Exhibit 4.4
COVER POOL MONITOR AGREEMENT
SCOTIABANK COVERED BOND GUARANTOR
LIMITED PARTNERSHIP,
as Guarantor
- and -
THE BANK OF NOVA SCOTIA,
as Issuer and Cash Manager
- and -
KPMG LLP,
as Cover Pool Monitor
- and -
COMPUTERSHARE TRUST COMPANY OF CANADA,
as Bond Trustee
DATED AS OF JULY 19, 2013
CONTENTS
THIS COVER POOL MONITOR AGREEMENT
is made as of July 19, 2013
BETWEEN:
| (1) | SCOTIABANK COVERED BOND GUARANTOR LIMITED PARTNERSHIP,
a limited partnership formed under the laws of the Province of Ontario, whose registered office is at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, 1 First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, by its managing general partner, SCOTIABANK COVERED BOND GP INC.,
in its capacity as the Guarantor; |
| (2) | THE BANK OF NOVA SCOTIA, a bank named in Schedule
I to the Bank Act, whose executive office is at Scotia Plaza, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, in its capacity
as the Issuer and the Cash Manager; |
| (3) | KPMG LLP, a limited liability partnership under the
laws of the Province of Ontario, whose registered office is at Bay Adelaide Centre, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇, in its capacity as Cover Pool Monitor; and |
| (4) | COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company
incorporated under the laws of Canada, whose registered office is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, in its capacity as Bond Trustee. |
WHEREAS:
| (A) | Under the terms of the Program, the Issuer will issue Covered
Bonds from time to time on an Issue Date. |
| (B) | In connection with the Program, the Guarantor has agreed
to guarantee payments of interest and principal under the Covered Bonds pursuant to the Covered Bonds Guarantee. |
| (C) | In connection therewith, the Guarantor has entered into
the Cash Management Agreement with the Cash Manager of even date herewith, pursuant to which the Cash Manager has agreed to, inter
alia, perform certain calculations in relation to the Asset Coverage Test, the Amortization Test and the Valuation Calculation. |
| (D) | The Cover Pool Monitor has agreed to be appointed by the
Guarantor and the Bond Trustee to carry out various testing and notification procedures in relation to the calculations performed
by the Cash Manager in relation to the Asset Coverage Test, the Amortization Test and the Valuation Calculation and in relation
to certain other matters, in each case subject to and in accordance with the terms of this Agreement. |
NOW THEREFORE, IT IS HEREBY AGREED
that in consideration of the mutual covenants and agreements herein set forth, the parties agree as follows:
Article
1
DEFINITIONS AND INTERPRETATION
The Master Definitions and
Construction Agreement made between the parties to the Transaction Documents on July 19, 2013 (as the same may be amended,
restated and/or supplemented from time to time) (the “Master Definitions and Construction Agreement”) is
expressly and specifically incorporated into this Agreement and, accordingly, the expressions defined in the Master
Definitions and Construction Agreement (as so amended, restated and/or supplemented) will, 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 will be construed in accordance with the interpretation provisions set out in Section 2 (Interpretation
and Construction) of the Master Definitions and Construction Agreement.
For the purposes of this Agreement, this
Agreement has the same meaning as Cover Pool Monitor Agreement in the Master Definitions and Construction Agreement.
The Schedule attached to this Agreement
will, for all purposes of this Agreement, form an integral part of it.
Schedule 1 – Certain Specified
Procedures
Schedule 2 – Valuation Calculation
The parties hereto acknowledge that the
Cash Manager is performing services for and on behalf of the Guarantor pursuant to the terms of the Cash Management Agreement and
that to the extent that anything herein is referred to as being done by the Cash Manager, such reference is deemed to include a
reference to such thing being done by the Guarantor (or the Cash Manager on its behalf).
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2
appointment and SERVICES OF THE COVER POOL MONITOR
| 2.1 | Appointment and Annual
Cover Pool Monitor Report
|
| (a) | Appointment: The Issuer, the Guarantor and the
Bond Trustee (according to their respective estates and interests) each hereby appoints the Cover Pool Monitor to provide the
services set out in this Agreement and the Cover Pool Monitor hereby accepts such appointment on the terms and subject to the
conditions of this Agreement. The Bond Trustee hereby consents to the appointment of the Cover Pool Monitor on the terms and conditions
set out herein. |
| (b) | Annual Cover Pool Monitor Report: The Cover Pool
Monitor will, subject to due receipt of the information to be provided by the Cash Manager to the Cover Pool Monitor in accordance
with Article 3 (Provision of Information to the Cover Pool Monitor) below, no later than the fifth Toronto Business Day prior
to the First Issue Date, and on or prior to the anniversary of the First Issue Date in each year, prepare and deliver to the Issuer,
the Guarantor, the Cash Manager, CMHC and the Bond Trustee (each a “Recipient”) a report (the “Annual
Cover Pool Monitor Report”), prepared in accordance with Section 9100 of the Other Canadian Standards issued by the
Canadian Institute of Chartered Accountants: |
| (i) | detailing the scope of work undertaken and the specified
procedures as described in Sections 2.2, 2.4, 2.5 and 2.6 (collectively, the “Specified Procedures”); |
| (ii) | confirming the matters set out in Section
2.3; and |
| (iii) | detailing the results of the Specified Procedures. |
| (c) | The first issuance of Covered Bonds shall not proceed
until CMHC has approved and accepted the initial Annual Cover Pool Monitor Report. |
| (d) | Each Annual Cover Pool Monitor Report must be dated
(or current to a date not later than) the anniversary of the First Issue Date, but may be issued or delivered to the Issuer, the
Guarantor, the Cash Manager, CMHC and the Bond Trustee at any time within 90 days of its date or currency. |
| 2.2 | Certain Testing Services |
| (a) | Test Period: In connection with each Annual Cover
Pool Monitor Report, the Cover Pool Monitor will randomly select one Investor Report (such Investor Report, the “Selected
Investor Report”) from the Investor Reports prepared since the date of its last report (or, in the case of the Annual
Cover Pool Monitor Report delivered in connection with the First Issue Date, the Selected Investor Report prepared in relation
to such issuance, which may be prepared on a pro forma basis in accordance with Section 5.1.1 of the CMHC Guide). |
| (b) | Loan Sample: From the system records, extraction
files and original asset documents, including the Issuer’s and Servicer’s mortgage files in respect of the Covered
Bond Portfolio (collectively, the “Source Materials”), the Cover Pool Monitor will select a sample of Loans
and a sample of Substitute Assets (the “Sample”) from the then current Covered Bond Portfolio, which Sample
must be of a size sufficient to provide a 95% confidence level, with a tolerable deviation rate of 5% (an “Industry Standard
Sampling Size”). |
| (i) | In respect of each Selected Investor Report, the Cover
Pool Monitor will: |
| A. | agree the mortgage information disclosed in the Selected
Investor Report with the Source Materials, and verify non-mortgage information disclosed in the Selected Investor Report by inspection
of the Issuer’s accounting records or other appropriate data made available to the Cover Pool Monitor by the Issuer; |
| B. | perform the specified procedures set forth in Schedule
1 hereto with respect to the Loans contained in the Sample with reference to the Source Materials by inspection of the data
elements identified in Schedule 1 under the heading “Category”; and |
| (ii) | with reference to the Source Materials, the Cover Pool
Monitor will (A) agree that the assets in the Sample meet the criteria specified in Sections 4.1.1 and 4.1.3 of the CMHC Guide,
and (B) perform the specified procedures set forth in Schedule 1 hereto with respect to the Substitute Assets in the Sample
by inspection of the data elements identified in Schedule 1 under the heading “Category”. |
| (d) | Materials delivered to Custodian: Using the Sample,
the Cover Pool Monitor will agree the Custodial Information provided to the Custodian by the Seller pursuant to the Mortgage Sale
Agreement with respect to the Loans contained in the Sample. |
| (e) | Deficiency Reporting: Using the Sample, the Cover
Pool Monitor will inspect the Source Materials and report any Loans where: |
| (i) | at the time of transfer to the Guarantor, one or more
payments of principal or interest payable thereunder were in arrears; |
| (ii) | at the time of transfer to the Guarantor, one or more
payments of principal or interest (or blended payment(s) of principal and interest) had not been made in accordance with the terms
of the Loan; |
| (iii) | there is no evidence that the mortgage or hypothecary
instrument charging the Mortgaged Property securing such Loan represents a first priority perfected security interest; or |
| (iv) | there is evidence of any Loans advanced under the same
mortgage or other hypothecary instrument having been insured by CMHC, Canada Guaranty Mortgage Insurance Company, the Genworth
Financial Mortgage Insurance Company of Canada, the PMI Mortgage Insurance Company Canada, any other private mortgage insurer
recognized by CMHC for purposes hereof or otherwise identified in the Protection of Residential Mortgage or Hypothecary Insurance
Act (Canada), or any successor to any of them. |
The Cover Pool Monitor will confirm the
sampling methodology used in connection with the matters set out in Section 2.2, including a description of the Sample and populations
used, in each case, accords with the Industry Standard Sampling Size.
| 2.4 | Confirming Mathematical
Accuracy of Asset Coverage
Test, Amortization Test and
Valuation Calculation |
Using the Selected Investor Report (provided
that, for the purposes of any Recalculation Procedures, “Selected Investor Report” as used in this Section 2.4
shall include any Investor Report required to be tested in accordance with Section 2.8),
the Cover Pool Monitor shall do the following and report the findings thereof:
| (a) | recalculate the results of the Asset Coverage and/or
Amortization Test disclosed in the Selected Investor Report; and |
| (b) | in connection with the Valuation Calculation disclosed
in the Selected Investor Report: |
| (i) | recalculate such Valuation Calculation; |
| (ii) | enquire of the Cash Manager as to the following whether,
in calculating the Present Value for purposes of the Valuation Calculation disclosed in the Selected Investor Report, expected
future cash flows are discounted using (A) the publicly posted mortgage rates or (B) the current market interest rates for mortgage
loans with credit risks similar to those of the Performing Eligible Loans; |
| (iii) | where the responses to Section 2.4(b)(ii) is (B), enquire
of the Cash Manager whether the same discounting methodology has been used as that used as part of the fair value disclosure in
the Issuer’s audited financial statements for the related period; |
| (iv) | enquire of the Cash Manager as to the determination of
the Trading Values of (i) all Substitute Assets, (ii) assets pledged or otherwise transferred to the Guarantor as collateral for
the obligations of the Swap Provider under or pursuant to the Interest Rate Swap Agreement or a Covered Bond Swap Agreement, and
(iii) the Covered Bond liabilities, in each case as used in such Valuation Calculation; and |
| (v) | agree the Valuation Calculation to the requirements set
forth in Schedule 2 and Section 4.6 of the CMHC Guide. |
| 2.5 | Confirming Accuracy
of Pre-Maturity Required Ratings,
Reserve Fund Required Amount
and Related Calculations |
Using the Selected Investor Report (provided
that, for the purposes of any Recalculation Procedures, “Selected Investor Report” as used in this Section 2.5
shall include any Investor Report required to be tested in accordance with Section 2.8)
and the ratings of the Issuer received from the Cash Manager in accordance with Section 3.5, the Cover Pool Monitor will do the
following and report the findings thereof:
| (a) | determine whether the Issuer no longer maintains all of the Pre-Maturity Required Ratings; |
| (b) | following the determination that the Issuer no longer maintains all of the Pre-Maturity Required Ratings, if one or more
Series of Hard Bullet Covered Bonds are outstanding: (i) obtain a schedule from the Issuer computing the amount, if any,
required to be credited to the Pre-Maturity Liquidity Ledger with respect to each applicable Calculation Date, (ii) perform
recalculation procedures on the information contained in such schedule, and (iii) enquire of the Issuer as to whether the
amount credited to the Pre-Maturity Liquidity Ledger on such Calculation Date is sufficient to comply with the requirements
in respect thereof; |
| (c) | determine whether, based on the Reserve Fund Required
Amount Ratings, the Reserve Fund Required Amount is greater than nil, and, if greater than nil, (i) obtain from the Issuer a schedule
computing the Reserve Fund Required Amount with respect to each applicable Calculation Date, (ii) perform recalculation procedures
on the information contained in such schedule, and (iii) enquire of the Issuer as to whether the amount credited to the Reserve
Ledger on such Calculation Date is equal to the Reserve Fund Required Amount. |
| 2.6 | Confirming Accuracy
of Latest Valuation Determinations |
| (a) | The Cover Pool Monitor shall obtain a schedule of the
Latest Valuation for each Eligible Loan in respect of the last day of the Calculation Period to which the Selected Investor Report
relates (or, in the case of the Annual Cover Pool Monitor Report to be delivered no later than five Toronto Business Days prior
to the First Issue Date, the Selected Investor Report must be for a Calculation Period ending not more than 45 days prior to the
date of the Annual Cover Pool Monitor Report). |
| (b) | Using the Sample (or another sample of Loans that is
of an Industry Standard Sampling Size), inspect that, for each Loan in the relevant sample: |
| (i) | on or before July 1, 2014, the Latest Valuation has been
determined by either (i) adjusting the original value given to the related Mortgaged Property, at least quarterly, to account
for subsequent price developments, or (ii) by reference to the original value given to the related Mortgaged Property; and |
| (ii) | after July 1, 2014, the Latest Valuation has been determined by adjusting the original value given to the related Mortgaged
Property, at least quarterly, to account for subsequent price developments. |
| 2.7 | Hedging Arrangements
and Use of ISDA Documentation
|
The Covered Pool Monitor will, for each
offering of a series or tranche of Covered Bonds, enquire of the Guarantor whether (i) at the time of issuance, the Guarantor entered
into one or more contracts the purpose or effect of which was to mitigate its risk of financial loss or exposure from fluctuations
in interest rates or currency exchange rates affecting, or which may come to affect, its obligations to make one or more payments,
and (ii) the Interest Rate Swap Agreement or the Covered Bond Swap Agreement has been documented using ISDA documentation, and,
in each case, report the findings of such enquiries to the Issuer, Guarantor, the Bond Trustee and CMHC in writing.
| (a) | If the arithmetic tests conducted by the Cover Pool Monitor in accordance with Section 2.4 or Section 2.5 (the “Recalculation
Procedures”), as applicable, reveal arithmetic errors in the relevant calculations performed by the Cash Manager, the
Cover Pool Monitor shall perform the Recalculation Procedures in relation to the Investor Reports in respect of the Program (i)
for the last Calculation Period of each calendar quarter of the preceding year, (ii) for each Calculation Period of the next succeeding
year until such Recalculation Procedures demonstrate no arithmetical error for three consecutive Calculation Periods, and (iii)
thereafter, for the last Calculation Period of each remaining calendar quarter in the next succeeding year. |
| (b) | For every Calculation Period in respect of which the
Cover Pool Monitor performs the Recalculation Procedures in accordance with Section 2.8(a), the Cover Pool Monitor shall promptly
prepare and deliver to the Issuer, the Guarantor, the Bond Trustee and CMHC a report detailing the results of such Recalculation
Procedures, including the factual results of the Recalculation Procedures applied and any errors found in performing the Recalculation
Procedures. |
| 2.9 | Reporting Non-Compliance
with CMHC Guide and Other
Information |
| (a) | The Cover Pool Monitor will advise the Issuer, Guarantor, CMHC and the Bond Trustee in writing (a “Non-Compliance
Notice”) as soon as practicable after it has become aware or reasonably believes (as a consequence of, or in the course
of, the performance of its obligations under this Agreement) that: (i) the Issuer, the Guarantor and/or the Program are non-compliant
with the requirements of Section 1.4.6, Section 3.6.8(a) and (b), Section 3.6.9(i), and Section 3.6.17 of the CMHC Guide; (ii)
the Issuer has failed to provide (or cause to be provided) to the Cover Pool Monitor all books, records, accounts, information
and explanations to which it is entitled pursuant to Section 7.4 of the CMHC Guide; (iii) there exists a |
discrepancy or inconsistency in the books, records, accounts,
information and/or explanations provided by the Issuer to the Cover Pool Monitor; or (iv) the Issuer has otherwise failed to comply
with its obligations under Chapter 7 of the CMHC Guide.
| (b) | Upon receiving a Non-Compliance Notice, CMHC will have
the right to request such additional information and explanation concerning the matters reported therein as may be reasonably
necessary for CMHC to verify that the Issuer, the Guarantor and/or the Program are in compliance with the items identified in
Section 2.9(a). If so requested, the Cover Pool Monitor will report to the Issuer, Guarantor, CMHC and the Bond Trustee on such
matters and at such times and intervals, as CMHC may reasonably request, if necessary for CMHC to verify that the Issuer, the
Guarantor and/or the Program are in compliance with the items identified in Section 2.9(a). |
| 2.10 | Cover Pool Monitor
Assumptions |
Other than in relation to the testing
by the Cover Pool Monitor of the arithmetic accuracy of the calculations performed by the Cash Manager in accordance with the provisions
of this Agreement, the Cover Pool Monitor is entitled, in the absence of manifest error, to assume that all information provided
to the Cover Pool Monitor in accordance with Article 3 (Provision of Information to the Cover Pool Monitor) is true, correct, complete
and not misleading and is not required to conduct an audit or otherwise take steps to verify the accuracy or completeness of any
such information. Furthermore, the Cover Pool Monitor will not be required to confirm whether the information provided to it by
the Cash Manager (i) has been accurately extracted from the sources identified therein or agrees with any underlying accounting
or other information, or (ii) is presented in compliance with any relevant accounting or other definitions as to its elements and
composition.
| 2.11 | Compliance with Requirements |
Nothing in this Agreement precludes the
Cover Pool Monitor from taking such steps as are necessary in order to comply with any legal or regulatory requirement or any professional
or ethical rules of any relevant professional body of which the Cover Pool Monitor or any of its partners or employees is, at the
time, a member.
| 2.12 | No Responsibility
to Update |
The Cover Pool Monitor has no responsibility
to update any Annual Cover Pool Monitor Report or advice for events occurring after its completion (which, unless provided otherwise
in this Agreement, will be the date on which such Annual Cover Pool Monitor Report is delivered or signed), nor to monitor its
continuing relevance or suitability for the purposes of the Guarantor, the Cash Manager, the Issuer or the Bond Trustee.
| 2.13 | Timely Performance
of Tests |
The Cover Pool Monitor will perform the
tests required under this Agreement by no later than ten (10) Toronto Business Days following the receipt of the relevant information
from the Cash Manager.
| 2.14 | Reliance on Annual
Cover Pool Monitor Report
and Other Advice from the
Cover Pool Monitor |
Each Annual Cover Pool Monitor Report
and any advice the Cover Pool Monitor provides to the Recipients in connection with this Agreement are for the exclusive use of
the Recipients (except as provided in the CMHC Guide) in the context of the Program and is provided subject to and in accordance
with the terms of this Agreement and the CMHC Guide. Each Annual Cover Pool Monitor Report and such advice should not be used for
any other purpose, recited or referred to in any document, copied or made available (in whole or in part) to any person other than
the parties to this Agreement or CMHC, without the Cover Pool Monitor’s prior written express consent, except as provided
in the CMHC Guide. The Recipients which are party to this Agreement acknowledge that were they to do so (and without limitation)
this could expose the Cover Pool Monitor to a risk that a third party who otherwise would not have access to any such Annual Cover
Pool Monitor Reports or advice might claim to have relied upon such Annual Cover Pool Monitor Report or advice to its detriment
and might bring or threaten to bring an action, claim or proceedings against the Cover Pool Monitor. Save as expressly provided
by this Agreement or the CMHC Guide, no person other than the Recipients may rely on any Annual Cover Pool Monitor Report, or any
advice and/or information derived from it. The Cover Pool Monitor has no responsibility or liability to any other party (including,
without limitation, any Dealer or Rating Agency) who is shown or gains access to any Annual Cover Pool Monitor Report or advice.
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PROVISION OF INFORMATION TO THE COVER POOL MONITOR
In accordance with Section 3.4 (Compliance
with the Asset Coverage Test, the Amortization Test, the Pre-Maturity Test and the Valuation Calculation) of the Cash Management
Agreement, the Cash Manager will provide the Cover Pool Monitor with:
| (a) | the figures used by the Cash Manager for items A, B, C, D, E and F described in Schedule 2
(Asset Coverage Test) of the Guarantor Agreement in its calculation of the ACT Asset Value and ACT Liability Value on the relevant
Calculation Date; |
| (b) | the constituent figures used in the calculations of items A and F described in Schedule 2
(Asset Coverage Test) of the Guarantor Agreement in order to test the arithmetical accuracy of the figures used by the Cash Manager
for items A and D provided in accordance with Section 3.1(a) above; and |
| (c) | the Canadian Dollar Equivalent of the aggregate Principal Amount Outstanding of the Covered Bonds as calculated by the Cash
Manager on the relevant Calculation Date. |
In accordance with Section 3.4 (Compliance
with the Asset Coverage Test, the Amortization Test, the Pre-Maturity Test and the Valuation Calculation) of the Cash Management
Agreement, the Cash Manager will provide the Cover Pool Monitor with:
| (a) | the figures used by the Cash Manager for items A, B, C and D described in Schedule 3
(Amortization Test) of the Guarantor Agreement in its calculation of the Amortization Asset Value and Amortization Liability Value
on the relevant Calculation Date; |
| (b) | the constituent figures used in the calculation of items A and D described in Schedule 3
(Amortization Test) of the Guarantor Agreement in order to test the arithmetical accuracy of the figures used by the Cash Manager
for items A and Z provided in accordance with Section 3.2(a) above; and |
| (c) | the Canadian Dollar Equivalent of the aggregate Principal Amount Outstanding of the Covered Bonds as calculated by the Cash
Manager on the relevant Calculation Date. |
In accordance with Section 3.4 (Compliance
with the Asset Coverage Test, the Amortization Test, the Pre-Maturity Test and the Valuation Calculation) of the Cash Management
Agreement, the Cash Manager will provide the Cover Pool Monitor with:
| (a) | the figures used by the Cash Manager for items A, B, C, D, E and F described in Schedule
10 (Valuation Calculation) of the Guarantor Agreement in its calculation of the Asset Value
on the relevant Calculation Date; |
| (b) | the constituent figures used in the calculation of items A and F described in Schedule
10 (Valuation Calculation) of the Guarantor Agreement in order to test the arithmetical
accuracy of the figures used by the Cash Manager for items A and F
provided in accordance with 3.3(a) above; and |
| (c) | the Trading Value of the aggregate Principal Amount Outstanding of the Covered Bonds as calculated by the Cash Manager on the
relevant Calculation Date. |
To the extent not already provided, the
Issuer shall, immediately upon the reasonable request of the Cover Pool Monitor, for purposes of performing its responsibilities
in relation to the Program:
| (a) | make available to the Cover Pool Monitor, and afford
it reasonable access to, any books, records or accounts of the Issuer that relate to the Program; |
| (b) | require any officer or employee of the Issuer or any
of its Affiliates to provide to the Cover Pool Monitor such information, explanations and representations as the Cover Pool Monitor
reasonably considers necessary in the performance of its responsibilities; and |
| (c) | cause the Guarantor, any servicer of the Loans, any
Swap Provider, the Cash Manager, the Account Bank (or other financial institution at which an account may be maintained), the
Managing GP, the GDA Provider, Corporate Services Provider and the Custodian to provide to the Cover Pool Monitor such information
as may be in their possession and the Cover Pool Monitor reasonably considers necessary in the performance of its responsibilities. |
In accordance with Section 3.4 (Compliance
with the Asset Coverage Test, the Amortization Test, the Pre-Maturity Test and the Valuation Calculation) of the Cash Management
Agreement, the Cash Manager will provide the Cover Pool Monitor with the ratings assigned to the short-term and long-term unsecured,
unsubordinated and unguaranteed debt obligations, or issuer default ratings, of the Issuer by each of the Rating Agencies.
The Cover Pool Monitor may rely on any
instructions, request or representation made, notices given or information supplied, whether orally or in writing, by any person
known or reasonably believed by the Cover Pool Monitor to be authorized from time to time by the Guarantor and/or the Cash Manager
in connection with the provision by the Guarantor and/or the Cash Manager of information pursuant to the terms of this Agreement.
For the avoidance of doubt, any notice
to be given to the Cover Pool Monitor, will be sent to those persons nominated by the Cover Pool Monitor from time to time (the
“Nominated Persons” and each a “Nominated Person”) and the Cover Pool Monitor will not be
deemed to have any knowledge of any notice sent to a person other than a Nominated Person, provided that a person will continue
to be a Nominated Person until such time as the Cover Pool Monitor has sent notice to the Bond Trustee and the Guarantor (or the
Cash Manager on its behalf) that any such Nominated Person has ceased to be a Nominated Person for the purpose of this Agreement.
Furthermore, a Nominated Person will not be required, expected or deemed to have knowledge of any information known to any person
not being a Nominated Person and is not required to obtain such information from any such other person.
| 3.8 | Preparation of Final
Annual Cover Pool Monitor
Report |
In the preparation of the final form
of any Annual Cover Pool Monitor Report, the Cover Pool Monitor may comment or provide advice to the Guarantor, the Cash Manager,
the Issuer or
the Bond Trustee on information provided to it by the Cash
Manager or show the Guarantor, the Cash Manager, the Issuer or the Bond Trustee drafts of such Annual Cover Pool Monitor Report
for comment. The Cover Pool Monitor does this on the basis that the Guarantor, the Cash Manager, the Issuer or the Bond Trustee
will not rely on any drafts or oral comments or advice. Accordingly, the Cover Pool Monitor will not be responsible if the Guarantor,
the Cash Manager, the Issuer or the Bond Trustee choose to act, or refrain from acting, on the basis of any drafts or oral comments
or advice. If the Guarantor, the Cash Manager, the Issuer or the Bond Trustee want to rely or want to act on oral comments, they
will inform the Cover Pool Monitor in order that it may deal with them in its final Annual Cover Pool Monitor Report. Furthermore,
for the convenience of the Guarantor, the Cash Manager, the Issuer or the Bond Trustee, the Annual Cover Pool Monitor Reports,
or any advice, may be made available to the Guarantor, the Cash Manager, the Issuer or the Bond Trustee in draft or in electronic
as well as hard copy format. Multiple copies and versions of documents may therefore exist in different media. In the case of any
discrepancy, the signed hard copy of the final Annual Cover Pool Monitor Report is definitive.
| 3.9 | Ownership of Working
Papers |
The Cover Pool Monitor will own and retain
ownership of its working papers in respect of Annual Cover Pool Monitor Reports and any advice. Any papers retained by the Cover
Pool Monitor on termination of this Agreement (including documents legally belonging to the Guarantor, the Cash Manager, the Issuer
or the Bond Trustee) may, unless requested to be returned to the Guarantor, the Cash Manager, the Issuer or the Bond Trustee or
any one of them in the case of documents legally belonging to the Guarantor, the Cash Manager, the Issuer or the Bond Trustee,
routinely be destroyed in accordance with the Cover Pool Monitor's internal policies.
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representations, warranties and COVENANTS OF THE COVER POOL MONITOR
The Cover Pool Monitor hereby represents,
warrants and covenants to the Issuer, Guarantor, the Bond Trustee and the Cash Manager as of the date of this Agreement, and for
so long as it remains a party to this Agreement, that:
| (a) | it possesses the necessary experience, qualifications,
facilities and other resources to perform its responsibilities in relation to its duties and obligations hereunder and the other
Transaction Documents to which it is a party; |
| (b) | it is and will continue to be in regulatory good standing
and in material compliance with and under all Laws applicable to its duties and obligations hereunder and the other Transaction
Documents to which it is a party; |
| (c) | it is and will continue to be in material compliance
with its internal policies and procedures (including risk management policies) relevant to its duties and obligations hereunder
and the other Transaction Documents to which it is a party; |
| (d) | it is and will continue to be a firm or company engaged
in the practice of accounting that is qualified to be an auditor of the Issuer under both the Bank Act (Canada) and Canadian
auditing standards; |
| (e) | it will exercise reasonable skill and care in the performance
of its obligations hereunder and the other Transaction Documents to which it is a party; |
| (f) | it will comply with the CMHC Guide and all material
legal and regulatory requirements applicable to the conduct of its business so that it can lawfully attend to the performance
of its obligations hereunder and the other Transaction Documents to which it is a party; and |
| (g) | it will comply with all Transaction Documents to which
it is a party. |
Article
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TERMINATION
The Cover Pool Monitor may, at any time,
resign from its appointment under this Agreement upon providing the Guarantor (or the Cash Manager on its behalf) and the Bond
Trustee with 60 days’ prior written notice. The Cover Pool Monitor may resign from its appointment immediately on written
notice if any action taken by the Recipients causes a professional conflict of interest for the Cover Pool Monitor under the rules
of the professional and/or regulatory bodies regulating the activities of the Cover Pool Monitor. The Cover Pool Monitor will inform
the Recipients as soon as reasonably practicable of any action of which the Cover Pool Monitor is aware that may cause a professional
conflict of interest for the Cover Pool Monitor which could result in resignation under this Clause 5.1.
Any costs, charges, fees or expenses
incurred by the Cover Pool Monitor as a result of its resignation under Section 5.1 (Resignation) above will be payable in full
by the Cover Pool Monitor and will not be liable for reimbursement by the Guarantor save that the Cover Pool Monitor will remain
entitled to payment for any costs, charges, fees or expenses payable to the Cover Pool Monitor in accordance with this Agreement
incurred or accruing prior to such resignation.
The Guarantor may, at any time, but subject
to the prior written consent of the Bond Trustee, terminate the appointment of the Cover Pool Monitor hereunder upon providing
the Cover Pool Monitor with at least 60 days’ prior written notice, provided that the consent of the Bond Trustee or such
notice period shall not be required for the Guarantor to terminate the appointment of the Cover Pool Monitor in the event that
the Cover Pool Monitor defaults in the performance or observance of any of its covenants, or breaches any of its representations
and warranties made, under Article 4, and provided further subject to Section 5.5 (Replacement Cover Pool Monitor) below, such
termination may not be effected unless and until a replacement
approved by the Bond Trustee has been found by the Guarantor
(such approval to be given by the Bond Trustee if the replacement is an accountancy firm of national standing in Canada) which
meets the requirements for a cover pool monitor in the CMHC Guide and agrees to perform the duties (or substantially similar duties)
of the Cover Pool Monitor set out in this Agreement.
Any costs, charges, fees or expenses
incurred by the Cover Pool Monitor as a result of its appointment being terminated under Section 5.3 (Removal) above (together
with the Cover Pool Monitor’s rights under Article 6 (Fees) in relation to funds owing to the Cover Pool Monitor for the
period up to and including the date of the termination of the Cover Pool Monitor’s appointment becoming effective) will be
payable in full by the Guarantor, unless the Cover Pool Monitor has been terminated as a result of a breach of its duties or obligations
hereunder.
| 5.5 | Replacement Cover Pool
Monitor |
Following any receipt of any notice of
resignation by the Cover Pool Monitor in accordance with Section 5.1 (Resignation) above, the Guarantor will immediately use all
commercially reasonable endeavours to appoint a substitute Cover Pool Monitor to provide the services set out in this Agreement,
provided that:
| (a) | the appointment of such substitute Cover Pool Monitor
is approved by the Bond Trustee, acting reasonably; and |
| (b) | the substitute Cover Pool Monitor meets the requirements
for a cover pool monitor in the CMHC Guide and enters into an agreement substantially on the same terms as the terms of this Agreement
(or on such terms as are satisfactory to the Bond Trustee, acting reasonably). |
If a substitute Cover Pool Monitor is
not appointed within 60 days of the giving of notice of resignation or termination or by the date which is 30 days prior to the
date when tests are to be carried out in accordance with the terms of this Agreement, then the Guarantor will use all commercially
reasonable endeavours to appoint an accountancy firm of national standing in Canada which meets the requirements for a cover pool
monitor in the CMHC Guide to carry out the duties of the Cover Pool Monitor set out in the Cover Pool Monitor Agreement on a one-off
basis, provided that such appointment is approved by the Bond Trustee, acting reasonably. The Bond Trustee will not be obliged
to act as Cover Pool Monitor in any circumstances.
The Cover Pool Monitor agrees that, if
a replacement is found in accordance with the provisions of Section 5.1 (Resignation) or Section 5.3 (Removal) above, or a temporary
arrangement is instituted pursuant to Section 5.5 (Replacement Cover Pool Monitor) above, the Cover Pool Monitor will provide all
reasonable co-operation to the replacement and will provide access to such replacement all records, papers, files and computer
data which it has received pursuant to this Agreement since the most recent Calculation Date in respect of which the Cover Pool
Monitor was obliged, in accordance with Article 2 (Services of the Cover Pool Monitor)
above, to conduct arithmetic tests of the calculations performed
by the Cash Manager on such Calculation Date. The Cover Pool Monitor will retain all of its intellectual property rights in relation
to any reports provided by it under this Agreement.
The Cover Pool Monitor’s appointment
under this Agreement will terminate upon the earlier of the occurrence of (i) a Guarantor Event of Default and service of a Guarantor
Acceleration Notice, or (ii) the repayment in full of all amounts outstanding in relation to all Covered Bonds.
| 5.8 | Notice of Termination
or Resignation |
Upon any termination or resignation of
the Cover Pool Monitor hereunder, the Guarantor shall provide notice to CMHC of such termination or resignation and of the Cover
Pool Monitor’s replacement contemporaneously with the earlier of (i) notice of such termination or resignation and replacement
to a Rating Agency, (ii) notice of such termination or resignation and replacement being provided to or otherwise made available
to Covered Bondholders, and (iii) five (5) Toronto Business Days following such termination or resignation and replacement (unless
the replacement Cover Pool Monitor has yet to be identified at that time, in which case notice of the replacement Cover Pool Monitor
may be provided no later than ten (10) Toronto Business Days thereafter). Any such notice shall include (if known) the reasons
for the termination or resignation of the Cover Pool Monitor, all information relating to the replacement Cover Pool Monitor required
by the CMHC Guide and the new agreement or revised and amended copy of this Agreement to be entered into with the replacement Cover
Pool Monitor.
Article
6
FEES
| 6.1 | Cover Pool Monitor
Fee |
The Guarantor will (subject to Sections
6.2 (Cover Pool Monitor Payment Date) and 6.3 (Other Costs) below) pay to the Cover Pool Monitor for its services hereunder a fee
per report that it provides (the “Cover Pool Monitor Fee”) in such amount as may be agreed to between the Guarantor
and Cover Pool Monitor from time to time. The Cover Pool Monitor Fee will be payable on a Guarantor Payment Date in accordance
with Section 6.2 (Cover Pool Monitor Payment Date) below.
| 6.2 | Cover Pool Monitor
Payment Date |
The parties hereto agree that the Cover
Pool Monitor Fee will be payable by the Guarantor (or the Cash Manager on its behalf) following delivery by the Cover Pool Monitor
of an Annual Cover Pool Monitor Report on the Guarantor Payment Date immediately following the Calculation Period in which such
duly completed invoice addressed to the Guarantor is delivered to the Guarantor (or the Cash Manager on its behalf), and the Issuer
(the “Cover Pool Monitor Payment Date”), provided that such duly completed invoice is delivered, at least 35
days prior to the relevant Cover Pool Monitor Payment Date. In the event that the Guarantor, the Cash Manager or the Issuer fails
to receive a duly completed invoice at least 35 days prior to the
relevant Cover Pool Monitor Payment Date, the Cover Pool
Monitor Fee will become due and payable on the next Guarantor Payment Date falling not less than 35 days after receipt by the Guarantor,
the Cash Manager and the Issuer of a duly completed invoice.
For the avoidance of doubt, other than
as specified herein, the Bond Trustee will not be responsible for payment of fees, costs and expenses due to or incurred by the
Cover Pool Monitor pursuant to its appointment and performance of its duties hereunder.
| 6.4 | Priorities of Payments |
The Cover Pool Monitor agrees to be bound
by the terms of the Priorities of Payments set out in the Guarantor Agreement and the Security Agreement. The Cover Pool Monitor
further agrees that, notwithstanding any other provision contained herein, it will not demand or receive payment of, or any distribution
in respect of or on account of, any amounts payable by the Guarantor (or the Cash Manager on its behalf) or the Bond Trustee, as
applicable, to the Cover Pool Monitor under this Agreement, 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
to all other creditors ranking higher in the relevant Priorities of Payments have been paid in full. The Cover Pool Monitor agrees
(subject to the Security granted pursuant to the Security Agreement) that it will have recourse only to sums paid to or received
by (or on behalf of) the Guarantor from time to time.
Without prejudice to Section 6.4 above,
whether in the liquidation of the Guarantor or of 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 the Cover Pool Monitor in respect of any amount
payable by the Guarantor (or the Cash Manager on its behalf) or the Bond Trustee, as applicable, to the Cover Pool Monitor under
this Agreement at a time when, by virtue of the provisions of this Agreement and the Cash Management Agreement and the Security
Agreement no payment or distribution should have been made, the amount so received will be held by the Cover Pool Monitor in trust
for the entity from which such payment was received and will be returned to such entity forthwith upon receipt (whereupon the relevant
payment or distribution will be deemed not to have been made or received).
None of the Guarantor, the Cash Manager
or the Bond Trustee will pay or repay, or make any distribution in respect of, any amount owing to the Cover Pool Monitor under
this Agreement (in cash or in kind) unless and until all amounts then due and payable by the Guarantor or the Bond Trustee to all
other creditors ranking higher in the applicable Priorities of Payments have been paid in full.
Article
7
ASSIGNMENTS AND TRANSFERS
Subject always to the provisions of Article
13 of the Mortgage Sale Agreement and Section 7.2 herein, no party hereto will be entitled to assign all or any part of
its rights or obligations hereunder to any other party without the prior written consent of each of the other parties hereto (which
will not, if requested, be unreasonably withheld or delayed or made subject to unreasonable conditions) save that the Guarantor
will be entitled to assign whether by way of security or otherwise all or any of its rights under this Agreement and all or any
of its interest in the Loans and their Related Security without such consent to the Bond Trustee pursuant to the Security Agreement
and the Bond Trustee may at its sole discretion assign all or any of its rights under or in respect of this Agreement and all or
any of its interest in the Loans and their Related Security without such consent in exercise of its rights under the Security Agreement.
If any party assigns any of its obligations under this Agreement as permitted by this Agreement, such party will provide at least
10 Toronto Business Days’ prior written notice of such assignment to DBRS.
| 7.2 | Assignment under Security
Agreement |
The parties hereto, other than the Bond
Trustee and the Guarantor, acknowledge that on the assignment pursuant to the Security Agreement by the Guarantor to the Bond Trustee
of the Guarantor’s rights under this Agreement, the Bond Trustee may enforce such rights in the Bond Trustee’s own
name without joining the Guarantor in any such action (which right such parties hereby waive) and such parties hereby waive as
against the Bond Trustee any rights or equities in its favour arising from any course of dealing between one or more of such parties
and the Guarantor.
| 7.3 | Agency, Partnership
and Joint Venture |
Save as set out in Article 18 (Agency),
this Agreement does not make any of the parties an agent or legal representative of any of the other parties, nor does it create
a partnership or joint venture.
Article
8
CONFIDENTIALITY
The Cover Pool Monitor agrees to keep
confidential all information of any kind whatsoever provided to it in its capacity as Cover Pool Monitor hereunder save for:
| (a) | information which it is expressly authorized to provide
to the Guarantor, the Rating Agencies, the Cash Manager, the Bond Trustee or any other party under the terms of this Agreement
or any of the other Transaction Documents; |
| (b) | information which is public knowledge otherwise than
as a result of the wrongful conduct of the Cover Pool Monitor; |
| (c) | information that the Cover Pool Monitor is required
to disclose pursuant to any laws or order of any court or pursuant to any direction, request or requirement (whether or not having
the force of law) of any governmental or other regulatory or taxation authority in Canada (including, without limitation, any
official bank examiners or regulators), or any stock exchange on which securities issued by the Issuer are listed; |
| (d) | information which the Cover Pool Monitor wishes to disclose
to its professional indemnity insurers or advisers where such insurers or advisers receive the same under a duty of confidentiality; |
| (e) | information which the Cover Pool Monitor is required
to disclose to the relevant authorities on a public interest disclosure basis or in order to comply with its statutory obligations
relating to money laundering and the proceeds of crime; |
| (f) | information disclosed to professional advisers of the
Cover Pool Monitor who receive the same under a duty of confidentiality in substantially the same terms as this Article 8; and |
| (g) | information disclosed with the prior written consent
of the Guarantor, the Cash Manager and the Bond Trustee. |
The parties agree that the Cover Pool
Monitor and each Nominated Person will not be required to disclose to any other party any information which is confidential to
any other client of the Cover Pool Monitor and any information received by the Cover Pool Monitor or any Nominated Person other
than by reason of, or in their capacity as, Cover Pool Monitor or Nominated Person (as applicable) pursuant to the terms of this
Agreement.
| 8.3 | Disclosure Required
by Law, CMHC Guide, etc. |
Notwithstanding any other provision in
this Agreement to the contrary, nothing in this Agreement will prevent a recipient of information provided by another party to
this Agreement to disclose such information to the extent the recipient is required to disclose the same pursuant to and in accordance
with (i) any law or order of any court of competent jurisdiction, (ii) any direction, request or requirement (whether or not having
the force of law) of any central bank or any governmental or other authority (including, without limitation, any official bank
examiners or regulators), or (iii) the CMHC Guide and the Covered Bond Legislative Framework.
Article
9
PROVISION OF INFORMATION TO THE BOND TRUSTEE
| 9.1 | Provision of Information
to the Bond Trustee |
The Cash Manager, solely in its capacity
as cash manager, the Guarantor and the Cover Pool Monitor will each provide to the Bond Trustee, or procure the provision to the
Bond Trustee of, such information and evidence available to that party in respect of any dealing between that relevant party or
its officers, employees, attorneys or agents and the Cash Manager, solely in its capacity as cash manager, the Guarantor and the
Cover Pool Monitor (as applicable) under or in relation to this Agreement as the Bond Trustee may reasonably request and the Cash
Manager, solely in its capacity as cash manager, the Guarantor and the Cover Pool Monitor hereby waive any right or duty of confidentiality
which they may have or which may be owed to them in respect of the disclosure of such information and evidence pursuant to this
Article 9 (Provision of Information to the Bond Trustee).
Article
10
LIABILITY
To the fullest extent permitted by law,
the Cover Pool Monitor will not have liability hereunder to the extent that liability would (but for this Section 10.1) be imposed
upon the Cover Pool Monitor by reason of it having relied upon any statement or information made or provided by any Person (including
information provided in accordance with Article 3 (Provision of Information to the Cover Pool Monitor) above) which was untrue,
inaccurate, incomplete or misleading without the Cover Pool Monitor having been aware of this other than the arithmetical accuracy
of the calculations performed by the Cash Manager in respect of the Asset Coverage Test, the Amortization Test and the Valuation
Calculation which the Cover Pool Monitor has been appointed to test in accordance with the provisions of this Agreement.
| 10.2 | Limitation of Liability |
To the fullest extent permitted by law,
the Cover Pool Monitor will not be liable or responsible to any other party hereto for any loss, cost, damage or expense which
results from the fraud of any other party or a breach by any of the other parties hereto of any provision of the Transaction Documents
and the Guarantor agrees (subject to the Priorities of Payments) to indemnify the Cover Pool Monitor for any liability (including
all liabilities in respect of all proceedings, claims, demands, losses, damages, costs and expenses relating to the same) which
becomes payable or which is incurred by the Cover Pool Monitor in respect of a breach by any of the other parties hereto of any
provision of the Transaction Documents.
The Cover Pool Monitor agrees that any
and all claims that it may have under or pursuant to this Agreement (including, without limitation, by exercising any rights of
set-off) (other than any amounts which are due under Article 6 (Fees) above) may be made solely against the Guarantor under the
terms of Section 10.2 (Limitation of Liability) above and may not be made
against any other Person including without limitation any
of the other parties hereto or any parent, Subsidiary, Affiliate or holding company of the Issuer.
| 10.4 | Bad Faith, Wilful
Misconduct, Gross Negligence
or Reckless Disregard |
The Cover Pool Monitor will not be liable
to any other party hereto for any loss, liability, claim, expense or damage suffered by them or any one of them as a result of
the proper performance of the duties of the Cover Pool Monitor hereunder save to the extent that any loss, liability, claim, expense
or damage is suffered or incurred as a result of any bad faith, wilful misconduct, gross negligence or reckless disregard of the
Cover Pool Monitor or as a result of a breach by the Cover Pool Monitor of the terms and provisions of this Agreement in relation
to such functions.
| 10.5 | Sole Responsibility
of the Cover Pool Monitor |
The performance of the services of the
Cover Pool Monitor is the responsibility of the Cover Pool Monitor alone. Neither the Guarantor nor the Bond Trustee will bring
any claim against any Person other than the Cover Pool Monitor in respect of loss or damage suffered by the Guarantor or the Bond
Trustee arising out of or in connection with the performance by the Cover Pool Monitor of its obligations under this Agreement.
This restriction will not operate to exclude or limit the liability of the Cover Pool Monitor for the acts and omissions of any
of its officers, employees, attorneys or agents.
Any clauses in this Agreement which operate
or which may operate to exclude or limit the liability of the Cover Pool Monitor or any other person in any respects will not operate
to exclude or limit any liability which cannot lawfully be excluded or limited. The Cover Pool Monitor will not be liable for any
losses arising out of the use by the Recipients of any Annual Cover Pool Monitor Report for a purpose other than the purposes of
the Program.
Article
11
FURTHER PROVISIONS
The respective rights of the parties
under this Agreement are cumulative, and may be exercised as often as they consider appropriate and are in addition to their respective
rights under the general law. The respective rights of each of the parties hereto in relation to this Agreement (whether arising
under this Agreement or under the general law) will not be capable of being waived or restated otherwise than by an express waiver
or variation in writing. In particular, any failure to exercise or any delay in exercising of any such rights will not operate
as a waiver or variation of that or any other such right; any defective or partial exercise of any of such rights will not preclude
any other or further exercise of that or any other such right. No act or course of conduct or negotiation on their part or on their
behalf will in any way preclude them from exercising any such right or constitute a suspension or any variation of any such right.
| 11.2 | Invalidity, Illegality
and Unenforceability |
If any of the provisions of this Agreement
become invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired.
Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction
will not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law,
each party hereto hereby waives any provision of law (where permitted by law) which renders any provision of this Agreement prohibited
or unenforceable in any respect.
| 11.3 | Insolvency of the
Issuer |
On and following the occurrence of an
Insolvency Event in respect of the Issuer, (a) the Cover Pool Monitor will continue to act as Cover Pool Monitor for the Guarantor,
(b) any subsequent engagement of a Cover Pool Monitor will be made by the Guarantor (and related fees will be paid by the Guarantor
or the Bond Trustee), and (c) all references to the Issuer in the provisions of this Agreement which correspond to the relevant
provisions of Chapter 7 of the CMHC Guide will be construed as references to the Guarantor.
Article
12
NOTICES
Any notices to be given pursuant to this
Agreement to any of the parties hereto will be in writing and will be sufficiently served if sent by prepaid first class mail,
by hand, e-mail or facsimile transmission and will be deemed to be given (if by facsimile transmission) when dispatched, (in the
case of e-mail) upon confirmation of receipt, (if delivered by hand) on the day of delivery if delivered before 5:00 p.m. (Toronto
time) on a Toronto Business Day or on the next Toronto Business Day if delivered thereafter or on a day which is not a Toronto
Business Day or (if by first class mail) when it would be received in the ordinary course of the post and will be sent:
| (a) | in the case of the Guarantor, Scotiabank Covered Bond
Guarantor Limited Partnership, ▇/▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ Plaza, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile
number 416-945-4001) for the attention of the Managing Director, Alternate Funding, e-mail: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇; |
| (b) | in the case of the Cover Pool Monitor, to KPMG LLP, acting through its offices at Bay
Adelaide Centre, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇) for the attention of ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇, e-mail: ▇▇▇▇▇▇@▇▇▇▇.▇▇; |
| (c) | in the case of the Cash Manager, to The Bank of Nova
Scotia, at its Executive Offices, Scotia Plaza, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 416-945-4001)
for the attention of the Managing Director, Alternate Funding, e-mail: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇; |
| (d) | in the case of the Bond Trustee, to Computershare
Trust Company of Canada, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (facsimile number 416-981-9777)
for the attention of the Manager, Corporate Trust, e-mail: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇;
and |
| (e) | in the case of the Issuer, to The Bank of Nova Scotia,
Scotia Plaza, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (facsimile number 416-945-4001) for the attention of the Managing
Director, Alternate Funding, e-mail: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇, |
or to such other physical or e-mail address or facsimile
number or for the attention of such other person or entity as may from time to time be notified by any party to the others by written
notice in accordance with the provisions of this Article.
Any party may change its address for
notice, or facsimile contact information for service from time to time by notice given in accordance with this Article 12 and any
subsequent notice will be sent to such party at its changed address, or facsimile contact information, as applicable.
Article
13
COUNTERPARTS
This Agreement may be executed in any
number of counterparts (manually, electronically or by facsimile or in pdf format) and by different parties hereto in separate
counterparts, each of which when so executed will be deemed to be an original and all of which when taken together will constitute
one and the same instrument.
Article
14
THE BOND TRUSTEE
| 14.1 | Change of Bond Trustee |
If there is any change in the identity
of the Bond Trustee or an additional Bond Trustee is appointed in accordance with the Security Agreement, the parties to this Agreement
will execute such documents and take such action as the successor Bond Trustee and the outgoing Bond Trustee may reasonably require
for the purpose of vesting in the successor Bond Trustee the rights and obligations of the outgoing Bond Trustee under this Agreement
and under the Security Agreement and releasing the outgoing Bond Trustee from any future obligations under this Agreement. Notice
thereof will be given to the Rating Agencies while any of the Covered Bonds remain outstanding.
| 14.2 | Limitation of Liability
of Bond Trustee |
It is hereby acknowledged and agreed
that by its execution of this Agreement, the Bond Trustee will not assume or have any obligations or liabilities to the other parties
to this Agreement notwithstanding any provision herein and that the Bond Trustee has agreed to become a party to this Agreement
for the purpose only of taking the benefit of this Agreement and agreeing to amendments to this Agreement pursuant to Article 16
(Amendments, Modification, Variation or Waiver). For the avoidance of doubt, the parties to this Agreement acknowledge that the
rights and powers of the Bond Trustee are governed by 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 therefor, and the Bond Trustee will not be responsible for any liability occasioned by so
acting, except if acting in breach of the standard of care set out in Section 11.1 (Standard of Care) of the Security Agreement.
Article
15
LIMITATION OF LIABILITY
| 15.1 | Limitation of Liability |
Scotiabank Covered Bond Guarantor Limited
Partnership 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.
Article
16
Amendments, MODIFICATION, Variation or Waiver
| 16.1 | Amendments, Modification,
Variation or Waiver |
Any amendment, modification, variation
or waiver to this Agreement will be made only with the prior written consent of each party to this Agreement. No waiver of this
Agreement will be effective unless 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 to be a material amendment, modification, variation
or waiver will be subject to satisfaction of the Rating Agency Condition, and the Guarantor (or the Cash Manager on its behalf)
will deliver notice to the Rating Agencies of any amendment or waiver which does not require satisfaction of the Rating Agency
Condition provided that failure to deliver such notice will not constitute a breach of the obligations of the Guarantor under this
Agreement. No single or partial exercise of, or failure or delay in exercising, any right under this Agreement will constitute
a waiver or preclude any other or further exercise of that or any other right.
Each of the Cover Pool Monitor and the
Cash Manager agrees that it will not institute against, or join any other Person or entity in instituting against, or with respect
to, the Guarantor, or any general partners of the Guarantor, any bankruptcy, reorganisation, arrangement,
insolvency or liquidation proceeding under any federal, provincial
or foreign bankruptcy, insolvency or similar law, for one year and one day after all Covered Bonds have been repaid in full. The
foregoing provision will survive the termination of this Agreement by any of the parties.
Article
17
EXCLUSION OF THIRD PARTY RIGHTS
| 17.1 | Exclusion of Third
Party Rights |
The parties to this Agreement do not
intend that any term of this Agreement should be enforced by any Person who is not a party to this Agreement but without prejudice
to the rights of the Bond Trustee as assignee under the Security Agreement.
Article
18
AGENCY
The Cover Pool Monitor agrees and confirms
that, unless otherwise notified by the Guarantor or the Bond Trustee in accordance with the terms of this Agreement, the Cash Manager,
as agent of the Guarantor, may act on behalf of the Guarantor under this Agreement.
Article
19
CONTINUING PROVISIONS
| 19.1 | Continuing Provisions |
Sections 5.2 (Resignation Costs), 5.4
(Removal Costs), 5.6 (Co-Operation) and 16.2 (Non-Petition) as well as Article 6 (Fees), Article 8 (Confidentiality), Article 10
(Liability), Article 11 (Further Provisions), Article 17 (Exclusion of Third Party Rights), Article 20 (Entire Agreement) and Article
22 (Governing Law) of this Agreement will survive the expiry or termination of this Agreement.
Article
20
ENTIRE AGREEMENT
This Agreement contains the entire agreement
between the parties hereto in relation to the services to be performed hereunder and supersedes any prior agreements, understandings,
arrangements, statements or representations relating to such services. Nothing in this Article or Agreement will operate to limit
or exclude any liability for fraud.
Article
21
FURTHER ASSURANCE
From time to time, each party will do
and perform any acts and execute any further instruments which may be required or which may be reasonably requested by any other
party to more fully give effect to the purpose of this Agreement.
Article
22
GOVERNING LAW
This Agreement will be governed by, and
construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein.
| 22.2 | Submission to Jurisdiction |
Each party to this Agreement hereby irrevocably
submits to the non-exclusive jurisdiction of the courts of the Province of Ontario in any action or proceeding arising out of or
relating to this Agreement.
[The remainder of this page left
intentionally blank]
IN WITNESS WHEREOF the parties
hereto have executed this Agreement on the day and year first before written.
| |
SCOTIABANK COVERED BOND GUARANTOR LIMITED PARTNERSHIP, by its managing general partner, SCOTIABANK COVERED BOND GP, INC. |
| |
|
|
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By: |
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ |
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇ |
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Title: President and Secretary |
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THE BANK OF NOVA SCOTIA, in its capacity as Cash Manager |
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By: |
/s/ ▇▇▇ ▇▇▇▇▇ |
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Name: ▇▇▇ ▇▇▇▇▇ |
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Title: Managing Director and Head, Funding and Liquidity Management |
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KPMG LLP, as Cover Pool Monitor |
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By: |
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
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Title: Partner, KPMG LLP |
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COMPUTERSHARE TRUST COMPANY OF CANADA, as Bond Trustee |
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By: |
/s/ ▇▇▇▇ ▇▇▇▇▇▇ |
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Name: ▇▇▇▇ ▇▇▇▇▇▇ |
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Title: Corporate Trust Officer |
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By: |
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ |
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇ |
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Title: Associate Trust Officer |
Schedule
1
Certain
specified procedures
| Procedure Reference |
Category |
Specific Procedures |
| Eligible Loans |
|
|
| 1. |
Name |
Agree the borrower(s)’ first name
(or initials) and surname with the following:
(i) Certificate of Title
(COT) or Report on Title (ROT), and
(ii) Registered Mortgage
document (or, if not on file, either the mortgage loan agreement or the mortgage application form)
|
| 2. |
Address |
Inspect that the property
address confirmed to be in Canada and agree on the following (allowing for common abbreviations but with no exception
for spelling):
(i) Certificate of Title
(COT) or Report on Title (ROT), and
(ii) Valuation report, where commissioned
|
| 3. |
Loan/Account number |
Agree the loan/account number with the primary system of record |
| 4. |
Term |
Agree the latest agreed term of the loan with the latest mortgage offer or account statement (or agree it is a HELOC) |
| 5. |
Interest rate |
Agree
the interest rate (or spread to index), interest rate type and interest rate index with the most current
loan document or account statement |
| 6. |
Amortization |
Agree
the remaining amortization period as reported with the remaining amortization on the mortgage administration system as of
cut-off date (or agree it is a HELOC) |
| 7. |
Amount advanced |
Agree the total amount advanced to the latest offer/loan documents |
| 8. |
Mortgage balance |
Agree the mortgage balance (and the limit in the case of a HELOC) on the mortgage administration extraction file with the balance on the mortgage loan processing system at the cut-off date |
| 9. |
Maturity date |
Agree the maturity date of each mortgage on the primary system of record with the latest offer document or account statement, and that it is within a 30 day range (or agree it is a HELOC) |
| 10. |
Valuation |
Agree
the valuation amount in the extraction file is less than or equal to the amount from the latest valuation, based on the underwriting
policy of |
| |
amount |
the
registered issuer or its Affiliate (if it is the regulated lender) that was valid at the
valuation date |
| 11. |
Valuation date |
Inspect the valuation date from the latest valuation report and check whether it is within one year of the completion date |
| 12. |
Currency of Loan |
Inspect that the loan is not specified as denominated in a currency other than Canadian dollars in the mortgage loan documents |
| 13. |
Loan characteristics |
Agree
the loan interest characteristics (e.g. fixed, variable) with the latest offer or supporting documentation (including the
account statement) |
| 14. |
Repayment type |
Agree the repayment type (amortizing/ interest only etc.) with supporting documents (which can include mortgage loan offer document or system record) |
| 15. |
Property tenure and type |
Agree the property tenure (freehold, condominium or other) with the valuation report, land registry records or report on title |
| 16. |
Flag |
Inspect that the mortgage loan in the primary system of record (or primary medium where loans are being flagged) has a flag to indicate it is used solely for the purpose of the covered bond pool |
| 17. |
Credit Bureau Score |
Agree the credit score with the score information reflected on the issuer’s records for updated credit scores |
| 18. |
Employment & Income Verification |
Agree the borrower’s employment income in the application form to underlying evidence of income (such as payslips or tax returns) where income verification is carried out. Where evidence of income is unavailable, this will be considered a material negative finding unless, at the time of origination of the loan, the policies and guidelines of the Issuer or its Affiliate (if it is the regulated lender) did not require the retention of such records and disclosure has been made to investors of their absence in each public offering document (as defined in the CMHC Guide) or, in the case of a private placement, offering memorandum or similar disclosure document prepared in connection with the issuance of a series or tranche of covered bonds under the Program following its registration |
| 19. |
Title |
Inspect that there is evidence of title or title insurance |
| 20. |
Property Insurance |
Inspect
that there is evidence of property insurance if required under the terms of the mortgage. Where evidence of property insurance
is unavailable, this will be considered a material negative finding unless (a) at the time of origination of the loan, the policies
and guidelines of the Issuer or its Affiliate (if it is the regulated lender) did not require the retention of such records and
(b) disclosure has been made to investors in each public offering document or, in the case of a private placement, offering memorandum
or similar disclosure document prepared in connection with the issuance of a series or tranche of covered bonds |
| |
|
under the Program following its registration of (i) the absence of evidence of property insurance and (ii) the Issuer’s or its Affiliate’s acknowledgement of self-insurance against the risk represented by a borrower’s failure to obtain property insurance where incapable of verification |
| Substitute Assets |
|
|
| 21. |
CUSIP |
Agree the CUSIP recorded with the primary system of record |
| 22. |
Maturity Date |
Agree the maturity date recorded with the primary system of record |
| 23. |
Face Value |
Agree the face value recorded with the primary system of record |
| 24. |
Coupon |
Agree the coupon recorded with the primary system of record |
Schedule
2
VALUATION
CALCULATION
| a) | The “Valuation Calculation” is equal to the VC Asset Value (as defined below) minus the Canadian Dollar
Equivalent of the Trading Value of the aggregate Principal Amount Outstanding of the Covered Bonds as calculated on the relevant
Calculation Date. For greater certainty, references in this Schedule to “immediately preceding Calculation Date” and
“previous Calculation Date” are to the Calculation Period ending on the Calculation Date. |
| b) | For the purposes of the Valuation Calculation, the “VC Asset Value” means the amount calculated as at each
Calculation Date as follows: |
A+B+C+D+E+F
where,
A = the aggregate “LTV Adjusted Loan Present
Value” of (a) each Performing Eligible Loan, which shall be the lower of (1) the Present Value of the relevant Loan on
such Calculation Date, and (2) 80% multiplied by the Latest Valuation relating to that Loan, and (b) each Non-Performing Loan,
which shall be zero
minus
the aggregate sum of the following deemed reductions to the
aggregate LTV Adjusted Loan Present Value of the Loans in the Covered Bond Portfolio if any of the following occurred during
the previous Calculation Period:
(1) a Loan or its Related Security was, in the immediately
preceding Calculation Period, in breach of the Loan Representations and Warranties contained in the Mortgage Loan Sale Agreement
or subject to any other obligation of the Seller to repurchase the relevant Loan and its Related Security, and in each case the
applicable Seller has not repurchased the Loan or Loans of the relevant Borrower and its or their Related Security to the extent
required by the terms of the Mortgage Loan Sale Agreement. In this event, the aggregate LTV Adjusted Loan Present Value of the
Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the LTV Adjusted
Loan Present Value of the relevant Loan or Loans on such Calculation Date of the relevant Borrower; and/or
(2) a Seller, in any preceding Calculation Period,
was in breach of any other material warranty under the Mortgage Loan Sale Agreement and/or the Servicer was, in any preceding Calculation
Period, in breach of a material term of the Servicing Agreement. In this event, the aggregate LTV Adjusted Loan Present Value of
the Loans in the Covered Bond Portfolio on such Calculation Date will be deemed to be reduced by an amount equal to the resulting
financial loss incurred by the Partnership in the immediately preceding Calculation Period (such financial loss to be calculated
by the Cash Manager
without double counting and to be reduced by any amount
paid (in cash or in kind) to the Partnership by the applicable Seller to indemnify the Partnership for such financial loss);
B = the aggregate amount of any Principal Receipts
on the Loans and their Related Security up to such Calculation Date (as recorded in the Principal Ledger) which have not been applied
as at such Calculation Date to acquire further Loans and their Related Security or otherwise applied in accordance with Article
6 (Priorities of Payments) of the Guarantor Agreement and/or the other Transaction Documents;
C = the aggregate amount of (i) any Cash Capital Contributions
made by the Partners (as recorded in the Capital Account Ledger for each Partner of the Guarantor), (ii) proceeds advanced under
the Intercompany Loan Agreement or (iii) proceeds from any sale of Randomly Selected Loans which, in each case, have not been applied
as at such Calculation Date to acquire further Loans and their Related Security or otherwise applied in accordance with Article
6 (Priorities of Payments) and/or the other Transaction Documents;
D = the Trading Value of any Substitute Assets;
E = the balance, if any, of the Reserve Fund and
the Pre-Maturity Liquidity Ledger; and
F = the Trading Value of the Swap Collateral.
