arising from any failure by the Guarantor LP to make any payment due under any of the Transaction Documents.  For greater certainty, the foregoing shall not relieve the Bank from any failure to make or direct any payment due by the Bank under any of the Transaction Documents, in any capacity other than as Cash Manager, including without limitation in its capacity as Servicer, Seller, Interest Rate Swap Provider, Covered Bond Swap Provider or Limited Partner of the Guarantor LP.

 

	
  

	
3.4

	
Compliance with the Asset Coverage Test and the Amortization Test

 

	
(a)

	
Without limitation to the Cash Management Services described elsewhere in this Agreement, the Cash Manager hereby agrees:

 

	
  

	
(i)

	
to do all calculations which are required to determine whether the Guarantor LP is in compliance with the Asset Coverage Test as of each Calculation Date and to determine in respect of, on each Cash Flow Model Calculation Date, the Asset Percentage in each case on or before the Business Day at least two Business Days prior to the immediately following Guarantor LP Payment Date, except in respect of each Calculation Period immediately preceding a proposed Issue Date, or more frequently as required pursuant to the terms of Section 2 of the Asset Monitor Agreement) in which case such calculations shall be completed at least five Business Days prior to the immediately following Guarantor LP Payment Date;

 

  

3

  

 

	
  

	
(ii)

	
to do all calculations which are required to perform the Valuation Calculation as of each Calculation Date except in respect of any Calculation Date for which the Asset Monitor is required to conduct arithmetic testing pursuant to the terms of the Asset Monitor Agreement and in respect of each Calculation Period immediately preceding a proposed Issue Date, or more frequently as required pursuant to the terms of Section 2 of the Asset Monitor Agreement) in which case such calculations shall be completed at least five Business Days prior to the immediately following Guarantor LP Payment Date.

 

	
  

	
(iii)

	
following an Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, to do all calculations which are required to determine whether the Guarantor LP is in compliance with the Amortization Test as of each Calculation Date case on or before the Business Day at least two Business Days prior to the immediately following Guarantor LP Payment Date, except in respect of any Calculation Date for which the Asset Monitor is required to conduct arithmetic testing pursuant to the terms of the Asset Monitor Agreement or more frequently as required pursuant to the terms of Section 2 of the Asset Monitor Agreement) in which case such calculations shall be completed at least five Business Days prior to the immediately following Guarantor LP Payment Date; and

 

	
  

	
(iv)

	
at any time the Cash Manager is required to do so by the terms of the Intercompany Loan Agreement or requested to do so by the Bank, to do all calculations which are required to determine the balances outstanding on the Guarantee Loan and the Demand Loan in accordance with the terms of the Intercompany Loan Agreement as of the date reasonably requested or required in respect thereof,

 

and where required in connection therewith to give any and all notices to the Guarantor LP, the Bank and/or the Bond Trustee in time and in the manner prescribed in the Guarantor LP Agreement, the Intercompany Loan Agreement or the Security Agreement.

 

	
(b)

	
In order to determine the Asset Percentage as set out in Section 3.4(a)(i) above, the Cash Manager shall coordinate the calculation of the spread assumption(s) set out in Schedule 2 of the Guarantor LP Agreement with each of the Rating Agencies, in accordance with Schedule 2 of the Guarantor LP Agreement and use its best reasonable efforts to ensure that such Rating Agencies use all reasonable efforts to provide the information relevant to calculation of the spread assumption(s) by a date that is no later than the relevant Spread Determination Date.  Subject to the foregoing, if the Rating Agencies do not provide the Cash Manager with the information relevant to the calculation of the spread assumption(s) on or before the Spread Determination Date, then the parties hereto acknowledge and agree that the Cash Manager will not be liable for any resulting delay in the calculation of the Asset Percentage.

 

	
(c)

	
Not later than fifteen days following any Calculation Date in respect of which the Asset Monitor is obliged, in accordance with Section 2 of the Asset Monitor Agreement, to conduct tests of the calculations performed by the Cash Manager in respect of such Calculation Date in respect of the Asset Coverage Test or the Amortization Test, as applicable, the Cash Manager shall provide the Asset Monitor with the information described in Section 3.1 or, as applicable, Section 3.2 of the Asset Monitor Agreement.

 

	
  

	
3.5

	
Liability of Cash Manager

 

	
(a)

	
The Cash Manager shall indemnify each of the Guarantor LP and the Bond Trustee on demand for any loss, liability, claim, expense or damage suffered or incurred by any of them as a result of any breach by the Cash Manager, in its capacity as cash manager, of any covenant or obligation contained in this Agreement or any other Transaction Document to which the Cash Manager, in its capacity as cash manager, is a party, provided such loss, liability, claim, expense or damage to the extent such breach arises as a result of negligence, fraud or wilful misconduct on the part of the Cash Manager.

 

  

4

  

 

	
(b)

	
For greater certainty, the Cash Manager shall not be liable in respect of any loss, liability, claim, expense or damage suffered or incurred by the Guarantor LP or the Bond Trustee and/or any other person as a result of the proper performance of the Cash Management Services by the Cash Manager or a breach of any covenant or obligation of the Cash Manager contained in this Agreement or any other Transaction Document to which the Cash Manager, in its capacity as cash manager, is a party that did not result from negligence, fraud or wilful misconduct on the part of the Cash Manager.

 

	
4.

	
PAYMENTS, ACCOUNTS, LEDGERS

 

	
  

	
4.1

	
Bank Accounts

 

The Cash Manager hereby represents, warrants and covenants as follows:

 

	
(a)

	
that the GIC Account has been established on or before the date hereof pursuant to the Bank Account Agreement and the Guaranteed Investment Contract and the Security Agreement in the agreed form will apply thereto as at the Programme Date;

 

	
(b)

	
that it will use its best reasonable efforts to cause the GIC Account to be operative as at the Programme Date;

 

	
(c)

	
that it will not knowingly create or permit to subsist any Security Interest in relation to any of the Guarantor LP Accounts, other than as created under or permitted pursuant to the terms of the Security Agreement or any other Transaction Document;

 

	
(d)

	
that it has entered into on or before the date hereof the Standby Guaranteed Investment Contract and the Standby Bank Account Agreement;

 

	
(e)

	
that if the ratings of the Account Bank fall below the Account Bank Ratings, or the Bank Account Agreement is otherwise terminated except pursuant to Section 7.3 of the Bank Account Agreement, it shall,

 

	
  

	
(i)

	
within five (5) Business Days,

 

	
  

	
(A)

	
terminate the Bank Account Agreement and serve a Standby Account Bank Notice on the Standby Account Bank with a copy to the Standby GIC Provider (if different than the Standby Account Bank); and

 

	
  

	
(B)

	
establish the Standby GIC Account and the Standby Transaction Account in accordance with the terms of the Standby Bank Account Agreement and cause the amounts standing to the credit of the Guarantor LP Accounts held with the Account Bank to be transferred to the Standby GIC Account and the amounts standing to the credit of the Transaction Account, if any, to be transferred to the Standby Transaction Account; and

 

	
  

	
(ii)

	
within 30 days direct to the Standby GIC Account or the Standby Transaction Account payments of principal, interest and other amounts received by the Cash Manager on behalf of the Guarantor LP under the Loans and their Related Security, the Substitute Assets or otherwise, provided that during such period all such amounts received by the Cash Manager shall be transferred to the Standby GIC Account or the Standby Transaction Account within five (5) Business Days of their receipt; and

 

  

5

  

 

	
  

	
(iii)

	
use commercially reasonable efforts to enter into a new standby bank account agreement and standby guaranteed investment contract on substantially the same terms as the Standby Bank Account Agreement and the Standby GIC Agreement, respectively, with a financial institution whose ratings are at least equal to or greater than the Account Bank Ratings, to create on substantially similar terms for the purpose of vesting in the new Standby Account Bank the rights and obligations of the outgoing Standby Account Bank and releasing the outgoing Standby Account Bank from its future obligations under the Standby Bank Account Agreement and the Standby GIC agreement.

 

	
  

	
4.2

	
Ledgers

 

	
(a)

	
The Cash Manager shall open and maintain in the books of the Guarantor LP certain ledgers to be known as:

 

	
  

	
(i)

	
the Revenue Ledger;

 

	
  

	
(ii)

	
the Principal Ledger;

 

	
  

	
(iii)

	
the Reserve Ledger; and

 

	
  

	
(iv)

	
the Capital Account Ledgers,

 

and all the foregoing ledgers shall together reflect the aggregate of all amounts (A) held by the Cash Manager for and on behalf of the Guarantor LP, (B) standing in any Guarantor LP Accounts, and (C) invested in Substitute Assets for or on behalf of the Guarantor LP.

 

	
(b)

	
The Cash Manager shall also open and maintain in the books of the Guarantor LP the Intercompany Loan Ledger which shall record amounts repaid in respect of each amount borrowed under the Intercompany Loan and the Payment Ledger to which it will record all amounts paid by or on behalf of the Guarantor LP and the Persons to whom such payments are made.

 

	
(c)

	
The Cash Manager shall make credits and debits to the Ledgers in accordance with Schedule 2 hereto.

 

	
  

	
4.3

	
Cashflows

 

	
(a)

	
Subject to 4.3(b) below, the Cash Manager is hereby authorized to collect, receive and hold the following amounts for and on behalf of the Guarantor LP:

 

	
  

	
(i)

	
all Revenue Receipts;

 

	
  

	
(ii)

	
all Principal Receipts;

 

	
  

	
(iii)

	
all Cash Capital Contributions;

 

	
  

	
(iv)

	
all amounts received by the Guarantor LP pursuant to the Interest Rate Swap Agreement; and

 

	
  

	
(v)

	
any other amounts whatsoever received by or on behalf of the Guarantor LP after the date hereof (including, without limitation, the proceeds of any advances made to the Guarantor LP under the Intercompany Loan where such proceeds have not been applied to acquire the Initial Covered Bond Portfolio or additional Covered Bond Portfolios, fund Additional Loan Advances in respect of Loans sold by the Seller to the Guarantor LP, invest in Substitute Assets up to the prescribed limit or make a Capital Distribution pursuant to the terms of the Guarantor LP Agreement);

 

  

6

  

 

provided that at no time shall the Cash Manager hold cash in excess of the amount of cash required to meet the Guarantor LP’s payment obligations pursuant to the terms of the Transaction Documents for the immediately succeeding six months, unless the Canada Mortgage and Housing Corporation has permitted the Cash Manager to hold such Excess Cash; provided that amounts received in the immediately preceding 31 day period shall be excluded. The Cash Manager shall apply, distribute, invest or re-invest any amounts in excess of cash it is permitted to hold hereunder in accordance with the instructions of the Guarantor LP provided that the Guarantor LP shall ensure such instructions comply with the terms of the Guide including Sections 6.3.4 and 3.6.8 of the Guide, as applicable.

 

	
(b)

	
The Cash Manager shall cause all transfers, payments and/or withdrawals, as applicable, of amounts held by the Cash Manager for and on behalf of the Guarantor LP and amounts standing to the credit of the Transaction Account (or, as applicable, the Standby Transaction Account) and the GIC Account (or, as applicable, the Standby GIC Account) to be made in accordance with the provisions of this Agreement, the Guarantor LP Agreement, the Bank Account Agreement or, as applicable, the Standby Bank Account Agreement and/or, as applicable, the Security Agreement.

 

	
(c)

	
Prior to (i) a downgrade in the ratings of the unsecured, unsubordinated and unguaranteed debt obligations or issuer default ratings, as applicable, of the Cash Manager below the Cash Manager Deposit Ratings, or (ii) a Covered Bond Guarantee Activation Event, funds held by the Cash Manager for or on behalf of the Guarantor LP shall be used to make payments on or before the next following Guarantor LP Payment Date in accordance with Article 6 (Priorities of Payment) of the Guarantor LP Agreement and following any such payments to be made on the Guarantor LP Payment Date any remaining amounts held by the Cash Manager for or on behalf of the Guarantor LP shall be deposited in the GIC Account (or, the Standby GIC Account, as applicable).

 

	
(d)

	
In the event that cash in the GIC Account immediately following a Guarantor LP Payment Date exceeds the amount of cash necessary to meet the Guarantor LP’s payment obligations for the immediately succeeding six month period (“Excess Cash”), the Cash Manager shall (unless (i) the Canada Mortgage and Housing Corporation has permitted the Cash Manager to hold such Excess Cash) cause such Excess Cash to be invested, distributed or paid, at the direction of the Guarantor LP (which may be by way of a standing direction), in Eligible Loans or Substitute Assets, provided that any purchase of Eligible Loans or Substitute Assets from the Issuer is made in compliance with the Guide (including Section 3.6.8 of the Guide), or as permitted by Section 6.3.4 of the Guide. Notwithstanding anything in this Agreement the Cash Manager shall not purchase any Substitute Assets unless the Guarantor LP has notified the Cash Manager that it has entered into a securities account agreement in a form acceptable to the Guarantor LP and the Bond Trustee providing for the holding of Substitute Assets in the name of the Guarantor LP in which case any such Substitute Assets purchased by the Cash Manager shall be held in the name of the Guarantor LP in accordance with the terms of such agreement.

 

	
(e)

	
In the event of a downgrade in the ratings of the unsecured, unsubordinated and unguaranteed debt obligations, or issuer default ratings, as applicable, of the Cash Manager below the Cash Manager Deposit Ratings, the Cash Manager will be required to cause the amounts collected, received and held, to be paid into the Transaction Account (or the Standby Transaction Account, as applicable) within two (2) Business Days of the collection and/or receipt thereof.

 

	
(f)

	
For greater certainty, as soon as reasonably practicable after becoming aware of the same, the Cash Manager may, and shall, withdraw monies from, as the case may be, the GIC Account or the Transaction Account (or, as applicable, the Standby GIC Account or the Standby Transaction Account) if and to the extent that such monies were credited thereto in error and shall use its reasonable endeavours to ensure that such monies are applied correctly thereafter.

 

  

7

  

 

	
(g)

	
The Cash Manager shall promptly notify each of the Guarantor LP and the Bond Trustee of any additional account which supplements or replaces any of the Guarantor LP Accounts.

 

	
(h)

	
Each of the Cash Manager and the Guarantor LP undertakes that, so far as it is able to cause the same, each of the Guarantor LP Accounts and all instructions and mandates in relation thereto will continue to be operative and will not, save as permitted pursuant to the Bank Account Agreement or, as applicable, the Standby Bank Account Agreement, be changed without the prior written consent of the Bond Trustee (such consent not to be unreasonably withheld or delayed provided that where any Guarantor LP Account is to be changed, such replacement account is subject to security in favour of the Bond Trustee on substantially the same terms as the security over the Guarantor LP Accounts granted to the Bond Trustee pursuant to the terms of the Security Agreement).  For the avoidance of doubt, the Cash Manager may change the Authorized Signatories in respect of any instructions or mandates relating to the Guarantor LP, without the prior written consent of the Bond Trustee, in accordance with Section 3.2 of the Bank Account Agreement and, as applicable, the corresponding section in the Standby Bank Account Agreement.

 

	
  

	
4.4

	
Withdrawals

 

The Cash Manager may make withdrawals:

 

	
  

	
(a)

	
on behalf of the Guarantor LP from the GIC Account (or, as applicable, the Standby GIC Account), but only:

 

	
  

	
(i)

	
if the Account Bank (or, as applicable, the Standby Account Bank) has confirmed to the Cash Manager that there are sufficient amounts standing to the credit of the GIC Account (or, as applicable, the Standby GIC Account) to make such withdrawal on such date;

 

	
  

	
(ii)

	
for payment of the monies to the Transaction Account (or, as applicable, the Standby Transaction Account) and application thereof in accordance with the relevant Priorities of Payments or in accordance with paragraph 5 of Schedule 2 hereto or otherwise in accordance with the Transaction Documents; and

 

	
  

	
(iii)

	
until the occurrence of a Guarantor LP Event of Default and service of a Guarantor LP Acceleration Notice on the Guarantor LP of which the Cash Manager has received notice; and

 

	
  

	
(b)

	
on behalf of the Guarantor LP from the Transaction Account (or, as applicable, the Standby Transaction Account) for application in accordance with the relevant Priorities of Payments and in accordance with paragraph 5 of Schedule 2 hereto or otherwise in accordance with the Transaction Documents, but only until the occurrence of a Guarantor LP Event of Default and service of a Guarantor LP Acceleration Notice on the Guarantor LP of which the Cash Manager has received notice,

 

but shall not in carrying out its functions as Cash Manager under this Agreement otherwise make withdrawals from the Guarantor LP Accounts.

 

  

8

  

 

	
  

	
4.5

	
Bank Account Statements

 

The Cash Manager shall take all reasonable steps to ensure that it receives a copy of the Payment Ledger in respect of the relevant month and a monthly bank statement in relation to each of the Guarantor LP Accounts and that it furnishes a copy of such statements to each of the Guarantor LP and the Bond Trustee.

 

	
  

	
4.6

	
Payments to Paying Agent

 

Each of the Bond Trustee and the Guarantor LP agree that all amounts payable by the Covered Bond Swap Provider to the Guarantor LP under the Covered Bond Swap Agreement and in accordance with the Priorities of Payments, shall be paid directly to the Paying Agent, and the Guarantor LP (or the Cash Manager on its behalf) shall direct the Covered Bond Swap Provider accordingly.

 

	
5.

	
THIRD PARTY AMOUNTS

 

The Cash Manager shall hold any Third Party Amounts received by the Guarantor LP for the Seller and transfer the same to the account and/or for the use of the entity entitled to such Third Party Amounts.

 

	
6.

	
INTEREST RATE SWAP AGREEMENTS

 

	
  

	
6.1

	
Computations

 

The Cash Manager shall determine, in accordance with the terms of the Interest Rate Swap Agreement, the Receipt Ratio and the Average Loan Balance in respect of the relevant Calculation Period and shall notify the Guarantor LP and the Bond Trustee of such amounts and balances on the Business Day that is at least two days prior to the first Guarantor LP Payment Date following the relevant Calculation Period.

 

	
  

	
6.2

	
Termination of the Interest Rate Swap Agreement

 

If on or prior to the repayment in full of the final Tranche of the Covered Bonds then outstanding, the Interest Rate Swap Agreement is terminated other than as a result of an Event of Default (as used in the relevant Interest Rate Swap Agreement) where the Guarantor LP is the Defaulting Party (as used in the relevant Interest Rate Swap Agreement)) or the delivery of a Guarantor LP Acceleration Notice to the Guarantor LP of which the Cash Manager has received notice, then the Cash Manager (on behalf of the Guarantor LP) shall enter into one or more new swaps with one or more third party swap provider(s) and the Bond Trustee, to hedge the risks being hedged under the terms of the Interest Rate Swap Agreement; provided that if and for so long as the Liquidation GP is the managing general partner of the Guarantor LP the Cash Manager shall not enter into any such swap without the prior written consent of the Guarantor LP. The Cash Manager may apply any termination payment received in respect of the foregoing from the Interest Rate Swap Provider for such purpose in accordance with Article 6 (Priorities of Payment) of the Guarantor LP Agreement.

	
7.

	
COVERED BOND SWAP AGREEMENT

 

	
  

	
7.1

	
Computations

 

From and after any Effective Date (as defined in each confirmation under the Covered Bond Swap Agreement), the Cash Manager shall determine, in accordance with the terms of such confirmation and the Covered Bond Swap Agreement, in respect of the relevant Calculation Period, the amount of principal payments payable with respect to Tranche of the Covered Bonds to which such confirmation relates and shall notify the Guarantor LP and the Bond Trustee of such amounts, balances and rates on the Business Day that is at least two days prior to the first Guarantor LP Payment Date following the relevant Calculation Period.

 

  

9

  

 

	
  

	
7.2

	
Termination of a Covered Bond Swap Agreement

 

If the Covered Bond Swap Agreement is terminated in respect of any Tranche of Covered Bonds on or prior to the repayment in full of such Tranche of Covered Bonds (other than as a result of an Event of Default (as defined in the Covered Bond Swap Agreement) where the Guarantor LP is the Defaulting Party (as defined in the Covered Bond Swap Agreement)) or the delivery of a Guarantor LP Acceleration Notice to the Guarantor LP, then the Cash Manager (on behalf of the Guarantor LP and the Bond Trustee) shall purchase a new swap to hedge (after the service on the Guarantor LP of a Notice to Pay) the risks being hedged under the terms of the Covered Bond Swap Agreement; provided that if and for so long as the Liquidation GP is the managing general partner of the Guarantor LP the Cash Manager shall not enter into any such swap without the prior written consent of the Guarantor LP.  The Cash Manager may apply any termination payment received in respect of the foregoing from the Covered Bond Swap Provider pursuant to the relevant Covered Bond Swap Agreement for such purpose.

 

	
8.

	
NO LIABILITY

 

Save as otherwise provided in this Agreement, the Cash Manager shall have no liability for the obligations of either the Guarantor LP or the Bond Trustee under any of the Transaction Documents or otherwise and nothing herein shall constitute a guarantee, or similar obligation, by the Cash Manager, in its capacity as cash manager, of the obligations of either the Guarantor LP or the Bond Trustee under the Transaction Documents.

 

	
9.

	
INFORMATION

 

	
  

	
9.1

	
Use of Information Technology systems

 

	
(a)

	
The Cash Manager represents and warrants that at the date hereof in respect of the software which is to be used by the Cash Manager in providing the Cash Management Services it has in place all necessary licences and/or consents from the respective licensor or licensors (if any) of such software.

 

	
(b)

	
The Cash Manager undertakes that it shall for the duration of this Agreement, use reasonable efforts to:

 

	
  

	
(i)

	
ensure that the licences and/or consents referred to in paragraph (a) are maintained in full force and effect; and

 

	
  

	
(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 Cash Manager (the “Substitute Cash Manager”) 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.

 

	
(c)

	
The Cash Manager shall use reasonable efforts to maintain in working order the information technology systems used by the Cash Manager in providing the Cash Management Services.

 

	
(d)

	
The Cash Manager 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 and the Bond Trustee elect as a Substitute Cash Manager 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.

 

  

10

  

 

	
  

	
9.2

	
Access to Books and Records

 

Subject to all applicable laws, the Cash Manager shall permit any person nominated by the Bond Trustee or the Guarantor LP (in each case, to whom the Cash Manager has no reasonable objection) at any time during normal office hours upon reasonable notice to have access, or procure that such person or persons are granted access, to all books of record and accounts relating to the Cash Management Services provided by the Cash Manager hereunder.

 

	
  

	
9.3

	
Statutory Obligations

 

The Cash Manager will use its reasonable efforts, on behalf of the Guarantor LP, to prepare or cause to be prepared and filed all reports, annual returns, financial statements, statutory forms and other returns which the Guarantor LP is required by law to prepare and file.  If directed by the Guarantor LP, or requested by the Bond Trustee and consented to by the Guarantor LP (in its sole discretion) the Cash Manager shall cause such accounts to be audited by the Auditor appointed by the Guarantor LP in accordance with the terms of the Guarantor LP Agreement, and shall procure so far as it is able so to do that the Auditor shall make a report thereon and copies of all such documents shall be delivered to the Guarantor LP and the Bond Trustee as soon as practicable after the end of each accounting reference period of the Guarantor LP.

 

	
  

	
9.4

	
Information Covenants

 

	
(a)

	
With the assistance of the Servicer, the Cash Manager shall prepare and provide the Bank, the Guarantor LP, the Bond Trustee and the Rating Agencies with the Investor Report as prescribed by the Guide and as otherwise agreed by the Cash Manager, the Guarantor LP and the Bond Trustee, at least two Business Days prior to each Guarantor LP Payment Date. Each of the parties hereto acknowledges and confirms that, as required by the Guide, the Investor Reports shall be prepared by the Cash Manager for and on behalf of the Bank prior to an Issuer Event of Default and for and on behalf of the Guarantor LP following an Issuer Event of Default.

 

	
(b)

	
The Cash Manager shall provide, or cause to be provided, to the Guarantor LP and the Bond Trustee copies of any annual returns or financial statements referred to in Section 9.3 hereof as soon as reasonably practicable after the preparation thereof.

 

	
(c)

	
The Cash Manager shall (i) notify the Rating Agencies in writing of the details of any material amendment to any of the Transaction Documents, of which the Cash Manager has notice, and (ii)  provide the Rating Agencies and/or the Bond Trustee, as applicable, any other information relating to the Cash Manager, solely in its capacity as Cash Manager and in connection with its obligations under this Agreement, as the Rating Agencies and/or the Bond Trustee may reasonably request provided that the Bond Trustee shall not make such a request more than once every three months unless, in the reasonable belief of the Bond Trustee, an Issuer Event of Default or a Guarantor LP Event of Default or a Cash Manager Termination Event (as defined in Section 14.1 hereof) has occurred and is continuing provided further that such request does not adversely interfere with the Cash Manager's day-to-day provision of the Cash Management Services under the other terms of this Agreement.

 

	
(d)

	
Upon the reasonable request of CMHC to the Cash Manager, the Cash Manager shall make available to CMHC during business hours all accounts and records relating to the Programme, if required by CMHC to verify that the Issuer, Guarantor LP and/or the Programme are in compliance with any requirement of the Guide and Part I.1 of the National Housing Act (Canada). Upon receipt of any such request, the Cash Manager shall promptly notify the Issuer and the Guarantor LP in writing of the receipt thereof and unless otherwise prohibited shall provide details of the nature of any such request.

 

  

11

  

 

	
  

	
9.5

	
Notice of events of default

 

The Cash Manager shall deliver to the Guarantor LP, the Bond Trustee and the Rating Agencies as soon as reasonably practicable thereafter, but in any event within three Business Days of becoming aware thereof, a notice of any:

 

	
  

	
(a)

	
Cash Manager Termination Event or any event which, with the lapse of time and/or the issue, making or giving of any notice, certification, declaration, demand, determination and/or request and/or the taking of any similar action and/or the fulfilment of any similar condition, would constitute a Cash Manager Termination Event;

 

	
  

	
(b)

	
Issuer Event of Default or Potential Issuer Event of Default; or

 

	
  

	
(c)

	
Guarantor LP Event of Default or any Potential Guarantor LP Event of Default.

 

	
  

	
9.6

	
Notifications under Mortgage Sale Agreement

 

	
(a)

	
The Cash Manager shall notify the Guarantor LP if the Cash Manager is aware that the purchase of any additional Loans and their Related Security on a Transfer Date would adversely affect the then current ratings of the Covered Bonds by any of the Rating Agencies.

 

	
(b)

	
The Cash Manager shall identify any Non-Performing Loans in the Covered Bond Portfolio and upon identification serve a Non-Performing Loans Notice on the Bank and the Servicer.

 

	
(c)

	
The Cash Manager shall deliver a Loan Repurchase Notice to the Seller with a copy to the Guarantor LP in the circumstances set out in Section 2.3(a) of the Mortgage Sale Agreement.

 

	
10.

	
REMUNERATION

 

	
  

	
10.1

	
Fee payable

 

	
(a)

	
Subject to paragraph (b) below, the Guarantor LP shall pay to the Cash Manager for its Cash Management Services hereunder a cash management fee which shall be agreed in writing between the Guarantor LP, the Bond Trustee and the Cash Manager from time to time.  For greater certainty, so long as the Bank is the Cash Manager, the cash management fee payable to the Bank by the Guarantor LP for the Cash Management Services hereunder shall be nil.

 

	
(b)

	
Unless and until otherwise agreed by the Guarantor LP and the Bond Trustee in writing (and notice delivered to the Cash Manager), the Guarantor LP shall be solely responsible for paying the cash management fee, referred to in paragraph (a) above, to the Cash Manager.

 

	
  

	
10.2

	
Payment of fee

 

The cash management fee referred to in Section 10.1 above, plus GST/HST, shall be paid to the Cash Manager in arrears on each Guarantor LP Payment Date in the manner contemplated by and in accordance with the provisions of the applicable Priorities of Payments.

 

  

12

  

 

	
11.

	
COSTS AND EXPENSES

 

	
  

	
11.1

	
Subject to and in accordance with the applicable Priorities of Payments, the Guarantor LP will on each Guarantor LP Payment Date reimburse the Cash Manager for all out-of-pocket costs, expenses and charges (together with any amounts in respect of GST/HST due thereon) properly incurred by the Cash Manager in the performance of the Cash Management Services including any such costs, expenses or charges not reimbursed to the Cash Manager on any previous Guarantor LP Payment Date and the Cash Manager shall supply the Guarantor LP with an appropriate GST/HST invoice issued by the Cash Manager or, if the Cash Manager has treated the relevant cost, expense or charge as a disbursement for GST/HST purposes, by the person making the supply.

 

	
  

	
11.2

	
Unless and until otherwise agreed by the Guarantor LP and the Bond Trustee in writing (and notice delivered to the Cash Manager), the Guarantor LP shall be solely responsible for reimbursing the Cash Manager for the out-of-pocket costs, expenses and charges (together with any amounts in respect of GST/HST due thereon) referred to in Section 11.1 above.

 

	
12.

	
COVENANTS OF CASH MANAGER

 

	
  

	
12.1

	
Covenants:

 

The Cash Manager 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:

 

	
  

	
(a)

	
it will devote all due skill, care and diligence to the performance of its obligations and the exercise of its discretions hereunder;

 

	
  

	
(b)

	
it will comply with any proper directions, orders and instructions which the Guarantor LP or the Bond Trustee may from time to time give to it in accordance with the provisions of this Agreement and, in the event of any conflict, those of the Bond Trustee shall prevail;

 

	
  

	
(c)

	
save as otherwise agreed with the Guarantor LP and the Bond Trustee, it will provide free of charge to the Guarantor LP (except with respect to payment of the cash management fee pursuant to Section 10.1 above) during normal office hours, office space, facilities, equipment and staff sufficient to fulfil the obligations of the Guarantor LP under this Agreement;

 

	
  

	
(e)

	
it will not knowingly fail to comply with any legal requirements in the performance of the Cash Management Services;

 

	
  

	
(f)

	
it will maintain the accounts and records relating to the Loans and their Related Security in accordance with sound accounting and business practices;

 

	
  

	
(g)

	
it will make all payments required to be made by it, as Cash Manager, solely in its capacity as cash manager, pursuant to this Agreement, on the due date for payment thereof for value on such day without set-off (including, without limitation, in respect of any fees owed to it) or counterclaim; and

 

	
  

	
(h)

	
it will not, in its capacity as cash manager, without the prior written consent of the Bond Trustee amend or terminate any of the Transaction Documents, to which it is a party, in its capacity as Cash Manager, save in accordance with their terms.

 

  

13

  

 

	
  

	
12.2

	
Duration of covenants

 

The covenants of the Cash Manager hereunder shall remain in force until this Agreement is terminated but without prejudice to any right or remedy of the Guarantor LP and/or the Bond Trustee arising from breach of any such covenant prior to the date of termination of this Agreement.

 

 

	
13.

	
SERVICES NON-EXCLUSIVE

 

Nothing in this Agreement shall prevent the Cash Manager 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, the Bond Trustee or any other person party to any Transaction Document to which the Cash Manager is a party.

 

	
14.

	
TERMINATION

 

	
  

	
14.1

	
Cash Manager Termination Events

 

	
(a)

	
If any of the following events (“Cash Manager Termination Events”) shall occur:

 

	
  

	
(i)

	
default is made by the Cash Manager in the payment on the due date of any payment due and payable by it under this Agreement or in the performance of its obligations under Sections 4.3 and 4.4 hereof and such default continues unremedied for a period of three (3) Business Days after the earlier of the Cash Manager becoming aware of such default and receipt by the Cash Manager of written notice from the Bond Trustee requiring the same to be remedied;

 

	
  

	
(ii)

	
default is made by the Cash Manager in the performance or observance of any of its other covenants and obligations under this Agreement (including the breach of any of its representations, warranties and covenants under Section 2.3 of this Agreement) and such default continues unremedied for a period of thirty (30) days after the earlier of the Cash Manager becoming aware of such default and receipt by the Cash Manager of written notice from the Bond Trustee requiring the same to be remedied;

 

	
  

	
(iii)

	
the short term, unsecured, unsubordinated and unguaranteed debt obligations, or issuer default ratings, as applicable, of the Cash Manager fall below the Cash Manager Ratings (unless the Cash Manager obtains an unconditional and unlimited guarantee of its obligations under this Agreement, from a credit support provider which has received Rating Agency Confirmation, within 30 Business Days of the first downgrade below such Cash Manager Ratings by a Rating Agency);

 

	
  

	
(iv)

	
an Insolvency Event occurs in respect of the Cash Manager;

 

	
  

	
(v)

	
the Bank or an Affiliate of the Bank is the Cash Manager and an Issuer Event of Default has occurred and is continuing,

 

then the Guarantor LP and/or the Bond Trustee may at once or at any time thereafter while such default continues by notice in writing to the Cash Manager terminate its appointment as Cash Manager under this Agreement with effect from a date (not earlier than the date of the notice) specified in the notice.

 

	
(b)

	
Upon termination of the appointment of the Cash Manager pursuant to this Section 14.1, the Guarantor LP shall use its reasonable endeavours to appoint a Substitute Cash Manager (but shall have no liability to any person in the event that, having used reasonable endeavours, it is unable to appoint a Substitute Cash Manager).

 

  

14

  

 

Any substitute Cash Manager:

 

	
  

	
(i)

	
must agree to enter into an agreement substantially on the same terms as the relevant provisions of this Agreement or on such other terms as are satisfactory to the Guarantor LP and the Bond Trustee; and

 

	
  

	
(ii)

	
will be subject to the prior written approval of the Bond Trustee (such consent not to be unreasonably withheld) and Rating Agency Confirmation.

 

	
  

	
14.2

	
Resignation of Cash Manager

 

The appointment of the Cash Manager under this Agreement may be terminated upon the expiry of not less than 12 months' notice of termination given by the Cash Manager to the Guarantor LP and the Bond Trustee (or such shorter time as may be agreed between the Cash Manager, the Guarantor LP and the Bond Trustee) provided that:

 

	
  

	
(a)

	
a Substitute Cash Manager shall be appointed, such appointment to be effective not later than the date of such termination;

 

	
  

	
(b)

	
such Substitute Cash Manager has cash management experience and is approved by each of the Guarantor LP and the Bond Trustee; and

 

	
  

	
(c)

	
the Substitute Cash Manager enters into an agreement substantially on the same terms as the relevant provisions of this Agreement or on such terms as are satisfactory to the Guarantor LP and the Bond Trustee.

 

	
  

	
14.3

	
Effect of Termination

 

	
(a)

	
On and after termination of the appointment of the Cash Manager under this Agreement pursuant to this Section 14, all authority and power of the Cash Manager under this Agreement shall be terminated and be of no further effect and the Cash Manager shall not thereafter hold itself out in any way as the agent of the Guarantor LP or the Bond Trustee pursuant to this Agreement.

 

	
(b)

	
Upon termination of the appointment of the Cash Manager under this Agreement pursuant to this Section 14, the Cash Manager shall:

 

	
  

	
(i)

	
forthwith deliver (and in the meantime hold on trust for, and to the order of, the Guarantor LP or the Bond Trustee, as the case may be) to the Guarantor LP or the Bond Trustee, as the case may be or as it shall direct, all books of account, papers, records, registers, correspondence and documents in its possession or under its control relating to the affairs of or belongings of the Guarantor LP or the Bond Trustee, as the case may be (if practicable, on the date of receipt), any monies then held by the Cash Manager on behalf of the Guarantor LP or, the Bond Trustee and any other assets of the Guarantor LP and the Bond Trustee; and

 

	
  

	
(ii)

	
take such further action as the Guarantor LP or the Bond Trustee, as the case may be, may reasonably direct at the expense of the Guarantor LP (including in relation to the appointment of a Substitute Cash Manager), provided that the Guarantor LP or the Bond Trustee, as the case may be, shall not be required to take or direct to be taken such further action unless it has been indemnified to its satisfaction (and in the event of a conflict between the directions of the Guarantor LP and the directions of the Bond Trustee, the directions of the Bond Trustee shall prevail).

 

  

15

  

 

	
  

	
14.4

	
General provisions relating to termination

 

	
(a)

	
Termination of this Agreement or the appointment of a new Cash Manager under this Agreement shall be without prejudice to the liabilities of the Guarantor LP and the Bond Trustee to the Cash Manager or vice versa incurred before the date of such termination.  The Cash Manager hereby agrees that it 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 or the Bond Trustee.

 

	
(b)

	
This Agreement shall, except as otherwise agreed between the Guarantor LP and the Cash Manager, terminate automatically at such time as the Guarantor LP's obligations under the Covered Bond Guarantee have been discharged and the security constituted by the Security Agreement has been released.

 

	
(c)

	
On termination of the appointment of the Cash Manager under the provisions of this Section 14, the Cash Manager shall be entitled to receive all fees and other monies accrued up to (but excluding) the date of termination but shall not be entitled to any other or further compensation.  Such monies so receivable by the Cash Manager, solely in its capacity as cash manager, shall be paid by the Guarantor LP, on the dates on which they would otherwise have fallen due hereunder and under the terms of the Guarantor LP Agreement and the Security Agreement.  For the avoidance of doubt, such termination shall not affect the Bank’s rights, to receive payment of all amounts (if any) due to it from the Guarantor LP other than in its capacity as cash manager under this Agreement.

 

	
(d)

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

 

	
15.

	
FURTHER ASSURANCE, NO SET-OFF

 

	
  

	
15.1

	
Co-operation, etc

 

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.

 

	
  

	
15.2

	
Powers of attorney

 

Without prejudice to the generality of Section 15.1 above, the Guarantor LP and the Bond Trustee shall upon request by the Cash Manager forthwith give to the Cash Manager such further powers of attorney or other written authorizations, mandates or instruments as are necessary to enable the Cash Manager to perform the Cash Management Services.

 

	
  

	
15.3

	
No set-off

 

The Bank, as Cash Manager, and as Seller, agrees that it will not:

 

	
  

	
(a)

	
set off or purport to set off any amount which the Guarantor LP is or will become obliged to pay to it under this Agreement against any amount from time to time standing to the credit of or to be credited to any of the Guarantor LP Accounts or any replacement or additional bank account of the Guarantor LP; or

 

  

16

  

 

	
  

	
(b)

	
make or exercise any claims or demands, any rights of counterclaim or any other equities against or withhold payment of any sum of money which may at any time and from time to time be standing to the credit of any of the Guarantor LP Accounts or any replacement of additional bank account of the Guarantor LP.

 

	
  

	
15.4

	
Acknowledgement of Servicer and Seller

 

Each of the Servicer and the Seller acknowledge the Cash Management Services to be provided by the Cash Manager and agree to provide all information and assistance reasonably required by the Cash Manager in a timely fashion in order for the Cash Manager to comply with its obligations under this Agreement.

 

	
  

	
15.5

	
New Sellers and New Servicers

 

Each of the parties hereto agrees to make all changes that are reasonably necessary or desirable to this Agreement following the accession of any other Seller or Servicer, as the case may be, to any one or more of the Transaction Documents.

 

	
16.

	
BOND TRUSTEE

 

	
  

	
16.1

	
Change of Bond Trustee

 

In the event that there is any change in the identity of the Bond Trustee, the Cash Manager, solely in its capacity as cash manager, shall execute such documents with any other parties to this Agreement and take such actions as such new Bond Trustee may reasonably require for the purposes of vesting in such new Bond Trustee the rights of the Bond Trustee under this Agreement and under the Security Agreement and while any of the Covered Bonds remain outstanding shall give notice thereof to the Rating Agencies.

 

	
  

	
16.2

	
Bond Trustee Liability

 

	
(a)

	
For greater certainty, the Bond Trustee shall, without prejudice to the obligations of the Guarantor LP, as the case may be, or any receiver appointed pursuant to the Security Agreement in respect of such amounts, not be liable to pay any amounts due under Sections 10 and 11 hereof.

 

	
(b)

	
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 Cash Manager 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, including the right of the Bond Trustee to agree to amendments to this Agreement pursuant to Section 19 hereof.  For greater certainty, the parties to this Agreement acknowledge that the rights and obligations of the Bond Trustee are governed by the terms of the Trust Deed and the 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 in accordance with the terms of the Trust Deed and the Security Agreement, but without prejudice to the obligation of the Bond Trustee to act reasonably.

 

  

17

  

 

	
17.

	
CONFIDENTIALITY

 

During the continuance of this Agreement or after its termination, each of the Guarantor LP, the Bank, both in its capacity as Cash Manager and in its other capacities under the Transaction Documents and the Bond Trustee shall use its best efforts 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 that provisions of this Section 17 shall not apply:

 

	
  

	
(a)

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

 

	
  

	
(b)

	
to any information subsequently received by the recipient 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 recipient;

 

	
  

	
(d)

	
to any extent that the recipient is required to disclose the same pursuant to the Guide, any Transaction Document or any law or order of any court of competent jurisdiction 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 or securities regulators);

 

	
  

	
(e)

	
to the extent that the recipient needs to disclose the same for determining the existence of, or declaring, an Issuer Event of Default, a Guarantor LP Event of Default or a Cash Manager 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 recipient or (in connection with a prospective rating of any debt to be issued by the Issuer) to any Rating Agency or any prospective new Cash Manager or prospective new bond trustee.

 

	
18.

	
NOTICES

 

(1)           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 Cash Manager or the Bank to:

 

Royal Bank of Canada

155 Wellington Street West, 14th Floor

Toronto, Ontario

Canada  M5V 3K7

Attention:  Senior Manager, Securitization

 

Facsimile number: (416) 974-1368

 

  

18

  

 

	
  

	
(b)

	
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:  Senior Manager, Securitization

 

Facsimile number: (416) 974-1368

 

	
  

	
(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

 

(2)           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.

 

(3)           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.

 

	
19.

	
AMENDMENTS, VARIATION AND WAIVER

 

Any amendment or waiver to this Agreement shall be effective only if  it is in writing and signed by (or by some person duly authorized 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.

 

20.           NON-PETITION

 

The Cash Manager, Seller, Servicer and Bank 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 Corporation 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.

 

  

19

  

 

	
21.

	
NO PARTNERSHIP, PROTECTION OF CERTAIN PARTIES

 

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.

 

	
22.

	
ASSIGNMENT

 

	
  

	
22.1

	
Assignment by the Guarantor LP

 

The Guarantor LP may not assign or transfer any of its respective rights and obligations under this Agreement without the prior written consent of each of the Bond Trustee and the Cash Manager and having obtained Rating Agency Confirmation therefor, except that the Guarantor LP may, without such consent, assign its rights and interest hereunder pursuant to the terms of the Security Agreement.

 

	
  

	
22.2

	
No Assignment by Cash Manager

 

The Cash Manager, in its capacity as Cash Manager, may not assign or transfer any of its rights and obligations under this Agreement without the prior written consent of the Guarantor LP and the Bond Trustee and the Guarantor LP shall not give its consent unless it has obtained Rating Agency Confirmation therefor.

 

	
23.

	
LIABILITY OF LIMITED PARTNERS

 

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.

 

	
24.

	
COUNTERPARTS

 

This Agreement may be executed in any number of counterparts (manually or by facsimile) each of which, when executed and delivered, shall constitute an original, but all the counterparts shall together constitute but one and the same instrument provided, however, that this Agreement shall have no force or effect until it is executed by the last party to execute the same and shall be deemed to have been executed and delivered in the place where such last party executed this Agreement.

 

	
25.

	
GOVERNING LAW

 

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

 

[The remainder of this page is intentionally left blank]

 

  

20

  

 

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

 

 

	  	  	
ROYAL BANK OF CANADA

	 	 	 
	  	  	  	
Per:

	 	
/s/ James Salem

	  	  	  	  	 	
Name:  James Salem

	  	  	  	  	 	
Title:  Executive Vice-President and 

Treasurer

	  	  	  	  	 	  
	  	  	  	
Per:

	 	
/s/ David Power

	  	  	  	  	 	
Name: David Power

	  	  	  	  	 	
Title: Vice-President, Corporate Treasury

 

 

	  	  	
RBC COVERED BOND GUARANTOR 

LIMITED PARTNERSHIP, by its managing 

general partner, RBC COVERED BOND GP 

INC.

	 	 	 
	  	  	
Per:

	 	
/s/ David Power

	  	  	  	 	
Name: David Power

	  	  	  	 	
Title:  President

 

	  	  	
COMPUTERSHARE TRUST COMPANY 

OF CANADA

	 	 	 
	  	  	
Per:

	 	
/s/ Mircho Mirchev

	  	  	  	 	
Name: Mircho Mirchev

	  	  	  	 	
Title:  Corporate Trust Officer

	  	  	
Per:

	 	
/s/ Stanley Kwan

	  	  	  	 	
Name: Stanley Kwan

	  	  	  	 	
Title:  Associate Trust Officer

Amended and Restated Cash Management Agreement (signature page)

  

  

  

 

SCHEDULE 1

THE CASH MANAGEMENT SERVICES

The Cash Manager shall:

 

	
(a)

	
use amounts held for and on behalf of the Guarantor LP, and operate the Guarantor LP Accounts, and ensure that payments are made into and from such accounts held for and on behalf of the Guarantor LP in accordance with this Agreement, the Guarantor LP Agreement, the Security Agreement, the Bank Account Agreement, the Standby Bank Account Agreement, the Guaranteed Investment Contract, the Standby Guaranteed Investment Contract and any other applicable Transaction Document provided however that nothing herein shall require the Cash Manager to make funds available to the Guarantor LP to enable such payments to be made other than as expressly required by the provisions of this Agreement;

 

	
(b)

	
keep any records necessary for Taxation purposes;

 

	
(c)

	
assist the Asset Monitor, if applicable, of the Guarantor LP and provide such information to the auditor as the auditor may reasonably request for the purpose of carrying out its duties as auditor;

 

	
(d)

	
make all filings, give all notices and make all registrations and other notifications required in the day-to-day operation of the respective businesses of the Guarantor LP or required to be given by the Guarantor LP pursuant to the Transaction Documents;

 

	
(e)

	
arrange for all payments due to be made by the Guarantor LP under any of the Transaction Documents (including under each relevant Priorities of Payments), provided that such monies are at the relevant time available to the Guarantor LP and provided further that nothing herein shall constitute a guarantee by the Cash Manager of all or any of the obligations of the Guarantor LP under any of the Transaction Documents;

 

	
(f)

	
provide accounting services, including reviewing receipts and payments, supervising and assisting in the preparation of interim statements and final accounts and supervising and assisting in the preparation of Tax returns;

 

	
(g)

	
provide or procure the provision of company secretarial and administration services to the Guarantor LP including the keeping of all registers and the making of all returns and filings required by applicable law or regulatory authorities, co-operate in the convening of board and general meetings and provide registered office facilities;

 

	
(h)

	
on behalf of the Guarantor LP, provided that such monies are at the relevant time available to the Guarantor LP, pay all the out-of-pocket expenses of the Guarantor LP, incurred by the Cash Manager on behalf of the Guarantor LP in the performance of the Cash Manager's duties hereunder including without limitation:

 

	
  

	
(i)

	
all taxes which may be due or payable by the Guarantor LP;

 

	
  

	
(ii)

	
all registration, transfer, filing and other fees and other charges payable in respect of the sale by the Seller of the Initial Covered Bond Portfolio and any additional Covered Bond Portfolios to the Guarantor LP;

 

	
  

	
(iii)

	
all necessary filing and other fees in compliance with regulatory requirements;

 

	
  

	
(iv)

	
all legal and audit fees and other professional advisory fees;

 

	
  

	
(v)

	
all communication expenses including postage, courier and telephone charges;

 

  

  

  

 

	
  

	
(vi)

	
all premiums payable by the Guarantor LP in respect of any insurance policies obtained or held by the Guarantor LP in accordance with the terms of the Guarantor LP Agreement; and

 

	
  

	
(vii)

	
following the occurrence of an Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, all fees payable to the London Stock Exchange plc and any other stock exchange on which the Covered Bonds are listed but only if the Issuer has not otherwise paid those fees;

 

	
(i)

	
at the request of the Guarantor LP, invest monies standing from time to time to the credit of the GIC Account (or, as applicable, the Standby GIC Account) in Eligible Loans or Substitute Assets up to the limit prescribed in the Guarantor LP Agreement, provided that any purchase of Eligible Loans or Substitute Assets from the Issuer is made in compliance with the Guide (including Section 3.6.8 of the Guide), (any such purchase to be at the sole discretion of the Cash Manager), subject to the following provisions:

 

	
  

	
(i)

	
any such Substitute Assets shall be purchased in the joint names of the Guarantor LP and the Bond Trustee;

 

	
  

	
(ii)

	
if required by the Bond Trustee on or prior to purchasing any such Substitute Assets, the Guarantor LP has entered into appropriate hedging arrangements with a hedge provider that has the requisite ratings to hedge against the interest rate risk (if any) associated with such Substitute Assets, in each case on terms that are satisfactory to the Bond Trustee;

 

	
  

	
(iii)

	
any costs properly and reasonably incurred in making and changing all such Substitute Assets will be reimbursed to the Cash Manager and the Bond Trustee by the Guarantor LP; and

 

	
  

	
(iv)

	
all income or other distributions arising on, or proceeds following the disposal or maturity of, any such Substitute Assets shall be credited to the GIC Account (or, as applicable, the Standby GIC Account); and

 

	
(j)

	
on the acquisition or disposition by any transfer of any Loans and their Related Security or any Substitute Assets by the Guarantor LP, and in any event on at least a quarterly basis, update (or deliver to the Custodian updated) Eligible Loan Details and Substitute Asset Details; provided that upon any event requiring Perfection pursuant to Section 7.1 of the Mortgage Sale Agreement (other than pursuant to 7.1(d) of such agreement), such information shall be delivered to the Custodian forthwith.

 

  

  

  

 

SCHEDULE 2

CASH MANAGEMENT AND MAINTENANCE OF LEDGERS

1            Determination

 

	
(a)

	
The Guarantor LP or the Cash Manager on its behalf shall on or before the Business Day at least two days prior to each Guarantor LP Payment Date calculate the following amounts as of the immediately preceding Calculation Date:

 

	
  

	
(i)

	
the amount of Available Revenue Receipts available for distribution on such Guarantor LP Payment Date;

 

	
  

	
(ii)

	
the Reserve Fund Required Amount; and

 

	
  

	
(iii)

	
the amount of Available Principal Receipts available for distribution on such Guarantor LP Payment Date.

 

	
(c)

	
Without prejudice to the obligations of the Calculation Agent, the Cash Manager shall, if necessary, perform all currency conversions free of charge, cost or expense at the relevant exchange rate (for the purposes of any calculations referred to above, (i) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (e.g. 9.876541% being rounded down to 9.87654% and (ii) any currency amounts used in or resulting from such calculations will be rounded in accordance with the relevant market practice).

 

	
(d)

	
Each determination made in accordance with this paragraph 1 shall (in the absence of demonstrable error) be final and binding on all persons.

 

2            Notification of Determinations

 

	
(a)

	
The Cash Manager may make all the determinations referred to in paragraph 1(a) on the basis that the amount of any Losses will not increase and on the basis of any other reasonable and proper assumptions as the Cash Manager considers appropriate (including without limitation as to the amount of any payments to be made or amounts received under the relevant Priorities of Payments during the period from and including the relevant Calculation Date to but excluding the following Guarantor LP Payment Date).

 

The Cash Manager shall notify the Guarantor LP and the Bond Trustee on request of any such other assumptions and shall take account of any representations made by the Issuer and the Bond Trustee (as the case may be) in relation thereto.

 

	
(b)

	
Each determination made in accordance with this paragraph 2 shall (in the absence of demonstrable error) be final and binding on all persons.

 

	
(c)

	
The Cash Manager shall cause that the determinations and notifications required to be made by the Guarantor LP pursuant to Articles 5 and 6 of the Guarantor LP Agreement to be made.

 

3            Pre-Acceleration Revenue Priority of Payments

 

On each Guarantor LP Payment Date, the Guarantor LP or the Cash Manager on its behalf will transfer funds from the GIC Account (or, as applicable, the Standby GIC Account) to the Transaction Account (or, as applicable, the Standby Transaction Account) in accordance with Article 6 (Priorities of Payments) of the Guarantor LP Agreement.

 

  

  

  

 

Subject to Section 4.4 hereof, prior to a Covered Bond Guarantee Activation Event, the Cash Manager will cause the Available Principal Receipts and Available Revenue Receipts held by it for and on behalf of the Guarantor LP and standing to the credit of the Transaction Account to be applied on each Guarantor LP Payment Date in accordance with the Pre-Acceleration Revenue Priority of Payments or Pre-Acceleration Principal Priority of Payments, as applicable.

 

4            Other Payments

 

Subject to Section 4.4 hereof, the Cash Manager agrees, and the Guarantor LP concurs, that (save as otherwise specified below) funds held by the Cash Manager for and on behalf of the Guarantor LP may be transferred from the GIC Account (or, as applicable, the Standby GIC Account) to the Transaction Account (or, as applicable, the Standby Transaction Account), and the following payments may be made from the Transaction Account (or, as applicable, the Standby Transaction Account) (to the extent that withdrawal of those amounts would not cause the balance of the Transaction Account to become overdrawn) and/or from amounts held by the Cash Manager for and on behalf of the Guarantor LP:

 

	
  

	
(i)

	
if any amount has been received from a Borrower for the express purpose of payment being made to a third party for the provision of a service (including giving insurance cover) to either that Borrower or the relevant Seller (in relation to Loans sold by that Seller) or the Guarantor LP, to pay such amount when due to such third party or, in the case of the payment of an insurance premium, where such third party and the Cash Manager have agreed that payment of commission should be made by deduction from such insurance premium, to pay such amount less such commissions when due to such third party and to pay such commission to the Cash Manager and to pay any premiums in respect of any insurance policies obtained or held by the Guarantor LP in accordance with the terms of the Guarantor LP Agreement or relating to any Loan comprised in the Covered Bond Portfolio;

 

	
  

	
(ii)

	
subject to Section 5.1 of the Servicing Agreement, to pay to any person (including the Servicer) any amounts due arising from any overpayment by any person or arising from any reimbursement by any person of any such overpayment (including, for the avoidance of doubt, where arising from the failure of a direct debit);

 

	
  

	
(iii)

	
subject to Section 2.5 of the Mortgage Sale Agreement, to pay when due (but subject to any right to refuse or withhold payment or of set-off that has arisen by reason of the Borrower's breach of the terms of the relevant Mortgage or Loan) any amount payable to a Borrower under the terms of the Mortgage or the Loan to which that Borrower is a party;

 

	
  

	
(iv)

	
to pay when due and payable any amounts due and payable by the Guarantor LP to third parties and incurred without breach by the Guarantor LP of the Guarantor LP Agreement and not provided for payment elsewhere in the Pre-Acceleration Revenue Priority of Payments or the Pre-Acceleration Principal Priority of Payments;

 

	
  

	
(v)

	
to refund any amounts due arising from the rejection of any payments in respect of a Loan and any other amounts which have not been received by the Guarantor LP as cleared funds; and

 

	
  

	
(vi)

	
to pay to the relevant Seller any amounts owed to the Seller pursuant to Section 8.4 of the Mortgage Sale Agreement.

 

  

  

  

 

5            Use of Ledgers

 

	
(a)

	
The Cash Manager shall forthwith record monies received or payments made by it on behalf of the Guarantor LP in the Ledgers in the manner set out in this Agreement and the Guarantor LP Agreement.

 

	
(b)

	
A debit item shall only be made in respect of any of the Ledgers and the corresponding payment or transfer (if any) may only be made from amounts held for and on behalf of the Guarantor LP, the GIC Account (or, as applicable, the Standby GIC Account) or the Transaction Account (or, as applicable, the Standby Transaction Account), as the case may be, to the extent that such entry does not cause the relevant Ledger to have a debit balance.

 

	
(c)

	
Following the service of a Notice to Pay on the Guarantor LP:

 

	
  

	
(i)

	
the Cash Manager shall not be obliged to maintain the Ledgers other than the Capital Account Ledger and the Intercompany Loan Ledger; and

 

	
  

	
(ii)

	
the Cash Manager shall establish any new Ledgers required by the Guarantor LP or the Bond Trustee to record payments in respect of obligations of the Guarantor LP under the Covered Bond Guarantee or otherwise.

 

6            Revenue Ledger

 

The Cash Manager shall ensure that:

 

	
  

	
(a)

	
the following amounts shall be credited to the Revenue Ledger:

 

	
  

	
(i)

	
all Revenue Receipts;

 

	
  

	
(ii)

	
all interest received by the Guarantor LP on the Guarantor LP Accounts;

 

	
  

	
(iii)

	
all amounts received by the Guarantor LP representing income on any such Substitute Assets;

 

	
  

	
(iv)

	
all amounts received by the Guarantor LP under any Interest Rate Swap Agreement on a Guarantor LP Payment Date (but excluding any early termination payments under the Swap Agreements and Swap Collateral Excluded Amounts); and

 

	
  

	
(v)

	
any other revenue income of the Guarantor LP which is not referred to in paragraphs (i) to (iv) above and which is not referred to in the receipts to be credited to the Principal Ledger in paragraph 8 below; and

 

	
  

	
(b)

	
any payment or provision made under the Pre-Acceleration Revenue Priority of Payments or made under paragraph 5 above (but only to the extent that such payment made under paragraph 5 has been recorded as a receipt on the Revenue Ledger), shall be debited to the Revenue Ledger.

 

7            Principal Ledger

 

The Cash Manager shall ensure that:

 

	
  

	
(a)

	
all Principal Receipts shall be credited to the Principal Ledger; and

 

	
  

	
(b)

	
any payment or provision made under the Pre-Acceleration Principal Priority of Payments or made under paragraph 6 above (but only to the extent that such payment made under paragraph 6 has been recorded as a receipt on the Principal Ledger), shall be debited to the Principal Ledger.

 

  

  

  

 

8            Capital Account Ledgers

 

	
(a)

	
The Cash Manager shall ensure that each Capital Contribution made by a Partner shall be credited to that Partner's Capital Account Ledger or, as applicable, debited from that Partner's Capital Account Ledger where a Capital Distribution has been made pursuant to Section 3.6 of the Guarantor LP Agreement.  The Cash Manager shall record on each Partner's Capital Account Ledger whether the relevant Capital Contribution was a Cash Capital Contribution or a Capital Contribution in Kind.

 

	
(b)

	
The Cash Manager shall ensure that each Capital Distribution to a Partner shall be debited to that Partner's Capital Account Ledger.

 

9            Reserve Ledger

 

The Cash Manager shall ensure that:

 

	
  

	
(a)

	
any amounts (or part thereof) borrowed by the Guarantor LP under the Intercompany Loan Agreement that are specifically required to be credited to the Reserve Fund, shall be credited to the Reserve Ledger; and

 

	
  

	
(b)

	
amounts shall be credited to the Reserve Ledger in accordance with the Pre-Acceleration Revenue Priority of Payments; and

 

	
  

	
(c)

	
amounts shall be debited to the Reserve Ledger on each Guarantor LP Payment Date in order to be applied in accordance with the Pre-Acceleration Revenue Priority of Payments or, as applicable, the Guarantee Priority of Payments.

 

10           Intercompany Loan Ledger

 

The Cash Manager shall ensure that each Advance, each repayment, all payments of interest and repayments of principal on each of Advance hereunder the Intercompany Loan Agreement are recorded in the Intercompany Loan Ledger at the appropriate time.

 

11           Payment Ledger

 

The Cash Manager shall ensure that all payments, and the Person to whom such payments are made and the source of such payments are recorded in the Payment Ledger at the appropriate time.Unassociated Document

EXHIBIT 4.12

 

 

AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

 

 

by and among

 

 

RBC COVERED BOND GUARANTOR LIMITED PARTNERSHIP

as Guarantor LP

 

and

 

COMPUTERSHARE TRUST COMPANY OF CANADA

as Bond Trustee

 

and

 

ANY OTHER PERSON WHO FROM TIME TO TIME MAY BECOME A PARTY TO THIS AGREEMENT

 

 

 

 

June 24, 2013

 

 

 

  

  

  

 

TABLE OF CONTENTS

 

	
ARTICLE 1

	  	  
	
SECURITY

	
2

	
Section 1.01

	
Definitions and Interpretation.

	
2

	
Section 1.02

	
Schedules.

	
2

	
Section 1.03

	
Terms Incorporated by Reference.

	
2

	
Section 1.04

	
Grant of Security.

	
3

	
Section 1.05

	
Obligations Secured.

	
4

	
Section 1.06

	
Notice and Acknowledgement.

	
5

	
Section 1.07

	
Accession of New Secured Creditors.

	
5

	
Section 1.08

	
Declaration of Trust.

	
5

	
Section 1.09

	
Attachment.

	
5

	
Section 1.10

	
Scope of Security.

	
7

	
Section 1.11

	
Grant of Licence to Use Intellectual Property.

	
7

	
Section 1.12

	
Care and Custody of Collateral.

	
7

	
Section 1.13

	
Rights of the Guarantor LP in Respect of Pledged Securities.

	
8

	
Section 1.14

	
Care and Custody of Securities.

	
8

	
Section 1.15

	
Investments in Substitute Assets.

	
8

	
Section 1.16        

	
Management and Application of Funds.

	
8

	  	  	  
	
ARTICLE 2

	  	  
	
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GUARANTOR LP

	
9

	
Section 2.01

	
Representations and Warranties of the Guarantor LP.

	
9

	
Section 2.02

	
Additional Representations and Warranties of the Guarantor LP.

	
10

	
Section 2.03

	
Covenants of the Guarantor LP.

	
10

	
Section 2.04

	
Additional Covenants of the Guarantor LP.

	
11

	  	  	  
	
ARTICLE 3

	  	  
	
ENFORCEMENT

	
11

	
Section 3.01

	
Enforcement.

	
11

	
Section 3.02

	
Knowledge of Bond Trustee of a Guarantor LP Event of Default.

	
12

	
Section 3.03

	
Discretionary Enforcement.

	
12

	
Section 3.04

	
Mandatory Enforcement.

	
12

	
Section 3.05

	
Mandatory other action.

	
13

	
Section 3.06

	
Disposal of Collateral.

	
13

 

  

- 2 -

  

 

	
Section 3.07

	
Payment of Monies After Service of a Guarantor LP Acceleration Notice.

	
13

	
Section 3.08

	
Remedies.

	
14

	
Section 3.09

	
Additional Rights.

	
14

	
Section 3.10

	
Enforcement When Not All Amounts Due and Payable.

	
16

	
Section 3.11

	
Substitute Assets.

	
16

	
Section 3.12

	
Concerning the Receiver.

	
17

	
Section 3.13

	
Appointment of Attorney.

	
17

	
Section 3.14

	
Dealing with the Collateral.

	
18

	
Section 3.15

	
Indemnity.

	
18

	
Section 3.16

	
Standards of Sale.

	
19

	
Section 3.17

	
Set-Off

	
19

	
Section 3.18

	
Dealings by Third Parties.

	
20

	
Section 3.19        

	
Risk of Funds

	
20

	  	  	  
	
ARTICLE 4

	  	  
	
CONFLICTS

	
20

	
Section 4.01

	
Secured Creditors

	
20

	
Section 4.02

	
Acknowledgement.

	
21

	  	  	  
	
ARTICLE 5

	  	  
	
EXERCISE OF CERTAIN RIGHTS

	
21

	
Section 5.01

	
No Enforcement by Bond Trustee

	
21

	
Section 5.02

	
Subordination

	
22

	  	  	  
	
ARTICLE 6

	  	  
	
RELEASE

	
23

	
Section 6.01

	
Discharge.

	
23

	
Section 6.02

	
Sale of the Covered Bond Portfolio.

	
23

	
Section 6.03

	
Disposal of Substitute Assets

	
23

	
Section 6.04

	
Withdrawals from Guarantor LP Accounts

	
24

	  	  	  
	
ARTICLE 7

	  	  
	
SUPPLEMENTAL PROVISIONS REGARDING THE BOND TRUSTEE

	
24

	
Section 7.01

	
Consent of Bond Trustee.

	
24

	
Section 7.02

	
Interests of Secured Creditors.

	
24

	
Section 7.03

	
Modification to Transaction Documents.

	
24

	  	  	  
	
ARTICLE 8

	  	  
	
REMUNERATION OF THE BOND TRUSTEE

	
26

 

  

- 3 -

  

 

	
Section 8.01

	
Remuneration.

	
26

	
Section 8.02

	
Additional Remuneration.

	
26

	
Section 8.03

	
Disputes.

	
27

	
Section 8.04

	
Expenses.

	
27

	  	  	  
	
ARTICLE 9

	  	  
	
APPOINTMENT OF NEW BOND TRUSTEE AND REMOVAL OF BOND TRUSTEE

	
27

	
Section 9.01

	
Power of Guarantor LP.

	
27

	
Section 9.02

	
Power of Bond Trustee.

	
27

	
Section 9.03

	
Multiple Bond Trustees.

	
28

	  	  	  
	
ARTICLE 10

	  	  
	
RETIREMENT OF BOND TRUSTEE

	
28

	  	  	  
	
ARTICLE 11

	  	  
	
NON-PETITION

	
29

	  	  	  
	
ARTICLE 12

	  	  
	
GENERAL

	
29

	
Section 12.01

	
Notices, etc.

	
29

	
Section 12.02

	
GST/HST

	
30

	
Section 12.03

	
No Merger.

	
30

	
Section 12.04

	
Further Assurances.

	
30

	
Section 12.05

	
Amendments

	
31

	
Section 12.06

	
Supplemental Security.

	
31

	
Section 12.07

	
Successors and Assigns.

	
31

	
Section 12.08

	
Headings, etc.

	
31

	
Section 12.09

	
Gender and Number.

	
31

	
Section 12.10

	
Severability.

	
31

	
Section 12.11

	
Governing Law.

	
31

	
Section 12.12      

	
Counterparts.

	
32

 

 

 

  

- 4 -

  

 

GENERAL SECURITY AGREEMENT

 

THIS GENERAL SECURITY AGREEMENT (this "Agreement") initially made as of the 25th day of October, 2007 and amended and restated on this 24th day of June, 2013.

 

BY AND AMONG:

 

	
(1)

	
RBC Covered Bond Guarantor Limited Partnership, a limited partnership formed under the laws of the Province of Ontario, whose principal office of the Partnership is located at 155 Wellington Street, West, 14th Floor, Toronto, Ontario, Canada M5V 3K7 by its managing general partner RBC Covered Bond GP Inc. (hereinafter the "Guarantor LP");

 

	
(2)

	
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 acting in its capacity as Bond Trustee (hereinafter the "Bond Trustee"); and

 

	
(3)

	
Any other person who from time to time may become a party to this Agreement.

 

WHEREAS:

 

	
(A)

	
Pursuant to the Trust Deed, the Guarantor LP has provided a guarantee covering all Guaranteed Amounts when the same become Due for Payment in respect of all Covered Bonds issued under the Programme from time to time; and

 

	
(B)

	
The Guarantor LP has agreed to execute and deliver this Agreement to and in favour of the Bond Trustee (on behalf of the Secured Creditors) as security for the payment and performance of the Guarantor LP’s obligations under the Transaction Documents to which the Guarantor LP is a party, including but not limited to the Trust Deed;

 

	
(C)

	
The parties entered into a General Security Agreement dated October 25, 2007 (the “Prior General Security Agreement” and the parties now desire to amend and restate in its entirety the terms of the Prior General Security Agreement by entering into this Agreement, such amendment and restatement having been made in accordance with Section 12.05 of the Prior General Security Agreement.

 

NOW THEREFORE, in consideration of the foregoing premises, the sum of $10.00 in lawful money of Canada now paid by the Bond Trustee to the Guarantor LP and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, the parties agree as follows:

 

ARTICLE 1

SECURITY

 

	
Section 1.01

	
Definitions and Interpretation.

 

The amended and restated master definitions and construction agreement dated June 24, 2013 made between, inter alia, the parties to this Agreement (as the same may be amended, varied or supplemented from time to time with the consent of the parties thereto) (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 shall, except where the context otherwise requires and save where otherwise defined herein, have the same meanings in this Agreement, including the recitals and Schedules 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.

 

  

  

  

 

	
Section 1.02

	
Schedules.

 

The following Schedules are attached to and form part of this Agreement:

 

	
  

	
Schedule “A”

	
Additional Representations and Warranties of the Guarantor LP

	
  

	
Schedule “B”

	
Additional Covenants of the Guarantor LP

	
  

	
Schedule “C”

	
Post-Enforcement Priority of Payments

 

	
Section 1.03

	
Terms Incorporated by Reference.

 

(1)           In this Agreement, "PPSA" shall mean the Personal Property Security Act as in effect from time to time in the Province of Ontario; provided that, if validity, perfection or the effect of perfection or non-perfection or the priority of the security interest granted by any Security in any collateral and the rights and remedies of the Bond Trustee are governed by the PPSA or other similar legislation as in effect in a jurisdiction other than Ontario, then "PPSA" shall mean the Personal Property Security Act or other similar legislation as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such validity, perfection, effect of perfection or non-perfection or priority and to such rights and remedies.

 

(2)           As used herein each of the following terms shall have the meaning specified in the section of the PPSA set forth in the column beside it below:

 

	
Term

	
PPSA

	
Control

	
1(2)

	
Entitlement Holder

	
1(1)

	
Entitlement Order

	
1(1)

	
Financial Asset

	
1(1)

	
Investment Property

	
1(1)

	
Securities Account

	
1(1)

	
Securities Intermediary

	
1(1)

	
Security

	
1(1)

	
Security Entitlement

	
1(1)

 

  

- 2 -

  

 

(3)           Other terms defined in the PPSA and used in this Agreement shall, unless otherwise defined herein, have the same meaning as ascribed to such terms in the PPSA.

 

	
Section 1.04

	
Grant of Security.

 

Subject to Section 1.10, the Guarantor LP assigns, mortgages, charges, hypothecates and pledges to the Bond Trustee (on behalf of the Secured Creditors) and grants to the Bond Trustee (on behalf of the Secured Creditors) a security interest in all the Guarantor LP’s right, title and interest in and to all of the personal property and undertaking of the Guarantor LP now owned or hereafter acquired, wherever situated (collectively, the "Collateral") including, without limitation, the Covered Bond Portfolio, Excess Proceeds received from the Bond Trustee pursuant to the Trust Deed, or Substitute Assets that the Guarantor LP may acquire from time to time and funds being held for the account of the Guarantor LP by its service providers and the amounts standing to the credit of the Guarantor LP and the Guarantor LP Accounts, subject to the right of the Guarantor LP (provided the Asset Coverage Test or the Amortization Test, as applicable, is met) to sell such Collateral, which includes any and all of the Guarantor LP’s:

 

	
  

	
(a)

	
inventory, including goods held for sale, lease or resale, goods furnished or to be furnished to third parties under contracts of lease, consignment or service, goods which are raw materials or work in process, goods used in or procured for packing and materials used or consumed in the business of the Guarantor LP;

 

	
  

	
(b)

	
equipment, machinery, furniture, fixtures, plants, vehicles and other goods of every kind and description and all licences and other rights and all records, files, charts, plans, drawings, specifications, manuals and documents relating thereto;

 

	
  

	
(c)

	
accounts due or accruing due and all agreements, books, accounts, invoices, letters, documents and papers recording, evidencing or relating thereto;

 

	
  

	
(d)

	
money, documents of title, chattel paper and instruments;

 

	
  

	
(e)

	
Investment Property and Equity Interests in other Persons that do not constitute Investment Property, now or hereafter acquired or owned by on or behalf of the Guarantor LP or in which the Guarantor LP now or hereafter has an interest (collectively, "Pledged Securities"), together with all substitutions or exchanges from time to time in respect of any of the foregoing Pledged Securities, and all dividends, distributions and other income (whether in the form of money, Securities or any other property) derived in respect of the foregoing Pledged Securities or payable in connection therewith and all monies and property received or receivable in the nature of the return or repayment of capital in respect thereof;

 

	
  

	
(f)

	
intangibles including all security interests, goodwill, choses in action and other contractual benefits and all trade marks, trade mark registrations and pending trade mark applications, patents and pending patent applications and copyrights and other intellectual property (collectively, the "Intellectual Property");

 

  

- 3 -

  

 

	
  

	
(g)

	
to the fullest extent permitted by applicable law, all authorizations, permits, approvals, grants, licenses, consents, rights, franchises, privileges, orders, certificates, judgments, writs, injunctions, awards, determinations, directions, decrees, demands or the like issued or granted by law or by rule or regulation of any public body now or hereafter issued or granted to it;

 

	
  

	
(h)

	
substitutions and replacements of and increases, additions and, where applicable, accessions to the property described in Sections 1.03(a)-(g) inclusive; and

 

	
  

	
(i)

	
proceeds in any form derived directly or indirectly from any dealing with all or any part of the property described in Sections 1.03(a)-(h) inclusive or the proceeds of such proceeds.

 

For purposes of this Agreement, "Equity Interest" means (i) in the case of a corporation, any shares of its capital stock, (ii) in the case of a limited liability company, any membership interest therein, (iii) in the case of a partnership, any partnership interest (whether general or limited) therein, (iv) in the case of any other business entity, any participation or other interest in the equity or profits thereof, (v) any warrant, option or other right to acquire any Equity Interest described in this definition, or (vi) any security entitlement in respect of any Equity Interest described in the definition.

 

	
Section 1.05

	
Obligations Secured.

 

(1)           The security interest granted hereby (the "Security") secures the payment and performance of all debts, liabilities and obligations, present or future, direct or indirect, absolute or contingent, matured or unmatured, at any time due or accruing due, owing by the Guarantor LP under the Transaction Documents, however or wherever incurred, and in any currency, and whether incurred by the Guarantor LP alone or with another or others and whether as principal or surety, pursuant to the Transaction Documents to which the Guarantor LP is a party (collectively, and together with the expenses, costs and charges set out in Section 1.05(2), the "Obligations").

 

(2)           All reasonable expenses, costs and charges incurred by or on behalf of the Bond Trustee in connection with this Agreement, the Security or the realization of the Collateral, including all reasonable legal fees, court costs, receiver’s or agent’s remuneration and other expenses of, or of taking or defending any action in connection with, taking possession of, repairing, protecting, insuring, preparing for disposition, realizing, collecting, selling, transferring, delivering or obtaining payment of the Collateral or other lawful exercises of the powers conferred by the Transaction Documents shall be added to and form a part of the Obligations.

 

	
Section 1.06

	
Notice and Acknowledgement.

 

The execution of this Agreement by each Secured Creditor shall constitute an express acknowledgement by each of them of such conveyances, transfers, charges and assignments and other Security made or granted by the foregoing provisions of this Article 1 and each of the Secured Creditors covenants with the Bond Trustee not to do anything inconsistent with the security interests given under or pursuant to this Agreement or knowingly to prejudice the Security constituted hereunder or pursuant hereto or under any Mortgage Deed provided that, without prejudice to Article 3, nothing herein shall be construed as limiting the rights or obligations of any of the Secured Creditors exercisable or to be prepared in accordance with and subject to the terms of any of the other Transaction Documents.

 

  

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Section 1.07

	
Accession of New Secured Creditors.

 

As a condition precedent to any new Series or Tranche, as applicable, of Covered Bonds issued under the Programme, any Person which becomes a Secured Creditor pursuant to and in accordance with this Agreement (each a “New Secured Creditor”) shall be bound by the terms of this Agreement and as evidence of such shall execute an instrument in a form acceptable to the Bond Trustee.

 

	
Section 1.08

	
Declaration of Trust.

 

The Bond Trustee hereby declares itself trustee of all the covenants, undertakings, charges, assignments, assignations and other security interests made or given to be made or given under or pursuant to this Agreement and the other Transaction Documents for itself and the other Secured Creditors in respect of the Obligations (as defined below) owed to each of them respectively upon and subject to the terms and conditions of this Agreement.

 

	
Section 1.09

	
Attachment.

 

(1)           The Guarantor LP acknowledges that (i) value has been given, (ii) it has rights in the Collateral (other than after-acquired Collateral) or the power to transfer rights in the Collateral (other than after-acquired Collateral) to the Bond Trustee, (iii) it has not agreed to postpone the time of attachment of the Security, and (iv) it has received a duplicate original copy of this Agreement.

 

If the Guarantor LP acquires Collateral consisting of chattel paper, instruments, securities, investment property or negotiable documents of title (collectively, "Negotiable Collateral"), the Guarantor LP will, immediately upon receipt, deliver to the Bond Trustee the Negotiable Collateral and shall (i) at the request of the Bond Trustee cause the transfer of the Negotiable Collateral to the Bond Trustee to be registered wherever, in the opinion of the Secured Creditors, such registration may be required or advisable, (ii) duly endorse the same for transfer in blank by an effective endorsement or deliver a stock transfer power in respect thereof or as the Bond Trustee may direct, (iii) immediately deliver to the Bond Trustee any and all consents or other documents which may be necessary to effect the transfer of the Negotiable Collateral to the Bond Trustee or any third party, and (iv) to the extent such Negotiable Collateral consists of investment property, cause the Bond Trustee to obtain Control of such Negotiable Collateral as determined pursuant to the PPSA.  If and to the extent that the Negotiable Collateral is uncertificated, the Guarantor LP shall enter into such custodial, control or other agreements at the request of the Bond Trustee.

 

  

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(2)           With respect to any Pledged Securities in certificated form, until further notice by the Bond Trustee, all certificates representing such Pledged Securities may remain registered in the name of the Guarantor LP, provided that the Guarantor LP shall promptly at the request and pursuant to the direction of the Bond Trustee (in the Bond Trustee’s sole discretion) either duly endorse such certificates in blank for transfer or execute stock transfer powers of attorney in respect thereof; in either case with signatures guaranteed and with all documentation being in form and substance satisfactory to the Bond Trustee and any transfer agent appointed from time to time in respect of such Pledged Securities.  If and to the extent that the Pledged Securities are uncertificated, the Guarantor LP shall enter into, and cause the issuer thereof to enter into, such custodial, control or other agreements as the Bond Trustee requires.  Notwithstanding the foregoing, at any time and from time to time upon request by the Bond Trustee (in the Bond Trustee’s sole discretion), the Guarantor LP shall cause any or all of the Pledged Securities to be issued and registered in the name of the Bond Trustee or its nominee, and the Bond Trustee is hereby appointed the irrevocable attorney (coupled with an interest) of the Guarantor LP with full power of substitution to cause any or all of the Pledged Securities to be issued and registered in the name of the Bond Trustee or its nominee.

 

(3)           The Guarantor LP shall hold its Security Entitlements in a Securities Account that (i) is maintained in the name of the Guarantor LP at an office of a Securities Intermediary located in Ontario, and (ii) together with all Financial Assets credited thereto and all related Security Entitlements, is subject to a Securities Account Control Agreement (as defined below) among the Guarantor LP, the Bond Trustee and such Securities Intermediary ("Controlled Securities Account").  The Guarantor LP shall, at the request of the Bond Trustee (in the Bond Trustee’s sole discretion), (i) enter into and cause any Securities Intermediary holding a Securities Account in respect of Pledged Securities to enter into a securities account control agreement in the form and substance satisfactory to the Bond Trustee acting reasonably (a "Securities Account Control Agreement") in respect of all Pledged Securities constituting Security Entitlements of the Guarantor LP, and (ii) deliver each such Securities Account Control Agreement to the Bond Trustee.  The Guarantor LP shall cause all Pledged Securities underlying any Security Entitlements acquired by the Guarantor LP after the date hereof to be credited to a Controlled Securities Account that is subject to a Securities Account Control Agreement.

 

(4)           The Guarantor LP will promptly inform the Bond Trustee in writing of the acquisition by the Guarantor LP of any personal property which is not adequately described in this Agreement, and the Guarantor LP will execute and deliver, at its own expense, from time to time amendments to this Agreement or additional Agreements or schedules as may be required by the Bond Trustee in order that the Security shall attach to such personal property.

 

	
Section 1.10

	
Scope of Security.

 

(1)           To the extent that the creation of the Security would constitute a breach or permit the acceleration or termination of any agreement, right, licence or permit of the Guarantor LP (each, a "Restricted Asset"), the Security shall not attach to the Restricted Asset but the Guarantor LP shall hold its interest in the Restricted Asset in trust for the Bond Trustee, and shall be deemed to have granted a Security in such Restricted Asset to the Bond Trustee or as it may direct immediately, and such Security shall attach to the Restricted Asset, upon obtaining the consent of the other party.

 

(2)           Until the Security shall have become enforceable, the grant of the Security in the Intellectual Property shall not affect in any way the Guarantor LP’s rights to commercially exploit the Intellectual Property, defend it, enforce the Guarantor LP’s rights in it or with respect to it against third parties in any court or claim and be entitled to receive any damages with respect to any infringement of it.

 

  

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(3)           The Security shall not extend to consumer goods.

 

(4)           The Security shall not extend or apply to the last day of the term of any lease or sublease or any agreement for a lease or sublease, now held or hereafter acquired by the Guarantor LP in respect of real property, but the Guarantor LP shall stand possessed of any such last day upon trust to assign and dispose of it as the Bond Trustee may direct.

 

	
Section 1.11

	
Grant of Licence to Use Intellectual Property.

 

For purposes of enabling the Bond Trustee to exercise its rights and remedies pursuant to Article 3, at such time as the Bond Trustee shall be lawfully entitled to exercise its rights and remedies and for no other purpose, the Guarantor LP grants to the Bond Trustee an irrevocable, nonexclusive licence (exercisable without payment of royalty or other compensation to the Guarantor LP) to use, assign or sublicense any of the Intellectual Property wherever the same may be located, including in such licence access to (i) all media in which any of the licensed items may be recorded or stored, and (ii) all computer programs used for compilation or print-out.

 

	
Section 1.12

	
Care and Custody of Collateral.

 

(1)           Subject to subsection (2) below, the Bond Trustee shall have no obligation to keep Collateral in its possession identifiable.

 

(2)           Prior to the service of a Guarantor LP Acceleration Notice, the Bond Trustee shall be bound to exercise in the physical keeping of any Pledged Securities or Negotiable Collateral, only the same degree of care as it would exercise in respect of its own Securities, negotiable collateral or other Investment Property kept at the same place.

 

(3)           The Bond Trustee may, after the Security shall have become enforceable, (i) notify any person obligated on an account or on chattel paper or any obligor on an instrument to make payments to the Bond Trustee whether or not the Guarantor LP was previously making collections on such accounts, chattel paper or instruments, and (ii) assume control of any proceeds arising from the Collateral.

 

	
Section 1.13

	
Rights of the Guarantor LP in Respect of Pledged Securities.

 

(1)           Until the Security has become enforceable, the Guarantor LP shall be entitled to vote the Pledged Securities and to give consents, ratifications or waivers and to receive all cash dividends in respect of the Pledged Securities.  Whenever the Security has become enforceable, all rights of the Guarantor LP to vote the Pledged Securities and to give consents, ratifications or waivers and to receive dividends in respect of the Pledged Securities shall cease and all such rights shall become vested solely and absolutely in the Bond Trustee.

 

(2)           Any dividends received by the Guarantor LP contrary to Section 1.13(1) or any other money or property which may be received by the Guarantor LP at any time for, or in respect of, the Pledged Securities shall be received as trustee for the Bond Trustee and shall be immediately paid over to the Bond Trustee.

 

  

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Section 1.14

	
Care and Custody of Securities.

 

Unless a Guarantor LP Acceleration Notice has been served, the Bond Trustee shall not have any right to the collection of dividends on, or exercise any option or right (including any right to vote, give consents, ratifications or waivers) in connection with, any Pledged Securities.  The Bond Trustee need not protect or preserve any Collateral from depreciating in value or becoming worthless and is released from all responsibility for any loss of value.

 

	
Section 1.15

	
Investments in Substitute Assets.

 

(1)           Notwithstanding the Security created by or pursuant to Agreement (and without prejudice to Section 3.11), the Cash Manager may, on behalf of the Guarantor LP and the Bond Trustee, invest in the name of the Guarantor LP and the Bond Trustee, monies standing from time to time to the credit of the Guarantor LP Accounts in Substitute Assets in accordance with the Cash Management Agreement and the Guarantor LP Agreement provided that:

 

	
  

	
(a)

	
any costs properly incurred by the Bond Trustee in making and changing investments will be reimbursed to the Bond Trustee by the Guarantor LP; and

 

	
  

	
(b)

	
all income from and proceeds following the disposal or maturity of Substitute Assets shall be credited to the relevant Guarantor LP Account.

 

(2)           Notwithstanding the Security created by or pursuant to this Agreement, Substitute Assets may, on any Business Day, be sold, redeemed, realized or otherwise disposed of subject always to the other provisions of this Agreement.

 

	
Section 1.16

	
Management and Application of Funds.

 

 The Guarantor LP shall take or cause to be taken such action as may from time to time be necessary on its part to ensure that the GIC Account (and/or, as applicable, the Standby GIC Account) shall from time to time be credited with all amounts received by the Guarantor LP and falling within any of the following categories:

 

	
  

	
(a)

	
all Revenue Receipts and all Principal Receipts;

 

	
  

	
(b)

	
all Cash Capital Contributions;

 

	
  

	
(c)

	
amounts received by the Guarantor LP pursuant to the Interest Rate Swap Agreement;

 

	
  

	
(d)

	
Excess Proceeds received from the Bond Trustee pursuant to the Trust Deed;

 

	
  

	
(e)

	
any other amount whatsoever received by or on behalf of the Guarantor LP after the Programme Date (including, without limitation, any proceeds advanced to the Guarantor LP under the Intercompany Loan Agreement where such proceeds have not been applied to acquire Loans and their Related Security, to refinance an existing Advance under the Intercompany Loan Agreement or invest in Substitute Assets);

 

  

- 8 -

  

 

	
  

	
(f)

	
the proceeds arising from the disposal of any Substitute Assets and any and all income or other distributions received by the Guarantor LP in respect thereof or arising from the proceeds of any Substitute Assets; and

 

	
  

	
(g)

	
such other payments received by the Guarantor LP as are, or ought in accordance with this Agreement to be, comprised in the Collateral.

 

For greater certainty, the Guarantor LP may apply, or cause to be applied on its behalf, such amounts in accordance with the terms of the transaction documents including the applicable Priorities of Payment, without first being deposited into the GIC Account.

 

ARTICLE 2

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GUARANTOR LP

 

	
Section 2.01

	
Representations and Warranties of the Guarantor LP.

 

(1)           The Guarantor LP represents and warrants to the Secured Creditors, acknowledging and confirming that the Secured Creditors are relying thereon without independent inquiry, that as at the date hereof:

 

	
  

	
(a)

	
it is the registered, legal and beneficial owner of the Pledged Securities and is the legal and beneficial owner of all other Collateral;

 

	
  

	
(b)

	
the Collateral is free and clear of all liens, mortgages, charges, security interests, claims, encumbrances or other similar rights or interests of any third parties other than those created pursuant to the Transaction Documents and Permitted Security Interests, and none of the Collateral is held by the Guarantor LP in a trust capacity except to the extent provided for in the Transaction Documents;

 

	
  

	
(c)

	
the Security in the Collateral owned by the Guarantor LP has been perfected;

 

	
  

	
(d)

	
the Bond Trustee has obtained Control pursuant to the PPSA of the Collateral owned by the Guarantor LP that consists of investment property ("Controlled Assets") and the Bond Trustee is a protected purchaser within the meaning of the PPSA;

 

	
  

	
(e)

	
no Person other than the Bond Trustee has Control or has the right to obtain Control within the meaning of the PPSA of any Controlled Assets; and

 

	
  

	
(f)

	
no authorizations, consents or approvals from, or notices to, any Governmental Authority or other Person is or was necessary in connection with the execution and delivery of this Agreement or the performance or enforcement of the Guarantor LP’s obligations hereunder, except as have been obtained, given or are in full force and effect unamended, at the date hereof.

 

  

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Section 2.02

	
Additional Representations and Warranties of the Guarantor LP.

 

In addition to the representations and warranties of the Guarantor LP in Section 2.01, the Guarantor LP further represents and warrants to the Secured Creditors that the representations and warranties set out in Schedule “A” hereto are true as at the date hereof .

 

	
Section 2.03

	
Covenants of the Guarantor LP.

 

Subject to the provisions of the Guarantor LP Agreement, the Guarantor LP covenants and agrees with the Bond Trustee that it shall:

 

	
  

	
(a)

	
duly and punctually pay and discharge all monies and liabilities whatsoever which now are or at any time hereafter may (whether before or after the Security has become enforceable pursuant to this Agreement) become due and payable to the Bond Trustee (whether for its own account or as trustee for the Secured Creditors) or any of the other Secured Creditors by the Guarantor LP, whether actually or contingently, solely or jointly with one or more Persons and whether as principal or guarantor under or pursuant to this Agreement or any other of the Transaction Documents;

 

	
  

	
(b)

	
observe, perform and satisfy all of its other obligations and liabilities under or pursuant to this Agreement and/or any of the Transaction Documents;

 

	
  

	
(c)

	
not do anything inconsistent with the Security or knowingly to prejudice the Security or the Bond Trustee’s interest therein; and

 

	
  

	
(d)

	
comply in all respects with the Priorities of Payments as set out in the Guarantor LP Agreement prior to and until service of a Guarantor LP Acceleration Notice on the Guarantor LP.

 

	
Section 2.04

	
Additional Covenants of the Guarantor LP.

 

In addition to the covenants of the Guarantor LP in Section 2.03, the Guarantor LP covenants and agrees with the Bond Trustee as set out on Schedule “B” hereto.

 

ARTICLE 3

ENFORCEMENT

 

	
Section 3.01

	
Enforcement.

 

(1)           The Security shall be and become enforceable against the Guarantor LP;

 

  

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(a)

	
upon a Guarantor  LP Acceleration Notice being served on the Guarantor LP; or

 

	
  

	
(b)

	
if there are no Covered Bonds outstanding following:

 

	
  

	
(i)

	
the non-payment when due, whether by acceleration or otherwise, of any Obligations or the failure of the Guarantor LP to observe or perform any obligation, covenant, term, provision or condition contained in this Security Agreement or any other Transaction Document to which it is a party which is not remedied within thirty (30) days after notice has been given by the Bond Trustee to the Guarantor LP specifying such default and requiring the Guarantor LP to remedy same;

 

	
  

	
(ii)

	
the occurrence the bankruptcy or insolvency of the Guarantor LP;

 

	
  

	
(iii)

	
the filing against the Guarantor LP of a petition in bankruptcy, the making of a compromise, arrangement or an authorized assignment for the benefit of creditors by the Guarantor LP, the appointment of a receiver or trustee for the Guarantor LP or for any assets of the Guarantor LP or the institution by or against the Guarantor LP of any other type of insolvency proceeding under the Bankruptcy and Insolvency Act or otherwise and if involuntary, which is not contested in good faith and vacated, discharged or stayed within thirty (30) days, provided that no order is made granting relief;

 

	
  

	
(iv)

	
the institution by or against the Guarantor LP of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against or winding up of affairs of the Guarantor LP and if involuntary, which is not contested in good faith and vacated, discharged or stayed within thirty (30) days, provided that no order is made granting relief;

 

	
  

	
(v)

	
any Encumbrance affecting the Collateral becomes enforceable against the Collateral; or

 

	
  

	
(vi)

	
the Guarantor LP ceasing or threatening to cease to carry on business or agreeing to make a bulk sale of assets without complying with applicable law or commits or threatens to commit an act of bankruptcy.

 

(2)           The Bond Trustee shall, if reasonably practicable, give prior notification to the Seller of the Bond Trustee’s intention to enforce the Security, provided always that the failure of the Bond Trustee to provide such notification shall not prejudice the ability of the Bond Trustee to enforce the Security.

 

(3)           Without prejudice to the effectiveness of any service of the Guarantor LP Acceleration Notice, as soon as is reasonable thereafter the Bond Trustee shall serve a copy of any Guarantor LP Acceleration Notice on each of the Secured Creditors, the Guarantor LP, the Rating Agencies and the Asset Monitor.

 

  

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Section 3.02

	
Knowledge of Bond Trustee of a Guarantor LP Event of Default.

 

The Bond Trustee will be deemed not to have knowledge of the occurrence of a Guarantor LP Event of Default or Potential Guarantor LP Event of Default unless the Bond Trustee has received written notice from the Guarantor LP (or on its behalf) or a Secured Creditor stating that a Guarantor LP Event of Default or Potential Guarantor LP Event of Default has occurred and describing that Guarantor LP Event of Default.

 

	
Section 3.03

	
Discretionary Enforcement.

 

Subject to the provisions of this Agreement, the Bond Trustee may at any time, at its discretion and without notice, take such proceedings and/or other action as it may think fit against, or in relation to, the Guarantor LP or any other person to enforce their respective obligations under or pursuant to this Agreement or any other Transaction Document.  Subject to the provisions of this Agreement, at any time after the Security has become enforceable, the Bond Trustee may, at its discretion and without notice, take such steps as it may think fit to enforce such Security.

 

	
Section 3.04

	
Mandatory Enforcement.

 

The Bond Trustee shall not be bound to take any steps to enforce any provision of this Agreement or to institute any proceedings or to enforce the Security unless the Bond Trustee:

 

	
  

	
(a)

	
shall have been directed to do so by an Extraordinary Resolution of all the Holders of the Covered Bonds of all Series (with the Covered Bonds of all Series taken together as a single Series as provided in Condition 7.03) or requested to do so in writing by the holders of not less than 25% in aggregate Principal Amount Outstanding of the Covered Bonds of all Series (taken together and converted into euros at the rate specified in the applicable Final Terms in accordance with Condition 7.03) then outstanding; and

 

	
  

	
(b)

	
shall have been indemnified and/or secured to its satisfaction against all Liabilities to which it may thereby render itself liable and all Liabilities which it may incur by so doing and the terms of such indemnity may include the provision of a fighting fund, non-recourse loan or other similar arrangement.

 

	
Section 3.05

	
Mandatory other action.

 

The Bond Trustee shall not be bound to take any other steps (other than the steps referred to in Section 3.04 above) under or pursuant to this Agreement or any of the other Transaction Documents unless the Bond Trustee shall have been directed to do so by an Extraordinary Resolution of the Holders of Covered Bonds of the relevant one or more Series (with Covered Bonds of such Series taken together as a single Series (if more than one Series) and converted, if applicable, into euros at the rate specified in the applicable Final Terms) or requested to do so in writing by the holders of not less than 25% in aggregate Principal Amount Outstanding of the Covered Bonds then outstanding of the relevant one or more Series (taken together and converted in to euros as aforesaid); and shall have been indemnified and/or secured to its satisfaction as aforesaid.

 

  

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Section 3.06

	
Disposal of Collateral.

 

Notwithstanding Article 3, if the Security has become enforceable otherwise than by reason of a default in payment of any amount due on the Covered Bonds, the Bond Trustee will not be entitled to dispose of any of the Collateral unless either a sufficient amount would be realised to allow discharge in full of all amounts owing to the Holders of Covered Bonds or the Bond Trustee is of the sole opinion, which shall be binding on the Bond Trustee, reached after considering at any time and from time to time the advice of any financial adviser (or such other professional advisers reasonably selected by the Bond Trustee for the purpose of giving such advice), that the cash flow prospectively receivable by the Guarantor LP will not (or that there is a significant risk that it will not) be sufficient, having regard to any other relevant actual, contingent or prospective liabilities of the Guarantor LP, to discharge in full in due course all amounts owing to the Holders of Covered Bonds.  The fees and expenses of the aforementioned financial adviser or other professional adviser selected by the Bond Trustee shall be paid by the Guarantor LP.

 

	
Section 3.07

	
Payment of Monies After Service of a Guarantor LP Acceleration Notice.

 

(1)           From and including the time when the Bond Trustee serves a Guarantor LP Acceleration Notice on the Guarantor LP, no amount may be withdrawn from the Guarantor LP Accounts without the prior written consent of the Bond Trustee.

 

(2)           Any and all moneys received or recovered (excluding all amounts due or to become due in respect of any Third Party Amounts) by the Bond Trustee (or a receiver appointed on its behalf in accordance with this Agreement) following the service of a Guarantor LP Acceleration Notice and enforcement of the Security, shall be held by it in the Guarantor LP Accounts in trust to be applied by the Bond Trustee (or a receiver appointed on its behalf in accordance with this Agreement) in accordance with Schedule C (the “Post-Enforcement Priority of Payments”) (in each case only if and to the extent that payments or provisions of a higher priority have been made in full) described on Schedule “C” hereto.

 

	
Section 3.08

	
Remedies.

 

Whenever the Security has become enforceable, the Bond Trustee may realize upon the Collateral and enforce the rights of the Bond Trustee by:

 

	
  

	
(a)

	
entry onto any premises where Collateral consisting of tangible personal property may be located;

 

	
  

	
(b)

	
entry into possession of the Collateral by any method permitted by law;

 

	
  

	
(c)

	
sale or lease of all or any part of the Collateral;

 

	
  

	
(d)

	
collection of any proceeds arising in respect of the Collateral;

 

  

- 13 -

  

 

	
  

	
(e)

	
collection, realization or sale of, or other dealing with, the accounts;

 

	
  

	
(f)

	
appointment by instrument in writing of a receiver (which term as used in this Agreement includes a receiver and manager) or agent of all or any part of the Collateral and removal or replacement from time to time of any receiver or agent;

 

	
  

	
(g)

	
institution of proceedings in any court of competent jurisdiction for the appointment of a receiver of all or any part of the Collateral;

 

	
  

	
(h)

	
institution of proceedings in any court of competent jurisdiction for sale or foreclosure of all or any part of the Collateral;

 

	
  

	
(i)

	
filing of proofs of claim and other documents to establish claims to the Collateral in any proceeding relating to the Guarantor LP; and

 

	
  

	
(j)

	
any other remedy or proceeding authorized or permitted under the PPSA or otherwise by law or equity.

 

Such remedies may be exercised from time to time separately or in combination and are in addition to, and not in substitution for, any other rights of the Bond Trustee however created.  The Bond Trustee shall not be bound to exercise any right or remedy, and the exercise of rights and remedies shall be without prejudice to any other rights of the Bond Trustee in respect of the Obligations including the right to claim for any deficiency.  The taking of any action or proceeding or refraining from doing so, or any other dealings with any other security for the Obligations secured by this Agreement shall not release or affect the Collateral or the Security.

 

	
Section 3.09

	
Additional Rights.

 

(1)           In addition to the remedies set forth in Section 3.08, the Bond Trustee may, whenever the Security has become enforceable:

 

	
  

	
(a)

	
require the Guarantor LP, at the Guarantor LP’s expense, to assemble the Collateral at a place or places designated by notice in writing and the Guarantor LP agrees to so assemble the Collateral;

 

	
  

	
(b)

	
require the Guarantor LP, by notice in writing, to disclose to the Bond Trustee the location or locations of the Collateral and the Guarantor LP agrees to make such disclosure when so required;

 

	
  

	
(c)

	
repair, process, modify, complete or otherwise deal with the Collateral and prepare for the disposition of the Collateral, whether on the premises of the Guarantor LP or otherwise;

 

	
  

	
(d)

	
carry on all or any part of the business of the Guarantor LP and, to the exclusion of all others including the Guarantor LP, enter upon, occupy and use all or any of the premises, buildings, and other property of or used by the Guarantor LP for such time as the Bond Trustee sees fit, free of charge, and the Bond Trustee shall not be liable to the Guarantor LP for any act, omission or negligence in so doing or for any rent, charges, depreciation or damages incurred in connection with or resulting from such action;

 

  

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(e)

	
exercise all voting rights attached to the Pledged Securities (whether or not registered in the name of the Bond Trustee or its nominee) and give or withhold all consents, waivers and ratifications in respect thereof, collect and receive dividends and other distributions relating thereto and otherwise act with respect thereto as though it were the absolute owner thereof;

 

	
  

	
(f)

	
deal with any Security Entitlements, Securities Accounts and Securities Intermediaries holding Security Entitlements as if it were the Entitlement Holder thereof including making such Entitlement Orders as it deems appropriate and instructing any such Securities Intermediary to transfer the Securities Accounts held in any Controlled Securities Accounts into an account in the name of the Bond Trustee or as it may direct;

 

	
  

	
(g)

	
exercise any and all rights of redemption, conversion, exchange, sale, subscription or any other rights, privileges or options pertaining to any of the Pledged Securities as if it were the absolute owner thereof including, without limitation, the right to exchange at its discretion any and all of the Pledged Securities upon the merger, consolidation, reorganization, recapitalization or other readjustment of any issuer thereof, or upon the exercise by any issuer of any right, privilege or option pertaining to any of the Pledged Securities, and in connection therewith, to deposit and deliver or direct the sale or other disposition of any of the Pledged Securities with any committee, depositary, Securities Intermediary, clearing house, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it;

 

	
  

	
(h)

	
borrow for the purpose of carrying on the business of the Guarantor LP or for the maintenance, preservation or protection of the Collateral and mortgage, grant or charge a security interest in the Collateral, whether or not in priority to the Security, to secure repayment; and

 

	
  

	
(i)

	
commence, continue or defend any judicial or administrative proceedings for the purpose of protecting, seizing, collecting, realizing or obtaining possession or payment of the Collateral, and give good and valid receipts and discharges in respect of the Collateral and compromise or give time for the payment or performance of all or any part of the accounts or any other obligation of any third party to the Guarantor LP.

 

(2)           The Bond Trustee shall have the power to insure against any liabilities or obligations arising:

 

  

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(a)

	
as a result of the Bond Trustee acting or failing to act in a certain way (other than which may arise from its negligence or wilful default or that of its officers or employees);

 

	
  

	
(b)

	
as a result of any act or failure to act by any person or persons to whom the Bond Trustee has delegated any of its trusts, rights, powers, duties, authorities or discretions, or appointed as its agent (other than which may arise from such person's negligence, fraud and/or wilful default);

 

	
  

	
(c)

	
in connection with the Collateral; or

 

	
  

	
(d)

	
in connection with or arising from the enforcement of the Security created by or pursuant to this Agreement.

 

The Bond Trustee shall not be under any obligation to insure in respect of such liabilities and/or obligations or to require any other person to maintain insurance, but to the extent that it does so, the Guarantor LP shall quarterly and on written request pay all insurance premiums and expenses which the Bond Trustee may properly incur in relation to such insurance.  If the Guarantor LP fails to pay such premiums or expenses or to reimburse the Bond Trustee therefor, the Bond Trustee shall be entitled to be indemnified out of the Collateral in respect thereof and, where a Guarantor LP Acceleration Notice has been served, the indemnification of the Bond Trustee in respect of all such insurance premiums and expenses shall be payable in priority to payments to the Holders of the Covered Bonds and all other Secured Creditors and otherwise in accordance with this Agreement.

 

	
Section 3.10

	
Enforcement When Not All Amounts Due and Payable.

 

If the Bond Trustee enforces the Security at a time when either no amounts or not all amounts owing in respect of the Obligations have become due and payable, the Bond Trustee (or a receiver appointed by it in accordance with this Agreement) may, for so long as no such amounts or not all such amounts have become due and payable, pay any monies referred to in Section 3.07 into, and retain such monies in, an interest-bearing account (a "Retention Account") to be held by it as security and applied by it in accordance with Section 3.07 as and when any of the amounts referred to therein become due and payable.

 

	
Section 3.11

	
Substitute Assets.

 

Any monies which under the trusts of this Agreement ought to or may be invested by the Bond Trustee (or by the Cash Manager or any other agent on its behalf) after the Security created under or pursuant to this Agreement shall have become enforceable may be invested in the name of the Bond Trustee or in the name of any nominee on its behalf and under the control of the Bond Trustee in any Substitute Assets and the Bond Trustee may at any time vary or transfer (or direct the Cash Manager to vary or transfer) any of such Substitute Assets for or into other such Substitute Assets as the Bond Trustee in its absolute discretion may determine, and shall not be responsible (save where any loss results from the Bond Trustee's breach of trust, fraud, wilful default or negligence or that of its officers or employees) for any loss occasioned by reason of any such Substitute Assets whether by depreciation in value or otherwise, provided that such Substitute Assets were made in accordance with the foregoing provisions.  If a bank or institution with which any monies placed on deposit in accordance with this clause is the Bond Trustee or an affiliate of the Bond Trustee, it need only account for an amount of interest equal to the amount of interest which would, at then current rates, be payable by it on such a deposit to an independent customer.

 

  

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Section 3.12

	
Concerning the Receiver.

 

(1)           Any receiver appointed by the Bond Trustee shall be vested with the rights and remedies which could have been exercised by the Bond Trustee in respect of the Guarantor LP or the Collateral and such other powers and discretions as are granted in the instrument of appointment and any supplemental instruments.  The identity of the receiver, its replacement and its remuneration shall be within the sole and unfettered discretion of the Bond Trustee.

 

(2)           Any receiver appointed by the Bond Trustee shall act as agent for the Bond Trustee for the purposes of taking possession of the Collateral, but otherwise and for all other purposes (except as provided below), as agent for the Guarantor LP.  The receiver may sell, lease, or otherwise dispose of Collateral as agent for the Guarantor LP or as agent for the Bond Trustee as the Bond Trustee may determine in its discretion.  The Guarantor LP agrees to ratify and confirm all actions of the receiver acting as agent for the Guarantor LP, and to release and indemnify the receiver in respect of all such actions.

 

(3)           The Bond Trustee, in appointing or refraining from appointing any receiver, shall not incur liability to the receiver, the Guarantor LP or otherwise and shall not be responsible for any misconduct or negligence of such receiver.

 

	
Section 3.13

	
Appointment of Attorney.

 

The Guarantor LP irrevocably appoints the Bond Trustee (and any of its officers) as attorney of the Guarantor LP (with full power of substitution) to do, make and execute, in the name of and on behalf of the Guarantor LP, all such further acts, documents, matters and things which the Bond Trustee may deem necessary or advisable to accomplish the purposes of this Agreement including the execution, endorsement and delivery of documents and any notices, receipts, assignments or verifications of the accounts and the delivery and transfer of any Collateral to the Bond Trustee to its nominees or transferees.  Whenever the Security has become enforceable, the Bond Trustee or its nominees and transferees are empowered to exercise all rights and powers and to perform all acts of ownership with respect to the Collateral that constitutes Pledged Securities to the same extent as the Guarantor LP might do.  The powers of attorney herein granted is in addition to, and not in substitution for any transfer power of attorney delivered by the Guarantor LP and such power of attorney may be relied upon by the Bond Trustee severally or in combination.  All acts of the attorney are ratified and approved, and the attorney shall not be liable for any act, failure to act or any other matter or thing, except for its own gross negligence or wilful misconduct.

 

	
Section 3.14

	
Dealing with the Collateral.

 

(1)           The Bond Trustee shall not be obliged to exhaust their recourse against the Guarantor LP or any other Person or against any other security they may hold in respect of the Obligations before realizing upon or otherwise dealing with the Collateral in such manner as the Bond Trustee may consider desirable.

 

  

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(2)           The Bond Trustee may grant extensions or other indulgences, take and give up securities, accept compositions, grant releases and discharges and otherwise deal with the Guarantor LP and with other Persons, sureties or securities as they may see fit without prejudice to the Obligations, the liability of the Guarantor LP or the rights of the Bond Trustee in respect of the Collateral.

 

(3)           The Bond Trustee shall not be (i) liable or accountable for any failure to collect, realize or obtain payment in respect of the Collateral, (ii) bound to institute proceedings for the purpose of collecting, enforcing, realizing or obtaining payment of the Collateral or for the purpose of preserving any rights of any Persons in respect of the Collateral, (iii) responsible for any loss occasioned by any sale or other dealing with the Collateral or by the retention of or failure to sell or otherwise deal with the Collateral, or (iv) bound to protect the Collateral from depreciating in value or becoming worthless.

 

(4)           The Bond Trustee shall upon the reasonable request of CMHC make available to CMHC during business hours all accounts and records relating to this Agreement, if required by CMHC to verify that the Issuer, Guarantor LP and/or the Programme are in compliance with any requirement of the Guide and Part I.1 of the National Housing Act (Canada). Upon receipt of any such request, the Bond Trustee shall promptly notify the Issuer and the Guarantor LP in writing of the receipt thereof and unless otherwise prohibited shall provide details of the nature of any such request.

 

	
Section 3.15

	
Indemnity.

 

The Guarantor LP agrees to indemnify in full (but only following service of an Issuer Acceleration Notice on the Issuer and service of a Notice to Pay on the Guarantor LP) the Bond Trustee and any receiver appointed in accordance with this Agreement from and against all losses, actions, claims, costs (including legal costs and travel expenses), charges and expenses (including insurance premiums), demands and liabilities whether in contract, tort or otherwise now or hereafter properly sustained or incurred by the Bond Trustee or such receiver and their respective officers and employees or by any person for whose liability, act or omission the Bond Trustee or such receiver may be answerable, in connection with anything done or omitted to be done under or pursuant to this Agreement or any other Transaction Document to which such entity is a party, or in the exercise or purported exercise of the powers herein contained, or occasioned by any breach by the Guarantor LP of any of its covenants or other obligations to the Bond Trustee, or in consequence of any payment in respect of the Obligations (whether made by the Guarantor LP or a third person) being declared void or impeached for any reason whatsoever.

 

	
Section 3.16

	
Standards of Sale.

 

Without prejudice to the ability of the Bond Trustee to dispose of the Collateral in any manner which is commercially reasonable, the Guarantor LP acknowledges that a disposition of Collateral by the Bond Trustee which takes place substantially in accordance with the following provisions shall be deemed to be commercially reasonable:

 

	
  

	
(a)

	
the Collateral may be disposed of in whole or in part;

 

  

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(b)

	
the Collateral may be disposed of by public auction, public tender private contract or any other means, with or without advertising and without any other formality;

 

	
  

	
(c)

	
any assignee of such Collateral may be the Bond Trustee or a customer of the Bond Trustee;

 

	
  

	
(d)

	
any sale conducted by the Bond Trustee shall be at such time and place, on such notice and in accordance with such procedures as the Bond Trustee, in its sole discretion, may deem advantageous;

 

	
  

	
(e)

	
Pledged Securities may be disposed of in any manner and on any terms necessary to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that the prospective bidders and purchasers have certain qualifications, and restrict the prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of the Pledged Securities) or in order to obtain any required approval of the disposition (or of the resulting purchase) of any Governmental Authority;

 

	
  

	
(f)

	
a disposition of Collateral may be on such terms and conditions as to credit or otherwise as the Bond Trustee, in its sole discretion, may deem advantageous; and

 

	
  

	
(g)

	
the Bond Trustee may establish an upset or reserve bid or price in respect of any Collateral.

 

	
Section 3.17

	
Set-Off

 

The Bond Trustee may at any time after the Security shall have become enforceable (without notice and notwithstanding any settlement of account or other matter whatsoever) combine or consolidate all or any existing accounts of the Guarantor LP whether in its own name or jointly with others and held by it or any Secured Creditor and may set-off or transfer all or any part of any credit balance or any sum standing to the credit of any such account (whether or not the same is due to the Guarantor LP from the Bond Trustee or relevant Secured Creditor and whether or not the credit balance and the account in debit or the Obligations are expressed in the same currency in which case the Bond Trustee is hereby authorized to effect any necessary conversions at its prevailing rates of exchange) in or towards satisfaction of any of the Obligations and may in its absolute discretion estimate the amount of any liability of the Guarantor LP which is contingent or unascertained and thereafter set-off such estimated amount and no amount shall be payable by the Bond Trustee to the Guarantor LP unless and until all Obligations have been ascertained and fully repaid or discharged.

 

	
Section 3.18

	
Dealings by Third Parties.

 

(1)           No Person dealing with the Bond Trustee or an agent or receiver shall be required to determine (i) whether the Security has become enforceable, (ii) whether the powers which such Person is purporting to exercise have become exercisable, (iii) whether any money remains due to the Bond Trustee by the Guarantor LP, (iv) the necessity or expediency of the stipulations and conditions subject to which any sale or lease is made, (v) the propriety or regularity of any sale or other dealing by the Bond Trustee with the Collateral, or (vi) how any money paid to the Bond Trustee has been applied.

 

  

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(2)           Any purchaser of Pledged Securities from the Bond Trustee shall hold the Pledged Securities absolutely, free from any claim or right of whatever kind, including any equity of redemption, of the Guarantor LP, which it specifically waives (to the fullest extent permitted by law) as against any such purchaser, all rights of redemption, stay or appraisal which the Guarantor LP has or may have under any rule of law or statute now existing or hereafter adopted.

 

	
Section 3.19

	
Risk of Funds

 

None of the provisions contained in this Agreement shall require the Bond Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it believes that repayment of such funds or adequate indemnity against such risk or liability is not assured to it, provided that the Bond Trustee shall, forthwith upon making such a determination, deliver notice of the same to the Secured Creditors and the Guarantor LP, which notice shall include the grounds for such belief .

 

ARTICLE 4

CONFLICTS

 

	
Section 4.01

	
Secured Creditors

 

(1)           The Bond Trustee, as regards the exercise and performance of all powers, rights, trusts, authorities, duties and discretions of the Bond Trustee in respect of the Collateral, under or pursuant to this Agreement or any other Transaction Document to which the Bond Trustee is a party or the rights or benefits in respect of which are comprised in the Collateral, shall perform its duties (i) strictly in accordance with the Transaction Documents, (ii) on the instructions or directions, as applicable, given in accordance with the terms of the Transaction Documents, of the Holders of the Covered Bonds exclusively, (iii) with regard only to the interests of the Holders of the Covered Bonds while any of the Covered Bonds remain outstanding, and (iv) in accordance with applicable laws, and shall not be required to have regard to the interests of any other Secured Creditor or any other person or to act upon or comply with any direction or request of any other Secured Creditor or any other person whilst any amount remains owing to any Holders of the Covered Bonds.

 

(2)           Where, in connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, determination or substitution) under or pursuant to this Agreement or any of the other Transaction Documents, the Bond Trustee is required have regard to the Holders of the Covered Bonds (or any Series thereof), it shall have regard to the general interests of the Holders of the Covered Bonds (or any Series thereof) as a class (and shall not have regard to any interests arising from circumstances particular to individual Holders of the Covered Bonds, Receiptholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Holders of the Covered Bonds, the related Receiptholders, Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Bond Trustee shall not be entitled to require, nor shall any Holders of the Covered Bonds, Receiptholder or Couponholder be entitled to claim from the Issuer, the Guarantor LP, the Bond Trustee or any other person any indemnification or payment in respect of any tax consequences of any such exercise upon individual Holders of the Covered Bonds, Receiptholders and/or Couponholders, except to the extent already provided for in Condition 7 and/or in any undertaking or covenant given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.

 

  

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(3)           If, in connection with the exercise of its powers, trusts, authorities or discretions, the Bond Trustee is of the opinion that the interests of the Holders of the Covered Bonds of any one or more Series would be materially prejudiced thereby, the Bond Trustee shall not exercise such power, trust, authority or discretion without the approval of such Holders of the Covered Bonds by Extraordinary Resolution or by a direction in writing of such Holders of the Covered Bonds of not less than 25% of the aggregate Principal Amount Outstanding of the Covered Bonds of all Series then outstanding (taken together and converted into euros at the rate specified in the applicable Final Terms).

 

	
Section 4.02

	
Acknowledgement.

 

Each of the Secured Creditors hereby acknowledges and concurs with the provisions of Section 4.01 and each of them agrees that it shall have no claim against the Bond Trustee as a result of the application thereof.

 

ARTICLE 5

EXERCISE OF CERTAIN RIGHTS

 

	
Section 5.01

	
No Enforcement by Bond Trustee

 

Each of the Secured Creditors (other than in relation to subparagraph (a) below, the Holders of the Covered Bonds and the Bond Trustee and, in relation to subparagraph (b) below, the Bond Trustee) hereby agrees with the Guarantor LP and the Bond Trustee that:

 

	
  

	
(a)

	
only the Bond Trustee may enforce the security created in favour of the Bond Trustee by this Agreement in accordance with the provisions hereof; and

 

	
  

	
(b)

	
it shall not take any steps for the purpose of (i) recovering any of the Obligations (including, without limitation, by exercising any rights of set-off); or (ii) enforcing any rights arising out of the Transaction Documents against the Guarantor  LP or procuring the winding up, administration or liquidation of the Guarantor LP in respect of any of its liabilities whatsoever,

 

unless the Bond Trustee, having become bound to take any steps or proceedings to enforce the said security under or pursuant to this Agreement, fails to do so within 30 days of having become bound to do so (in which case each of such Secured Creditors shall be entitled to take any such steps and proceedings as it shall deem necessary other than the presentation of a petition for the winding up of, or for an administration order in respect of, the Guarantor LP).

 

  

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Section 5.02

	
Subordination

 

(1)           Each of the Secured Creditors hereby acknowledges that it has received a copy of the Guarantor LP Agreement and hereby agrees to be bound by the terms of the Priorities of Payment set out in the Guarantor LP Agreement and this Agreement. Without prejudice to Section 5.01, each of the Secured Creditors further agrees with each other party to this Agreement that, notwithstanding any other provision contained herein or in any other Transaction Document:

 

	
  

	
(a)

	
it will not demand or receive payment of, or any distribution in respect of or on account of, any amounts payable by the Guarantor LP (or the Cash Manager on its behalf) or the Bond Trustee, as applicable, to that Secured Creditor under the Transaction Documents, in cash or in kind, and will not apply any money or assets in discharge of any such amounts payable to it (whether by set off or by any other method), unless all amounts then due and payable by the Guarantor LP to all other Secured Creditors ranking higher in the relevant Priorities of Payments have been paid in full;

 

	
  

	
(b)

	
without prejudice to the foregoing, whether in the liquidation of the Guarantor LP or any other party to the Transaction Documents or otherwise, if any payment or distribution (or the proceeds of any enforcement of any security) is received by a Secured Creditor in respect of any amount payable by the Guarantor LP (or the Cash Manager on its behalf) or the Bond Trustee, as applicable, to that Secured Creditor under the relevant Transaction Document at a time when, by virtue of the provisions of the relevant Transaction Document, the Guarantor LP Agreement and this Agreement, no payment or distribution should have been made, the amount so received shall be held by the Secured Creditor upon trust for the entity from which such payment was received and shall be paid over to such entity forthwith upon receipt (whereupon the relevant payment or distribution shall be deemed not to have been made or received); and

 

	
  

	
(c)

	
without prejudice to Section 3.01 above, it shall not claim, rank, prove or vote as creditor of the Guarantor LP or its estate in competition with any prior ranking Secured Creditors in the relevant Priorities of Payments, the Bond Trustee, as applicable, or claim a right of set-off until all amounts then due and payable to Secured Creditors who rank higher in the relevant Priorities of Payments have been paid in full.

 

(2)           Neither the Guarantor LP nor the Bond Trustee shall pay or repay, or make any distribution in respect of, any amount owing to a Secured Creditor under the relevant Transaction Documents (in cash or in kind) unless and until all amounts then due and payable by the Guarantor LP or the Bond Trustee to all other Secured Creditors ranking higher in the relevant Priorities of Payments have been paid in full.

 

  

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(3)           The trusts in this Article 5 shall terminate on the date which is the day before the last day of the period that is twenty-one years after the death of the last to die of the descendants of Her Majesty, Queen Elizabeth II, alive at the date of this Agreement.

 

(4)           Each of the Secured Creditors acknowledges that this Article 5 is without prejudice to the provisions set out in Section 7.3 of the Intercompany Loan Agreement.

 

ARTICLE 6

RELEASE

 

	
Section 6.01

	
Discharge.

 

The Security shall be discharged upon, but only upon, full payment and performance of the Obligations and at the request and expense of the Guarantor LP, and thereafter the Bond Trustee shall execute and deliver to the Guarantor LP such other releases and discharges as the Guarantor LP may reasonably require.

 

	
Section 6.02

	
Sale of the Covered Bond Portfolio.

 

In the event of any sale of Loans and their Related Security by or on behalf of the Guarantor LP pursuant to and in accordance with the Transaction Documents, such Loans and their Related Security shall no longer form part of the Covered Bond Portfolio and the Bond Trustee shall, if so requested in writing by the Guarantor LP, release, reassign or discharge those Loans and their Related Security from the Security on or prior to the date of any such sale provided that:

 

	
  

	
(a)

	
the Bond Trustee provides its prior written consent to the terms of such sale, if required, in accordance with the Guarantor LP Agreement; and

 

	
  

	
(b)

	
in the case of the sale of Loans and their Related Security, the Guarantor LP provides to the Bond Trustee a certificate confirming that the Loans being sold are Randomly Selected Loans.

 

	
Section 6.03

	
Disposal of Substitute Assets

 

Upon the Cash Manager, on behalf of the Guarantor LP, making a disposal of any Substitute Asset secured pursuant to the Security, the Bond Trustee shall, if so requested in writing by the Cash Manager (but at the sole cost and expense (on an indemnity basis) of the Guarantor LP), but without being responsible for any loss, costs, claims or liabilities whatsoever occasioned and howsoever arising by so acting upon such request, release, reassign or discharge from the encumbrances constituted by this Agreement the relevant Substitute Assets, provided that the proceeds of such disposal are paid into the Guarantor LP Accounts from which the monies to make such Substitute Assets were originally drawn, subject to and in accordance with the provisions of the Guaranteed Investment Contract, the Standby Guaranteed Investment Contract (if applicable), the Cash Management Agreement and this Agreement.

 

  

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Section 6.04

	
Withdrawals from Guarantor LP Accounts

 

From time to time, and for greater certainty, there shall be deemed to be released from the Security all amounts which the Cash Manager, on behalf of the Guarantor LP and the Bond Trustee, is permitted to withdraw from the Guarantor LP Accounts pursuant to the relevant Priorities of Payments and otherwise in accordance with the Cash Management Agreement and this Agreement, any such release to take effect immediately upon the relevant withdrawal being made provided that where the relevant amount is transferred to another Guarantor LP Accounts, it shall thereupon become subject to the Security constituted by this Agreement in respect of such other Guarantor LP Accounts.

 

ARTICLE 7

SUPPLEMENTAL PROVISIONS REGARDING THE BOND TRUSTEE

 

	
Section 7.01

	
Consent of Bond Trustee.

 

If a request in writing is made to the Bond Trustee by the Guarantor LP or any other person to give its consent to any event, matter or thing, then:

 

	
  

	
(a)

	
if the Transaction Document specifies that the Bond Trustee is required to give its consent to that event, matter or thing if certain specified conditions are satisfied in relation to that event, matter or thing, then the Bond Trustee shall give its consent to that event, matter or thing upon being satisfied acting reasonably that those specified conditions have been satisfied; and

 

	
  

	
(b)

	
in any other case, the Bond Trustee may give its consent if to do so would not, in its opinion, be materially prejudicial to the interests of any of the Holders of the Covered Bonds.

 

	
Section 7.02

	
Interests of Secured Creditors.

 

At any time no Covered Bonds are outstanding, where the Bond Trustee is required to have regard to the interests of any Secured Creditor (other than the Holders of the Covered Bonds), the Bond Trustee may consult with such Secured Creditors and may rely on the written opinion of such Secured Creditors as to whether any act, matter or thing is or is not materially prejudicial to the interests of such Secured Creditors.

 

	
Section 7.03

	
Modification to Transaction Documents.

 

(1)           Subject to Sections 7.03(2) and (3) below, the Bond Trustee may from time to time and at any time without any consent or sanction of the Secured Creditors (other than any Secured Creditor who is a party to the relevant document) concur with any person in making or sanctioning any modification (disregarding whether any such modification relates to a Series Reserved Matter):

 

	
  

	
(a)

	
to the Covered Bonds of any one or more Series, the related Receipts and/or Coupons or any of the Transaction Documents provided that the Bond Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Holders of Covered Bonds of any series and notice of such modification is given to the Rating Agencies prior to such modification becoming effective; or

 

  

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(b)

	
to the Covered Bonds of any one or more Series, the related Receipts and/or Coupons or any of the Transaction Documents which in the Bond Trustee's opinion is of a formal, minor or technical nature or is made to correct a manifest error or an error established as such to the satisfaction of the Bond Trustee, or to comply with mandatory provisions of law. In establishing whether an error is established as such, the Bond Trustee may have regard to any evidence which the Bond Trustee considers reasonable to rely upon and may, but shall not be obliged to, have regard to all or any of the following:

 

	
  

	
(i)

	
a certificate from any of the Arrangers:

 

	
  

	
(1)

	
stating the intention of the parties to the relevant Transaction Document;

 

	
  

	
(2)

	
confirming nothing has been said to or by investors or any other parties which is in any way inconsistent with the stated intention; and

 

	
  

	
(3)

	
stating the modification to the relevant Transaction Document is required to reflect such intention; or

 

	
  

	
(ii)

	
Rating Agency Confirmation in respect of such modification.

 

(2)           The prior consent of the Bond Trustee and the other Secured Creditors (other than the Bond Trustee) will not be required or obtained in relation to the accession of any New Seller to the Programme provided that the relevant conditions precedent set out in the Dealership Agreement and the Mortgage Sale Agreement are satisfied at the time of the intended accession.

 

(3)           The Bond Trustee shall be obliged to concur in and to effect any modifications to the Transaction Documents that are requested by the Guarantor LP or the Cash Manager to accommodate the accession of a New Seller to the Programme subject to the provisions of Section 7.03(1) being satisfied and, provided that (i) the Interest Rate Swap Provider and each of the Covered Bond Swap Providers provide written confirmation to the Bond Trustee consenting to such modification of those documents to which they are a party (such consent not to be unreasonably withheld) (which consent shall be deemed to be given by the Interest Rate Swap Provider and each of the Covered Bond Swap Providers (as the case may be) if no written response is received by the Bond Trustee from each party, respectively, by the tenth Business Day after the Bond Trustee's request for such consent) and (ii) the Guarantor LP or the Cash Manager, as the case may be, has certified to the Bond Trustee in writing that such modifications are required in order to accommodate the addition of New Sellers to the Programme and (iii) all other conditions precedent to the accession of a New Seller to the Programme set out in the Dealership Agreement, the Mortgage Sale Agreement, the Servicing Agreement, the Guarantor LP Agreement and any other Transaction Documents have been satisfied at the time of the accession.

 

  

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(4)           Each Secured Creditor agrees that any such modifications effected pursuant to this Section 7.03 shall be binding on it and unless the Bond Trustee otherwise agrees, notice thereof shall be given by the Servicer to the Secured Creditors as soon as practicable after the modifications have been made.

 

(5)           Each of the Secured Creditors agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other documents and instruments as may be required by law or requested by the other party at the other party's expense to establish, maintain and protect the rights and remedies of the other party and carry out and effect the intent and purpose of this Section 7.03.

 

ARTICLE 8

REMUNERATION OF THE BOND TRUSTEE

 

	
Section 8.01

	
Remuneration.

 

(1)           Subject to the terms of the Trust Deed (and subject also as hereinafter provided), the Issuer (or, following Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, the Guarantor LP) shall (subject as hereinafter provided) pay to the Bond Trustee an annual fee of such amount and payable on such dates as shall from time to time be agreed in writing by the Issuer and the Bond Trustee.  All such remuneration shall be payable in accordance with the Guarantee Priority of Payments or the Post-Enforcement Priority of Payments, as applicable. Such remuneration shall accrue from day to day and shall be payable up to and including the date when all of the Obligations have been paid and/or discharged and the Bond Trustee has released, reassigned and/or discharged the Collateral as provided in Article 6.

 

(2)           The Issuer (or, following Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, the Guarantor LP) shall in addition pay to the Bond Trustee an amount equal to the amount of any GST/HST chargeable in respect of its remuneration hereunder subject to the Bond Trustee issuing to the Issuer or (as the case may be) the Guarantor LP a proper GST/HST invoice in respect thereof.

 

	
Section 8.02

	
Additional Remuneration.

 

In the event of an Issuer Event of Default, a Guarantor LP Event of Default, Potential Issuer Event of Default or Potential Guarantor LP Event of Default occurring or in the event of the Bond Trustee finding it expedient or necessary or being required by the Issuer or (as the case may be) the Guarantor LP to undertake any duties which the Bond Trustee and the Issuer or the Guarantor LP agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Bond Trustee under or pursuant to this Agreement, the Issuer or the Guarantor LP shall pay to the Bond Trustee such additional remuneration as shall be agreed between the Bond Trustee and the Guarantor LP.

 

	
Section 8.03

	
Disputes.

 

In the event of the Bond Trustee and the Issuer (or, following an Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, the Guarantor LP) failing to agree upon the amount of any remuneration from time to time pursuant to Section 8.01 or to agree in a case to which  Section above applies, upon whether such duties are of an exceptional nature or otherwise outside the scope of the normal duties of the Bond Trustee hereunder or upon the amount of such additional remuneration, such matters shall be determined by a merchant or investment bank (acting as an expert and not as an arbitrator) selected by the Bond Trustee and approved by the Issuer or the Guarantor LP or, failing such approval, nominated by a sole arbitrator in accordance with the ‘screened’ appointment procedure provided in the Simplified Arbitration Rules of the ADR Institute of Canada Inc. then currently in effect, the expenses being involved in such nomination and the fees of such investment bank being payable by the Issuer or the Guarantor LP, and the decision of any such merchant or investment bank shall be final and binding on the Issuer or the Guarantor LP and the Bond Trustee.

 

  

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Section 8.04

	
Expenses.

 

In addition to remuneration hereunder, the Issuer (or, following an Issuer Event of Default and service of a Notice to Pay on the Guarantor LP, the Guarantor LP) shall on written request, pay all Liabilities which the Bond Trustee may properly incur in relation to the negotiation, preparation and execution of, the exercise of its powers and the performance of its duties under or pursuant to this Agreement and any of the other Transaction Documents to which the Bond Trustee is a party including but not limited to travelling and legal expenses and any stamp, issue, registration, documentary and other similar taxes or duties paid or payable by the Bond Trustee in connection with any action taken or contemplated by or on behalf of the Bond Trustee for enforcing this Agreement or any of the other Transaction Documents to which it is party.

 

ARTICLE 9

APPOINTMENT OF NEW BOND TRUSTEE AND REMOVAL OF BOND TRUSTEE

 

	
Section 9.01

	
Power of Guarantor LP.

 

The power of appointing a new Bond Trustee and removing the Bond Trustee or any new Bond Trustee shall be vested in the Guarantor LP, provided that such appointment or removal must be approved by (i) an Extraordinary Resolution of the Holders of the Covered Bonds of all Series taken together as a single Series with the nominal amount of Covered Bonds not denominated in euros converted into euros at the rate specified in the applicable Final Terms) and (ii) in writing by each Secured Creditor (such approval not to be reasonably withheld or delayed). Any appointment of a new Bond Trustee and any retirement or removal of an existing Bond Trustee hereof shall as soon as practicable thereafter be notified by the Guarantor LP to the Secured Creditors.

 

	
Section 9.02

	
Power of Bond Trustee.

 

(1)           Notwithstanding the provisions of Section 9.01, the Bond Trustee may (as attorney for the Guarantor LP) upon giving prior written notice to the Guarantor LP but without the consent of the Guarantor LP or the Secured Creditors appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate bond trustee or as a co-trustee jointly with the Bond Trustee:

 

	
  

	
(a)

	
if the Bond Trustee considers such appointment to be in the interests of the Secured Creditors (or any of them);

 

  

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(b)

	
for the purposes of conforming to any legal requirement, restrictions or conditions in any jurisdiction in which any particular act or acts are to be performed or any Collateral Property is or is to be located; or

 

	
  

	
(c)

	
for the purposes of obtaining a judgment or decree in any jurisdiction or the enforcement in any jurisdiction of either a judgment or decree already obtained or any of the provisions of this Agreement or any of the other Transaction Documents to which the Bond Trustee is a party or obligations arising pursuant thereto or any of the security constituted by or pursuant to this Agreement.

 

(2)           The Guarantor LP hereby irrevocably appoints the Bond Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment.  Such a Person shall (subject always to the provisions of this Agreement or any of the other Transaction Documents to which the Bond Trustee is a party) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Bond Trustee by this Agreement or any of the other Transaction Documents to which the Bond Trustee is a party) and such duties and obligations as shall be conferred or imposed on it by the instrument of appointment.  The Bond Trustee shall have power in like manner to remove any such person.  Such proper remuneration as the Bond Trustee may pay to any such person, together with any attributable costs, charges and expenses incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of this Agreement be treated as costs, charges and expenses incurred by the Bond Trustee.

 

	
Section 9.03

	
Multiple Bond Trustees.

 

Whenever there shall be more than two bond trustees hereof, the majority of such bond trustees shall be competent to execute and exercise all the trusts, powers, authorities and discretions vested by this Agreement and any of the other Transaction Documents in the Bond Trustee generally.

 

ARTICLE 10

RETIREMENT OF BOND TRUSTEE

 

Any bond trustee for the time being of this Agreement may retire at any time upon giving not less than three calendar months' prior notice in writing to the Guarantor LP without assigning any reason therefor and without being responsible for any Liabilities incurred by reason of such retirement.  Provided, however, that the retirement or removal of any bond trustee shall not become effective unless there remains at least one bond trustee hereof in office upon such retirement or removal.  The Guarantor LP covenants that, in the event of a bond (being a sole bond trustee) giving notice under this Article or being removed as referred to in Section 9.01, it shall use all reasonable endeavours to procure a new bond trustee of this Agreement to be appointed as soon as reasonably practicable thereafter.  If within 60 days of having given notice of its intention to retire, no appointment of such replacement Bond Trustee has become effective, the outgoing Bond Trustee will be entitled to appoint its successor (provided that such successor is acceptable to the Rating Agencies and will agree to the terms of this Agreement) and that the Rating Agencies confirm in writing that the current ratings of the Covered Bonds shall not be either downgraded, reviewed or withdrawn as a result of such appointment).

 

  

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ARTICLE 11

NON-PETITION

 

The Bond Trustee agrees that it 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 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 12

GENERAL

 

	
Section 12.01

	
Notices, etc.

 

(1)           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, in the case of the Guarantor LP and the Bond Trustee, the address provided below and in the case of the Secured Creditors other than the Bond Trustee, to the address provided for such Person in Schedule “D” hereto, or by facsimile transmission to facsimile number set forth below, as applicable:

 

	
  

	
(a)

	
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: Senior Manager, Securitization

 

Facsimile number: (416) 974-1368

 

	
  

	
(b)

	
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

 

(2)           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.

 

  

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(3)           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.

 

	
Section 12.02

	
GST/HST

 

If any sums which are payable by the Guarantor LP under Section 2.04 or Section 3.07 of this Agreement are subject to GST/HST, the Guarantor LP shall make payment of the amount in respect of GST/HST, where the payment is not already inclusive of GST/HST to the relevant person in accordance with the order of priorities set out in those Sections.

 

	
Section 12.03

	
No Merger.

 

This Agreement shall not operate by way of merger of any of the Obligations and no judgment recovered by the Bond Trustee shall operate by way of merger of, or in any way affect, the Security, which is in addition to, and not in substitution for, any other security now or hereafter held by the Bond Trustee in respect of the Obligations.

 

	
Section 12.04

	
  Further Assurances.

 

(1)           The Guarantor LP shall from time to time, whether before or after the Security shall have become enforceable (i) do, or cause to be done, all acts and things and execute and deliver, or cause to be executed and delivered, all transfers, assignments and instruments, (ii) give, or cause to be given, any notices to any Governmental Authority or Person, and (iii) obtain, or cause to be obtained, any approvals from any Governmental Authority or Person, in each case, as the Bond Trustee may reasonably require:

 

	
  

	
(a)

	
for protecting the Collateral;

 

	
  

	
(b)

	
for perfecting the Security;

 

	
  

	
(c)

	
to obtain Control, as determined pursuant to the PPSA, of any Collateral that consists of Investment Property;

 

	
  

	
(d)

	
for exercising all powers, authorities and discretions conferred upon the Bond Trustee; and

 

	
  

	
(e)

	
for otherwise enabling the Bond Trustee to obtain a first priority perfected security interest in the Collateral (subject only to Permitted Security Interests) and to exercise the rights and powers herein granted.

 

(2)           The Guarantor LP shall, from time to time after the Security has become enforceable (i) give, or cause to be given, any notices to any Governmental Authority or Person, (ii) obtain, or cause to be obtained, any approvals from any Governmental Authority or Person, and (iii) do, or cause to be done, all other acts and things and execute and deliver, or cause to be executed and delivered, all such transfers, assignments and instruments, in each case, as the Bond Trustee may require to effect the sale, transfer or other disposition of the Collateral in connection with its realization.

 

  

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Section 12.05

	
Amendments

 

Subject to Clause 20 of the Trust Deed, and except as otherwise expressly provided in this Agreement, the provisions in this Agreement may be amended or modified only by written agreement of all of the parties hereto, and 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. 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.

 

	
Section 12.06

	
Supplemental Security.

 

This Agreement is in addition to and without prejudice to all other security now held or which may hereafter be held by the Bond Trustee.

 

	
Section 12.07

	
Successors and Assigns.

 

None of the parties hereto may assign or transfer any of their rights or obligations under this Agreement without the prior written consent of the other party and the Guarantor LP having obtained Rating Agency Confirmation in respect of such assignment.

 

	
Section 12.08

	
Headings, etc.

 

The division of this Agreement into articles, sections and subsections and the insertion of headings are for convenience of reference only and shall not affect the meaning or construction of this Agreement.

 

	
Section 12.09

	
Gender and Number.

 

Any reference in this Agreement to gender shall include all genders and words importing the singular number only shall include the plural and vice versa.

 

	
Section 12.10

	
Severability.

 

If any provision of this Agreement shall be deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect.

 

	
Section 12.11

	
  Governing Law.

 

(1)           This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.

 

(2)           The Guarantor LP hereby (i) irrevocably submits to the non-exclusive jurisdiction of any court sitting in the Province of Ontario over any suit, action or proceeding arising out of or relating to this Agreement; (ii)  irrevocably agrees that all claims in respect of any suit, action or proceeding may be heard and determined in such court; and (iii)  irrevocably waives, to the fullest extent permitted by law, any objection which it may have or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum.  The Guarantor LP agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other manner provided by law.  Nothing in this section shall affect the right of the Bond Trustee to serve process in any manner permitted by law or limit the rights of the Bond Trustee to bring proceedings against the Guarantor LP in the courts of any other jurisdiction.

 

  

- 31 -

  

 

(3)           The Guarantor LP hereby consents generally in respect of any legal action or proceedings arising out of or in connection with this Agreement to the giving of any relief or the issue of any process in connection with such action or proceedings, including, without limitation, the making, enforcement or execution against the Guarantor LP of any order or judgment which may be made or given in such action or proceedings.

 

(4)           To the extent that the Guarantor LP has or hereafter may acquire any immunity from the jurisdiction of any court or from any legal process (whether service of notice, attachment prior to judgment, attachment in the aid of execution, execution or otherwise) with respect to itself or its assets, the Guarantor LP hereby irrevocably waives, to the fullest extent permitted by law, such immunity in respect of its obligations under this Agreement.

 

	
Section 12.12

	
Counterparts.

 

This Agreement may be executed in counterparts (including by way of facsimile) and all such counterparts taken together shall be deemed to constitute one and the same instrument.

 

[The remainder of this page is intentionally left blank]

 

 

 

 

 

 

  

- 32 -

  

 

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

 

 

	  	  	
RBC COVERED BOND GUARANTOR LIMITED PARTNERSHIP, by its general partner RBC COVERED BOND GP INC.

 

	
Per:  

	
/s/ David Power

	  	
Name: David Power

	  	
Title:  President

	  	  	  	  
	  	  	  	  
	  	  	
COMPUTERSHARE TRUST COMPANY OF CANADA

 

	
Per:

	
/s/ Mircho Mirchev

	  	
Name: Mircho Mirchev

	  	
Title:  Corporate Trust Officer

	
Per:

	
/s/ Stanley Kwan

	  	
Name: Stanley Kwan

	  	
Title:  Associate Trust Officer

	  	  	  	  

 

  

  

  

 

SCHEDULE “A”

Additional Representations and Warranties of Guarantor LP

	
(a)

	
No encumbrance exists over or in respect of any of its assets except for encumbrances created by the Transaction Documents and Permitted Security Interests.

 

	
(b)

	
It is validly formed and existing as a limited partnership under the Limited Partnership Act (Ontario) pursuant to a declaration of limited partnership filed under such Act.

 

	
(c)

	
Since the date of registration of its limited partnership declaration there has been no material adverse change in its financial position or prospects.

 

	
(d)

	
It is not the subject of any governmental or official investigation or inquiry and to its knowledge, none is progressing or pending or has been threatened in writing against it, which may have a material adverse effect on any of it, any relevant Transaction Document (for greater certainty, the term “relevant Transaction Documents” in this Schedule “A” does not include the Guarantor LP Agreement), and/or the issue and offering of Covered Bonds under the Programme.

 

	
(e)

	
No litigation, arbitration or administrative proceedings of or before any court, tribunal or governmental body has been commenced or, so far as it is aware are pending or threatened against it or any of its assets or revenues which may have a material adverse effect on it, any relevant Transaction Document and/or the issuance and offering of Covered Bonds under the Programme.

 

	
(f)

	
The Managing GP has at all times carried on and conducted the affairs and business of the Guarantor LP in the name of the Guarantor LP as a separate entity and in accordance with the Guarantor LP Agreement and all laws and regulations applicable to it and shall continue to do so throughout the continuation of the Partnership.

 

	
(g)

	
The Managing GP has at all times kept or procured the keeping of proper books of account and records for the Guarantor LP separate from any person or entity.

 

	
(h)

	
The Managing GP for and on behalf of the Guarantor LP has duly executed the relevant Transaction Documents.

 

	
(i)

	
Its entry into and the execution (and, where appropriate, delivery) of the relevant Transaction Documents and the performance by it of its obligations under the relevant Transaction Documents do not and will not conflict with or constitute a breach or infringement of:

 

	
  

	
(i)

	
the declaration of limited partnership in respect of the Guarantor LP or the Guarantor LP Agreement;

	
  

	
(ii)

	
any law applicable to it; or

	
  

	
(iii)

	
any agreement, indenture, contract, mortgage, deed or other instrument to which it is a party or which is binding on it or any of its assets.

 

  

  

  

 

	
(j)

	
The obligations expressed to be assumed by it under the relevant Transaction Documents are legal and valid obligations, binding on it and enforceable against it in accordance with their terms.

 

	
(k)

	
The Transaction Documents to which it is a party have been entered into in good faith for its own benefit and on arm's length commercial terms.

 

	
(l)

	
It is not in breach of or default under any agreement, indenture, contract, mortgage, deed or other instrument to which it is a party or which is binding on it or any of its assets which would be reasonably likely to have a Material Adverse Effect on the Guarantor LP any of the relevant Transaction Documents or the Collateral.

 

	
(m)

	
It is not necessary that any relevant Transaction Document in relation to it be filed, recorded or enrolled with any court or other authority in any jurisdiction in which the assets of the Partnership or the Liquidation GP are located.

 

	
(n)

	
It does not require the consent of any other party except for such consents as have been obtained by it prior to the date hereof or the consent, licence, approval or authorisation of any Governmental Authority in connection with the entering into or performance of the relevant Transaction Documents.

 

	
(o)

	
This Agreement and the relevant Transaction Documents have been properly authorized by all necessary action on the part of the Guarantor LP and its partners in accordance with the term of the Guarantor LP Agreement and constitutes a legal, valid and binding obligation of the Guarantor LP enforceable in accordance with its terms except as may be limited by applicable bankruptcy, insolvency, moratorium, and other similar laws affecting creditors’ rights generally and except that orders for specific performance, injunctions and other equitable remedies are discretionary remedies which may be granted only in the discretion of the court; the making and performance of this Agreement will not result in the breach of, constitute a default under, contravene any provision of, or result in the creation of, any lien upon the Collateral other than those created pursuant to the Transaction Documents and Permitted Security Interests;

 

	
(p)

	
This Agreement creates a valid first priority security interest in the Collateral.

 

  

  

  

SCHEDULE “B”

Additional Covenants of Guarantor LP

The Guarantor LP covenants and agrees with the Bond Trustee (for and on behalf of itself and the Secured Creditors) that:

	
(a)

	
It will, at all times, carry on and conduct its affairs and business in its own name (or if necessary in the name of the Managing GP) as a separate entity and in accordance with the Guarantor LP Agreement and applicable laws.

 

	
(b)

	
It will not, without the Bond Trustee’s prior written consent, sell, lease or otherwise dispose of any of the Collateral, except in accordance with the other Transaction Documents.

 

	
(c)

	
It will not, incur any indebtedness in respect of borrowed money or give any guarantee or indemnity in respect of any indebtedness, except pursuant to the terms of the Transaction Documents or in connection with a Permitted Security Interest.

 

	
(d)

	
It will, at its own expense, promptly and duly authorize, execute and deliver any further instruments and documents, and take any further action, that the Bond Trustee may request for the purpose of obtaining or preserving the full benefits of, and the rights and powers granted by, this Agreement and any of the other Transaction Documents (including the filing of any financing statements or financing change statements under any applicable legislation with respect to the Security Interest created by this Agreement).

 

	
(e)

	
It will, give notice in writing to the Bond Trustee of the occurrence of any Guarantor LP Event of Default, Potential Guarantor LP Event of Default and/or service of an Guarantor LP Acceleration Notice (such notice to be effected by the delivery of a copy of the Guarantor LP Acceleration Notice to the Bond Trustee) immediately upon becoming aware thereof and without waiting for the Bond Trustee to take any further action.

 

	
(f)

	
It will, at all times, comply with the obligations and provisions binding upon it under and pursuant to this Agreement and the other relevant Transaction Documents;

 

 

 

 

 

  

  

  

SCHEDULE “C”

 

 

Post-Enforcement Priority of Payments

 

	
(a)

	
first, in or towards satisfaction of all amounts due and payable or to become due and payable to the Bond Trustee under the provisions of the Trust Deed together with interest and applicable GST (or other similar taxes) thereon as provided therein; and

 

	
(b)

	
second, in or towards satisfaction pro rata and pari passu according to respective amounts thereof of any remuneration then due and payable to the Agents under or pursuant to the Agency Agreement together with applicable GST (or other similar taxes) thereon to the extent provided therein;

 

	
(c)

	
third, in or towards satisfaction pro rata and pari passu according to the respective amounts thereof, of:

 

	
  

	
(i)

	
any remuneration then due and payable to the Servicer and any costs, charges, liabilities and expenses then due or to become due and payable to the Servicer under the provisions of the Servicing Agreement, together with applicable GST (or other similar taxes) thereon to the extent provided therein;

 

	
  

	
(ii)

	
any remuneration then due and payable to the Cash Manager and any costs, charges, liabilities and expenses then due or to become due and payable to the Cash Manager under the provisions of the Cash Management Agreement, together with applicable GST (or other similar taxes) thereon to the extent provided therein;

 

	
  

	
(iii)

	
amounts due to the Account Bank or, as applicable, the Standby Account Bank (including costs) pursuant to the terms of the Bank Account Agreement or applicable, the Standby Bank Account Agreement, together with applicable GST (or other similar taxes) thereon to the extent provided therein;

 

	
  

	
(iv)

	
amounts due and payable to the Asset Monitor (other than the amounts referred to in paragraph (g) below) pursuant to the terms of the Asset Monitor Agreement, together with applicable GST/HST (or other similar taxes) thereon as provided therein; and

 

	
  

	
(v)

	
amounts due and payable to the Custodian pursuant to the terms of the Custodial Agreement together with applicable GST/HST (or other similar taxes) thereon to the extent provided therein;

 

	
(d)

	
fourth, to pay pro rata and pari passu according to the respective amounts thereof, of

 

	 	
(i)

	
any amounts due and payable to the Interest Rate Swap Provider (including any termination payment (but excluding any Excluded Swap Termination Amounts)) pursuant to the terms of the Interest Rate Swap Agreement;

 

	
  

	
(ii)

	
the amounts due and payable to the Covered Bond Swap Provider pro rata and pari passu in respect of each relevant Series of Covered Bonds to the Covered Bond Swap Agreement (including any termination payment due and payable by the Guarantor LP under the Covered Bond Swap Agreement (but excluding any Excluded Swap Termination Amount)) in accordance with the terms of the Covered Bond Swap Agreement; and

 

  

  

  

 

	
  

	
(iii)

	
the amounts due and payable under the Covered Bond Guarantee, to the Bond Trustee on behalf of the holders of the Covered Bonds pro rata and pari passu in respect of interest and principal due and payable on each Series of Covered Bonds,

 

provided that if the amount available for distribution under this paragraph (d) (excluding any amounts received from the Covered Bond Swap Provider in respect of amounts referred to in (d)(ii) above) would be insufficient to pay the Canadian Dollar Equivalent of the amounts due and payable under the Covered Bond Guarantee in respect of each Series of Covered Bonds under (d)(iii) above, the shortfall will be divided amongst all such Series of Covered Bonds on a pro rata basis and the amount payable by the Guarantor LP in respect of each relevant Series of Covered Bonds under (d)(ii) above to the Covered Bond Swap Provider will be reduced by the amount of the shortfall applicable to the Covered Bonds in respect of which such payment is to be made;

 

	
(e)

	
fifth, in or towards satisfaction pro rata and pari passu according to the respective amounts thereof, of any Excluded Swap Termination Amounts due and payable by the Guarantor LP to the relevant Swap Provider under the relevant Swap Agreement;

 

	
(f)

	
sixth, after the Covered Bonds have been fully repaid, any remaining moneys shall be applied in or towards repayment in full of all amounts outstanding under the Intercompany Loan Agreement;

 

	
(g)

	
seventh, in or towards satisfaction pro rata and pari passu according to the respective amounts thereof of any indemnity amount due to the Partners pursuant to the Guarantor LP Agreement and certain costs, expenses and indemnity amounts due by the Guarantor LP to the Asset Monitor pursuant to the Asset Monitor Agreement; and

 

	
(h)

	
eighth, thereafter any remaining moneys will be applied in or towards payment to the Partners pursuant to the Guarantor LP Agreement.

 

  

  

  

 

SCHEDULE “D”

 

Addresses For Notice

 

Nil.

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