Amended and Restated Servicing Agreement — between — National Bank of Canada — and — NB Capital Corporation
Amended
and Restated
—
between —
National
Bank of Canada
—
and —
NB
Capital Corporation
June 28,
2006
TABLE
OF CONTENTS
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Page
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1.
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DEFINITIONS
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2
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1.1
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Definitions
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2
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2.
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SERVICING
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6
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2.1
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Duties
of Servicer
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6
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2.2
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Liquidation
of Mortgage Loans
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7
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2.3
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Collection
of Mortgage Loan Payments
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9
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2.4
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Establishment
of and Deposits to Custodial Account
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9
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2.5
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Permitted
Withdrawals from Custodial Account
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10
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2.6
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Establishment
of and Deposits to Escrow Account
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10
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2.7
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Permitted
Withdrawals from Escrow Account
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11
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2.8
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Protection
of Accounts
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12
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2.9
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Maintenance
of Hazard Insurance
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12
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2.10
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Maintenance
of Mortgage Impairment Insurance
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13
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2.11
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Maintenance
of Fidelity Bond
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13
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2.12
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Inspections
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13
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2.13
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Restoration
of Mortgaged Property
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14
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2.14
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Title,
Management and Disposition of REO Property
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14
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2.15
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Permitted
Withdrawals with respect to REO Property
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15
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2.16
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Real
Estate Owned Reports
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16
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3.
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PAYMENTS
TO THE COMPANY
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16
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3.1
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Remittances
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16
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3.2
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Statements
to the Company
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16
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4.
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GENERAL
SERVICING PROCEDURES
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17
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4.1
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Transfers
of Mortgaged Property
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17
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4.2
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Satisfaction
of Mortgages and Release of Mortgage Files
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18
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4.3
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Servicing
Compensation
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18
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4.4
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Annual
Statement as to Compliance
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18
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4.5
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Annual
Independent Chartered Accountants Servicing Report
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18
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4.6
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Right
to Examine Servicer Records
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19
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5.
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SERVICER
TO COOPERATE
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19
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5.1
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Provision
of Information
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19
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6.
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TERMINATION
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19
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6.1
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Agency
Suspension
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19
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6.2
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Damages
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19
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6.3
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Termination
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19
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6.4
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Termination
without Cause
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20
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-i-
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7.
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BOOKS
AND RECORDS
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20
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7.1
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Possession
of Servicing Files
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20
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8.
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INDEMNIFICATION
AND ASSIGNMENT
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21
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8.1
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Indemnification
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21
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8.2
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Limitation
on Liability of Servicer and Others
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21
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8.3
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Limitation
on Registration and Assignment by Servicer
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22
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8.4
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Assignment
by the Company
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22
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8.5
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Merger
or Consolidation of the Servicer
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22
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8.6
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Successor
to the Servicer
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23
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9.
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REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE COMPANY
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24
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9.1
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Due
Organization and Authority
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24
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9.2
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No
Conflicts
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24
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9.3
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Ability
to Perform
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24
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9.4
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No
Litigation Pending
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24
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9.5
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No
Consent Required
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25
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10.
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REPRESENTATIONS
AND WARRANTIES OF SERVICER
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25
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10.1
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Qualification
as a REIT
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25
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10.2
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Due
Organization and Authority
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25
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10.3
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Ordinary
Course of Business
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25
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10.4
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No
Conflicts
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25
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10.5
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Ability
to Service
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26
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10.6
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Ability
to Perform
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26
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10.7
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No
Litigation Pending
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26
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10.8
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No
Consent Required
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26
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10.9
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No
Untrue Information
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27
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10.10
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Reasonable
Servicing Fee
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27
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10.11
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Conflict
of Interest
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27
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10.12
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Confirmation
of Original Servicing Agreement
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27
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11.
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DEFAULT
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27
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11.1
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Events
of Default
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27
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11.2
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Waiver
of Defaults
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29
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12.
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MISCELLANEOUS
PROVISIONS
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29
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12.1
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Notices
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29
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12.2
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Waivers
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30
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12.3
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Entire
Agreement — Amendment
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30
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12.4
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Execution
— Binding Effect
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30
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12.5
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Headings
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30
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12.6
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Governing
Law
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30
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12.7
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Relationship
of Parties
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31
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12.8
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Quebec
Sales Tax and Goods and Services Tax
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31
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12.9
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Severability
of Provisions
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31
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12.10
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Recordation
of Assignments of Mortgage
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32
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12.11
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Exhibits
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32
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12.12
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English
Language
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32
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-ii-
| EXHIBITS | ||
| Exhibit 1 | Custodial Account Certification | |
| Exhibit 2 | Custodial Account Letter Agreement | |
| Exhibit 3 | Escrow Account Certification | |
| Exhibit 4 | Escrow Account Letter Agreement |
-iii-
AMENDED
AND RESTATED
Amended
and Restated Servicing Agreement (the "Servicing
Agreement"
or
the "Agreement")
entered into on June 28, 2006.
| BETWEEN: | NATIONAL BANK OF CANADA, a Canadian chartered bank; | |
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(the "Servicer")
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| AND: | NB CAPITAL CORPORATION, a Maryland Corporation; | |
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(the "Company")
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WHEREAS
NB Finance, Ltd., a Bermuda Corporation, (the "Purchaser")
and
National Bank of Canada, acting as seller (the "Seller"),
entered into various deeds of sale of mortgage loans including, without
limitation, the deeds of sale of mortgage loans dated as of September 3,
1997, December 4, 1998, September 28, 1999, June 12, 2001, September
24, 2001, January 29, 2002, June 20, 2002, December 16, 2002, May 27, 2003,
October 21, 2003, April 28, 2004, August 26, 2004, February 24, 2005, August
29,
2005 and February 22, 2006 (collectively, the "Purchase
Agreement")
pursuant to which the Purchaser purchased from the Seller the Mortgage Loans
(as
hereinafter defined);
WHEREAS
the Purchaser and the Company entered into various assignment agreements
including, without limitation, the assignment agreements dated as of
September 3, 1997, December 4, 1998, September 28, 1999, April
14, 2000, June 12, 2001, September 24, 2001, January 29, 2002, June 20, 2002,
December 16, 2002, May 27, 2003, October 21, 2003, April 28, 2004, August 26,
2004, February 24, 2005, August 29, 2005 and February 22, 2006
(the "Mortgage
Loan Assignment Agreements")
pursuant to which the Purchaser assigned all of its right, title and interest
in, to and under the Mortgage Loans to the Company;
WHEREAS
the Company is qualified and intends to remain qualified as a "real estate
investment trust" ("REIT")
under
the Internal Revenue Code of 1986, as amended;
WHEREAS
this Agreement amends and restates the servicing agreement dated as of
September 3, 1997, as supplemented by a first supplemental servicing
agreement, a second supplemental servicing agreement and a third supplemental
servicing agreement dated as of December 4, 1998, September 28, 1999
and April 14, 2000 as well as an amended and restated servicing agreement once
a
year after the latter date, renewing the Agreement for additional one-year
periods, respectively entered into by the Company and the Servicer
(collectively, the "Original
Servicing Agreement")
establishing the terms and conditions on which the Servicer services and
administers the Mortgage Loans;
-1-
WHEREAS
the parties hereto wish to confirm that all the Mortgage Loans have been
serviced and administered by the Servicer in accordance with the terms and
conditions of the Original Servicing Agreement;
WHEREAS
the Company desires to continue to have the Servicer service and administer
the
Mortgage Loans, the Servicer desires to continue to service and administer
the
Mortgage Loans on behalf of the Company, and the parties desire to set forth
the
terms and conditions on which the Servicer will continue to service and
administer to the Mortgage Loans.
NOW,
THEREFORE, in consideration of the mutual agreements set forth herein and for
other good and valuable consideration, the receipt and the sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as
follows:
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1.
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DEFINITIONS
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1.1
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Definitions
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The
following terms are defined as follows:
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1.1.1
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"Accepted
Servicing Practices"
means, with respect to any Mortgage Loan, those mortgage servicing
practices (i) provided for in the CMHC Guide and in the NHA,
(ii) established by the Company, and (iii) subject to the terms
of this Agreement, those normal mortgage servicing practices of prudent
mortgage lending institutions which service mortgage loans of the
same
type as such Mortgage Loan in the jurisdiction where the related
Mortgaged
Property is located to the extent such normal mortgage servicing
practices
do not conflict with the practices established by the CMHC Guide, the
NHA and the Company;
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1.1.2
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"Ancillary
Income"
means all late payment charges, penalties and assumption fees,
non-sufficient funds fees ("NSF"),
escrow account benefits, reinstatement fees and other miscellaneous
and
similar types of fees arising from or in connection with any Mortgage
Loan
to the extent not otherwise payable to the Mortgagor under applicable
law
or pursuant to the terms of any applicable loan documents contained
in the
related Mortgage Loan File;
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1.1.3
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"CDIC"
means The Canadian Deposit Insurance Corporation, or any successor
thereto;
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1.1.4
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"Closing
Date"
means, with respect to each Mortgage Loan, the date upon which the
assignment of such Mortgage Loan in favour of the Company becomes
effective between the parties to the Mortgage Loan Assignment Agreement
relating to such Mortgage Loan, or such other date as is mutually
agreed
upon by the parties hereto;
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1.1.5
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"CMHC"
means the Canada Mortgage and Housing
Corporation;
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-2-
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1.1.6
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"CMHC Guide"
means the CMHC Mortgage Loan Insurance Handbook and all amendments or
additions thereto, a copy of which is delivered to the Company
concurrently with the execution
hereof;
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1.1.7
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"Condemnation
Proceeds"
means all awards or settlements in respect of a Mortgaged Property,
whether permanent or temporary, partial or entire, by exercise of
the
power of eminent domain, expropriation or condemnation, to the extent
not
required to be released to a Mortgagor in accordance with the terms
of the
related Mortgage Loan File;
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1.1.8
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"Custodial
Account"
means the separate account or accounts created and maintained pursuant
to
Section 2.4;
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1.1.9
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"Determination
Date"
means one (1) Business Day prior to the related Remittance
Date;
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1.1.10
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"Due
Period"
means, with respect to each Remittance Date, the calendar month preceding
the Remittance Date;
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1.1.11
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"Escrow
Account"
means the separate account or accounts created and maintained pursuant
to
Section 2.6;
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1.1.12
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"Escrow
Payment"
means, with respect to any Mortgage Loan, the amounts constituting
real
estate tax payments and any other payments required to be escrowed
by the
Mortgagor under the applicable documents contained in the Mortgage
Loan
File;
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1.1.13
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"Event
of Default"
means any one of the conditions or circumstances enumerated in
Section 11.1;
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1.1.14
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"Fidelity
Bond"
means a fidelity bond to be maintained by the Servicer pursuant to
Section 2.11;
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1.1.15
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"Insurance
Proceeds"
means, with respect to each Mortgage Loan, proceeds of insurance
policies
insuring the Mortgage Loan or the related Mortgaged
Property;
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1.1.16
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"Liquidation
Proceeds"
means cash received in connection with the liquidation of a defaulted
Mortgage Loan, whether through the sale of such Mortgage Loan, foreclosure
sale or otherwise, or the sale of the related Mortgaged Property
if the
Mortgaged Property is acquired in satisfaction of the Mortgage
Loan;
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1.1.17
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"Monthly
Remittance Advice"
means the monthly remittance advice to be provided to the Company
pursuant
to Section 3.2;
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1.1.18
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"Mortgage
Impairment Insurance Policy"
means a mortgage impairment or blanket hazard insurance policy as
described in Section 2.10;
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-3-
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1.1.19
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"Mortgage
Loan Assignment Agreement"
has the meaning set forth in the
recitals;
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1.1.20
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"Mortgage
Loan File"
means, collectively, all of the agreements, deeds and proceedings
evidencing the Mortgage Loans and the Security, as well as any
architectural and engineering report, title report, survey, insurance
policy and other information and material with respect to the real
property securing the Mortgage Loans and, with respect to each Mortgage
Loan, all of the agreements, deeds and proceedings evidencing such
Mortgage Loan and the Security relating thereto as well as any
architectural and engineering report, title report, survey, insurance
policy and other information and material with respect to the real
property securing such Mortgage
Loan;
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1.1.21
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"Mortgage
Loans"
means the Canada Mortgage and Housing Corporation insured residential
first mortgage loans assigned on or before the date hereof by the
Purchaser in favour of the Company together with all other Canada
Mortgage
and Housing Corporation insured residential first mortgage loans
assigned
in the future in favour of the Company by the
Purchaser;
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1.1.22
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"Mortgage
Property"
means, with respect to each Mortgage Loan, the real or immoveable
property
mortgaged, charged or hypothecated pursuant to such Mortgage Loan,
including all fixtures attached
thereto;
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1.1.23
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"Mortgagor"
means the mortgagor or hypothecary debtor under the Mortgage
Loans;
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1.1.24
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"NHA"
means the National
Housing Act
(Canada) as amended from time to time, and the regulations promulgated
thereunder;
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1.1.25
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"Non-recoverable
Advance"
means any Servicing Advance previously made or proposed to be made
in
respect of a Mortgage Loan which, in the good faith judgement of
the
Servicer, will not or, in the case of a proposed Servicing Advance,
would
not, be ultimately recoverable from related Insurance Proceeds,
Liquidation Proceeds or otherwise. The determination by the Servicer
that
it has made a Non-recoverable Advance or that any proposed Servicing
Advance, if made, would constitute a Non-recoverable Advance, shall
be
evidenced by an Officers' Certificate delivered to the
Company;
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1.1.26
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"Officer's
Certificate"
means a certificate signed by the Senior
Vice-President, Internal Audit
of
the Servicer, and delivered to the Company as required by this
Agreement;
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1.1.27
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"Original
Servicing Agreement"
has the meaning set forth in the
recitals;
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1.1.28
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"Principal
Prepayment"
means any payment or other recovery of principal on a Mortgage Loan
which
is received in advance of its scheduled maturity date, including
any
prepayment penalty or premium thereon, and which is not accompanied
by an
amount of interest representing scheduled interest due on any date
or
dates in any month or months subsequent to the month of
prepayment;
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-4-
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1.1.29
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"Purchase
Agreement"
has the meaning set forth in the
recitals;
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1.1.30
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"Qualified
Depository"
means a depository the accounts of which are insured by the
CDIC;
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1.1.31
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"Qualified
Insurer"
means an insurance company duly qualified to carry on business as
such
under the laws of the provinces in which the Mortgaged Properties
are
located, duly authorized and licensed in such provinces to engage
in the
applicable insurance business and to sell policies of insurance and
provide the coverages set forth in such policies provided, and approved
by
CMHC as an insurer with respect to hazard insurance and flood
insurance;
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1.1.32
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"Remittance
Date"
means at the latest, on the 15th day (or if such 15th day is not
a Business Day, the first Business Day immediately following) of
any
month, beginning with the first Remittance Date following
the date hereof;
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1.1.33
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"REO
Property"
means a Mortgaged Property acquired by the Servicer on behalf of
the
Company through foreclosure or by deed in lieu of foreclosure or
by taking
in payment, as described in Section 2.14;
|
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1.1.34
|
"Required
Servicing Practices"
means, with respect to any Mortgage Loan, those mortgage servicing
practices (i) provided for in the CMHC Guide and in the NHA and
(ii) where not inconsistent with the CMHC Guide and the NHA,
established in writing by the
Company;
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1.1.35
|
"Security"
means collectively the moveable and immoveable security securing
the
Mortgage Loans and set forth in the Mortgage Loan File, including,
without
limitation, any moveable and immoveable hypothecs, mortgages and
similar
instruments securing the Mortgage
Loans;
|
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1.1.36
|
"Servicer
Employees"
has the meaning set forth in Section 2.11;
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1.1.37
|
"Servicing
Advances"
means all customary, reasonable and necessary "out of pocket" costs
and
expenses (including reasonable attorneys' fees and disbursements)
incurred
in the performance by the Servicer of its servicing obligations,
including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any
enforcement or judicial proceedings, including foreclosures or the
exercise of the hypothecary rights contemplated in the Civil
Code of Québec,
and (c) the management and liquidation of the Mortgaged Property if
the Mortgaged Property is acquired in satisfaction of the Mortgage
Loan;
|
-5-
|
1.1.38
|
"Servicing
Agreement"
means this agreement between the Company and the Servicer for the
servicing and administration of the Mortgage
Loans;
|
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1.1.39
|
"Servicing
Fee"
means the amount of the annual fee the Company shall pay to the Servicer,
which shall, for a period of one (1) full month, be equal to the sum
of (i) one-twelfth of the product of the Servicing Fee Rate and the
aggregate outstanding balance of the Mortgage Loans as of the last
day of
each calendar month, and (ii) any amounts not required to be
deposited in the Custodial Account pursuant to Section 2.4.
Such fee shall be payable quarterly, in US dollars and shall be computed
on the basis of the same principal amount and period in respect of
which
any related interest payment on a Mortgage Loan is computed and shall
be
pro rated for any portion of a month during which the Mortgage Loan
is
serviced by the Servicer under this Agreement;
and
|
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1.1.40
|
"Servicing
Fee Rate"
means, with respect to each Mortgage Loan, a rate of 0.25% per annum
or
such other rate to which the parties may mutually
agree.
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2.
|
SERVICING
|
|
2.1
|
Duties
of Servicer
|
From
and
after the date hereof, the Servicer, as provider of services, shall service
and
administer the Mortgage Loans in strict compliance with the servicing provisions
of the CMHC Guide and the NHA and shall, subject to such serving
provisions, do all things in connection with such servicing and administration
which are consistent with the terms of this Agreement and Required Servicing
Practices. In the event of any conflict, inconsistency or discrepancy between
any of the servicing provisions of this Agreement and any of the servicing
provisions of the CMHC Guide and/or of the NHA, the provisions of the
CMHC Guide and the NHA shall control and be binding upon the Servicer.
Consistent with the terms of this Agreement, but in strict compliance with
the
CMHC Guide and the NHA, the Servicer shall, if so instructed in writing by
the Company, waive, modify or vary any term of any Mortgage Loan or consent
to
the postponement of strict compliance with any such term or in any manner grant
any indulgence to any Mortgagor. For greater certainty, unless the Servicer
has
obtained the consent of CMHC and the Company, the Servicer shall not permit
any
modification with respect to any Mortgage Loan that would change the mortgage
interest rate, defer or forgive the payment of principal or interest, reduce
or
increase the outstanding principal balance (except for actual payments of
principal) or change the final maturity date on such Mortgage Loan. Without
limiting the generality of the foregoing, the Servicer shall, in accordance
with
Required Servicing Practices, execute and deliver all instruments of
satisfaction or cancellation, or of partial or full release, discharge and
all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties.
In
servicing and administering the Mortgage Loans, the Servicer shall employ
procedures (including collection procedures) consistent with the provisions
of
this Agreement, in compliance with Required Servicing Practices and exercise
the
same care that it customarily employs and exercises in servicing and
administering mortgage and hypothecary loans for its own account, giving due
consideration to Accepted Servicing Practices and the Company's reliance on
the
Servicer.
-6-
The
Servicer shall keep at its servicing office books and records (including
electronic records) in which, subject to such reasonable regulations as it
may
prescribe, the Servicer shall note sales and transfers of Mortgage Loans. No
sale or transfer of a Mortgage Loan may be made unless such transfer is approved
in writing by the Company, and is in compliance with the terms hereof and the
NHA. For the purposes of this Agreement, the Servicer shall be under no
obligation to deal with any person with respect to this Agreement or the
Mortgage Loans unless the Servicer has been notified of such transfers as
provided in this Section 2.1.
The
Company may sell and transfer, in whole or in part, the Mortgage Loans, provided
that no such sale and transfer shall be binding upon the Servicer unless such
transferee shall agree in writing to be bound by the terms of this Agreement,
and an executed copy of the same shall have been delivered to the Servicer.
Upon
receipt thereof, the Servicer shall xxxx its books and records to reflect the
ownership of the Mortgage Loans by such assignee, and the Company shall be
released from its obligations hereunder. The Servicer shall be required to
remit
all amounts required to be remitted to the Company hereunder to said transferee,
and said transferee shall succeed to all rights of the Company hereunder,
commencing with the first Remittance Date falling after receipt of said copy
of
the related assignment and assumption agreement provided that the Servicer
receives said copy no later than fifteen (15) Business Days immediately
prior to the first day of the month of the related Remittance Date.
Upon
request by the Company, or as provided in Section 2.9,
the
Mortgage Loan File retained by the Servicer pursuant to this Agreement shall
be
amended to clearly record the sale of the related Mortgage Loan to the Company.
The Servicer shall release from its custody the contents of the Mortgage Loan
File retained by it only in accordance with this Agreement.
The
Servicer covenants that it has established an internal quality control program
that is capable of evaluating and monitoring the overall quality of its
servicing activities. The program shall ensure that the Mortgage Loans are
(i) serviced in accordance with Accepted Servicing Practices and generally
accepted accounting principles; (ii) guard against dishonest, fraudulent or
negligent acts; and (iii) guard against errors and omissions by officers,
employees or other authorized persons.
For
greater certainty, the Company and the Servicer acknowledge that in acting
hereunder, the Servicer shall have only such authority to act on behalf of
the
Company as is expressly conferred in this Agreement and more specifically,
this
Agreement does not provide the Servicer with the authority to conclude or modify
contracts in the name of the Company and the Servicer shall not hold itself
out
as having any such authority.
|
2.2
|
Liquidation
of Mortgage Loans
|
In
the
event that any payment due under any Mortgage Loan and not postponed pursuant
to
Section 2.1
is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan File and
such failure continues beyond any applicable grace period, the Servicer shall
take such administrative action as is consistent with Required Servicing
Practices.
-7-
In
the
event that any payment due under any Mortgage Loan is not postponed pursuant
to
Section 2.1
and
remains delinquent beyond the expiration of any grace or cure period (or such
other period as is required by law in the jurisdiction where the related
Mortgaged Property is located), the Servicer shall commence foreclosure
proceedings as directed by the Company in accordance with Required Servicing
Practices. The Servicer shall transmit to the Company copies of the notices
given to, and received from, CMHC with respect thereto. In such connection,
the
Servicer shall from its own funds make all necessary and proper Servicing
Advances, provided, however, that the Servicer shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration
or
preservation of any Mortgaged Property, unless its shall determine:
|
(a)
|
that
such preservation, restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan to Company after
reimbursement to itself for such expenses,
and
|
|
(b)
|
that
such expenses will be recoverable by it either through Liquidation
Proceeds (in respect of which it shall have priority for purposes
of
withdrawals from the Custodial Account pursuant to
Section 2.5)
or through Insurance Proceeds (in respect of which it shall have
similar
priority).
|
Notwithstanding
anything to the contrary contained herein, in connection with a foreclosure,
in
the event the Servicer has reasonable cause to believe that a Mortgaged Property
is contaminated by hazardous or toxic substances or wastes, or if CMHC otherwise
requests an environmental inspection or review of such Mortgaged Property to
be
conducted by a qualified inspector, the Servicer shall immediately notify the
Company and, upon receipt of instructions from the Company, the Servicer shall
cause the Mortgaged Property to be so inspected at the expense of the Company.
Upon completion of the inspection, the Servicer shall promptly provide the
Company with a written report of the environmental inspection.
After
reviewing the environmental inspection report, the Company, subject to the
rights of CMHC under the NHA, shall determine how the Servicer shall proceed
with respect to the Mortgaged Property. In the event:
|
(a)
|
the
environmental inspection report indicates that the Mortgaged Property
is
contaminated by hazardous or toxic substances or wastes,
and
|
|
(b)
|
the
Company and/or CMHC directs the Servicer, in writing, to proceed
with
foreclosure or acceptance of a deed in lieu of
foreclosure,
|
the
Servicer shall be reimbursed for all reasonable costs associated with such
foreclosure or acceptance of a deed in lieu of foreclosure and any related
environmental clean up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse
the
Servicer, the Servicer shall be entitled to be reimbursed from amounts in the
Custodial Account pursuant to Section 2.5
hereof
and to the extent amounts in the Custodial Account are insufficient to fully
reimburse the Servicer, the Servicer shall be entitled to be reimbursed by
the
Company for such deficiencies (upon presentation of satisfactory evidence of
such deficiency). In the event the Company and/or CMHC directs the Servicer,
in
writing, not to proceed with foreclosure or acceptance of a deed in lieu of
foreclosure, the Servicer shall be reimbursed for all Servicing Advances made
with respect to the related Mortgaged Property from the Custodial Account
pursuant to Section 2.5
hereof.
-8-
|
2.3
|
Collection
of Mortgage Loan Payments
|
Continuously
from the Closing Date, the Servicer shall proceed diligently to collect all
payments due under each of the Mortgage Loans when the same shall become due
and
payable and shall take special care in ascertaining and estimating Escrow
Payments and all other charges that will become due and payable with respect
to
the Mortgage Loans and each related Mortgaged Property, to the end that the
instalments payable by the Mortgagors will be sufficient to pay such charges
if
and when they become due and payable.
|
2.4
|
Establishment
of and Deposits to Custodial
Account
|
The
Servicer shall segregate and hold the hereinafter mentioned funds collected
and
received pursuant to the Mortgage Loans separate and apart from any of its
own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of term deposit or demand accounts, titled "National
Bank
of Canada in trust for NB Capital Corporation" (or similar designation with
respect to any subsequent Company). The Custodial Account shall be established
with a depository acceptable to the Company. If the Custodial Account is held
at
a depository the deposit accounts of which are insured by CDIC, any funds
deposited in the Custodial Account shall at all times be insured to the full
extent permitted under applicable law. Funds deposited in the Custodial Account
may be drawn on by the Servicer in accordance with Section 2.5.
The
creation of any Custodial Account shall be evidenced by a certificate in the
form of Exhibit 2 hereto. A copy of such certificate shall be furnished to
the Company and, upon request, to any subsequent company.
The
Servicer shall deposit in the Custodial Account and retain therein, the
following collections received by the Servicer and payments made by the Servicer
after the Closing Date, other than payments of principal and interest due on
or
before the Closing Date, or received by the Servicer prior to the Closing Date
but allocable to a period subsequent thereto:
|
2.4.1
|
all
payments on account of principal on the Mortgage Loans, including
all
Principal Prepayments;
|
|
2.4.2
|
all
payments on account of interest on the Mortgage
Loans;
|
|
2.4.3
|
all
Liquidation Proceeds and any amount received with respect to
REO Property;
|
|
2.4.4
|
all
Insurance Proceeds including amounts required to be deposited pursuant
to
Section 2.9
(other than proceeds to be held in the Escrow Account and applied
to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 2.13);
|
|
2.4.5
|
all
Condemnation Proceeds which are not applied to the restoration or
repair
of the Mortgaged Property or released to the Mortgagor in accordance
with
Section 2.13;
and
|
-9-
|
2.4.6
|
any
amount required to be deposited in the Custodial Account pursuant
to
Sections 2.14
or
3.1.
|
The
collections mentioned in Sections 2.4.1
and
2.4.2
shall be
deposited in the Custodial Account within one (1) Business Day of receipt
by the Servicer. The collections mentioned in Sections 2.4.3
to
2.4.6
inclusive shall be deposited within thirty (30) Business Days of
receipt.
|
2.5
|
Permitted
Withdrawals from Custodial
Account
|
Subject
to Section 2.14
hereof,
the Servicer shall, from time to time, withdraw funds from the Custodial Account
for the following purposes:
|
2.5.1
|
to
make payments to the Company in the amounts and in the manner provided
for
in Section 3.1;
|
|
2.5.2
|
to
reimburse itself for unreimbursed Servicing Advances (except to the
extent
reimbursed pursuant to Section 2.7),
any accrued but unpaid Servicing Fees and for unreimbursed advances
of
Servicer funds made pursuant to Section 2.14,
the Servicer's right to reimburse itself pursuant to this
subparagraph 2.5.2
with respect to any Mortgage Loan being limited to related Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds and such other
amounts
as may be collected by the Servicer from the Mortgagor or otherwise
relating to the Mortgage Loan, it being understood that, in the case
of
any such reimbursement, the Servicer's right thereto shall be subordinate
to the right of the Company;
|
|
2.5.3
|
to
pay to the person entitled thereto any amounts deposited in error;
and
|
|
2.5.4
|
to
clear and terminate the Custodial Account upon the termination of
this
Agreement.
|
On
each
Remittance Date, the Servicer shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 3.1,
the
Servicer is not obligated to remit on such Remittance Date. The Servicer may
use
such withdrawn funds only for the purposes described in this
Section 2.5.
|
2.6
|
Establishment
of and Deposits to Escrow
Account
|
The
Servicer shall segregate and hold all funds collected and received pursuant
to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain one or more Escrow
Accounts, in the form of term deposit or demand accounts. The Escrow Account
or
Accounts shall be established with a Qualified Depository. If the Escrow Account
is held at a Qualified Depository the deposit accounts of which are insured
by
CDIC, any funds deposited in the Escrow Account shall at all times be insured
to
the full extent permitted under applicable law. Funds deposited in the Escrow
Accounts may be drawn on by the Servicer in accordance with
Section 2.7.
The
creation of any Escrow Account shall be evidenced by a certification in the
form
of Exhibit 4 hereto. A copy of such certificate shall be furnished to
the Company and, upon request, to any subsequent Company.
-10-
The
Servicer shall deposit in the Escrow Account or Accounts within one Business
Day
of receipt, and retain therein all Escrow Payments collected on account of
the
Mortgage Loans, for the purpose of effecting timely payment of any such items
as
required under the terms of this Agreement. The Servicer shall deposit in the
Escrow Account or Accounts as soon as possible, but within a maximum of
five (5) Business Days of receipt, all amounts representing Insurance
Proceeds or Condemnation Proceeds which are to be applied to the restoration
or
repair of any Mortgaged Property.
The
Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in
Section 2.7.
The
Servicer shall be entitled to retain any interest paid on, or other income
generated by and paid on, funds deposited in the Escrow Account by the
depository institution, other than interest on escrowed funds required by law
of
the Mortgage Loan File to be paid to the Mortgagor. To the extent required
by
law, the Servicer shall pay from its own funds interest on escrowed funds to
the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing
or
that interest paid thereon is insufficient for such purposes.
|
2.7
|
Permitted
Withdrawals from Escrow
Account
|
Withdrawals
from each Escrow Account may be made by the Servicer only:
|
2.7.1
|
to
effect timely payments of taxes, assessments, mortgage insurance
premiums,
condominium charges or other items constituting Escrow Payments for
the
related Mortgage Loan;
|
|
2.7.2
|
to
refund to the related Mortgagor any funds found to be in excess of
the
amounts required under the terms of the related Mortgage Loan or
applicable federal or provincial law or judicial or administrative
ruling;
|
|
2.7.3
|
for
transfer to the Custodial Account and application to reduce the principal
balance of the Mortgage Loan in accordance with the terms of the related
Mortgage Loan File;
|
|
2.7.4
|
for
application to restoration or repair of the related Mortgaged Property
in
accordance with the procedures outlined in Section 2.13;
|
|
2.7.5
|
to
pay to the Servicer, or any Mortgagor to the extent required by law,
any
interest paid on the funds deposited in the Escrow
Account;
|
|
2.7.6
|
to
pay to the person entitled thereto any amounts deposited in error;
and
|
|
2.7.7
|
to
clear and terminate the Escrow Account on the termination of this
Agreement.
|
-11-
|
2.8
|
Protection
of Accounts
|
The
Servicer may transfer the Custodial Account or the Escrow Account to a different
depository from time to time. Such transfer shall be made only upon obtaining
the written consent of the Company. The Servicer shall bear any expenses, losses
or damages sustained by the Company because the Custodial Account and/or the
Escrow Account are not demand deposit accounts.
|
2.9
|
Maintenance
of Hazard Insurance
|
The
Servicer shall cause to be maintained for each Mortgage Loan hazard insurance
such that all buildings upon the Mortgaged Property are insured against loss
by
fire, hazards of extended coverage and such other hazards as are required to
be
insured pursuant to Required Servicing Practices.
If
at any
time during the term of the Mortgage Loan, the Servicer determines in accordance
with applicable law and pursuant to the CMHC Guide that a Mortgaged
Property is located in a special flood hazard area and is not covered by flood
insurance satisfactory to CMHC, the Servicer shall notify the related Mortgagor
(to the extent permitted by the applicable Mortgage Loan File) that the
Mortgagor must obtain such flood insurance coverage, and if said Mortgagor
fails
to obtain the required flood insurance coverage within forty-five (45) days
after such notification, the Servicer shall immediately purchase the required
flood insurance on the Mortgagor's behalf.
The
Servicer shall cause to be maintained on each Mortgaged Property such other
or
additional insurance as may be required pursuant to such applicable laws and
regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of CMHC Guide. All
policies required hereunder shall name the Servicer and its successors and
assigns as mortgagee and shall provide for at least thirty (30) days' prior
written notice of any cancellation, reduction in amount or material change
in
coverage.
The
Servicer shall not interfere with the Mortgagor's freedom of choice in selecting
either his insurance carrier or agent, provided, however, that the Servicer
shall not accept any such insurance policies from insurance companies which
do
not meet or exceed applicable requirements of the CMHC Guide. The Servicer
shall determine that such policies provide sufficient risk coverage and amounts
as required pursuant to the CMHC Guide, that they insure the property
owner, and that they properly describe the property address. To the extent
reasonably possible the Servicer shall furnish to the Mortgagor a formal notice
of expiration of any such insurance in sufficient time for the Mortgagor to
arrange for renewal coverage by the expiration date; provided, however, that
in
the event that no such notice is furnished by the Servicer, the Servicer shall
ensure that replacement insurance policies are in place in the required
coverages and the Servicer shall be solely liable for any losses in the event
such coverage is not provided.
Pursuant
to Section 2.4,
any
amounts collected by the Servicer under any such policies (other than amounts
to
be deposited in the Escrow Account and applied to the restoration or repair
of
the related Mortgaged Property, or property acquired in liquidation of the
Mortgage Loan, or to be released to the Mortgagor as specified in
Section 2.13)
shall
be deposited in the Custodial Account subject to withdrawal pursuant to
Section 2.5.
-12-
|
2.10
|
Maintenance
of Mortgage Impairment
Insurance
|
In
the
event that the Servicer shall obtain and maintain a blanket policy insuring
against losses arising from fire and hazards covered under extended coverage
on
all of the Mortgage Loans, then, to the extent such policy provides coverage
in
an amount equal to the amount required pursuant to Section 2.9
and
otherwise complies with all other requirements of Section 2.9,
it
shall conclusively be deemed to have satisfied its obligations as set forth
in
Section 2.9.
Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.5.
Such
policy may contain a deductible clause, in which case, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 2.9,
and
there shall have been a loss which would have been covered by such policy,
the
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such deductible
clause, such amount to be deposited from the Servicer's funds, without
reimbursement therefor. Upon request of the Company, the Servicer shall cause
to
be delivered to the Company a certified true copy of such policy and a statement
from the insurer thereunder that such policy shall in no event be terminated
or
materially modified without thirty (30) days' prior written notice to the
Company.
|
2.11
|
Maintenance
of Fidelity Bond
|
The
Servicer shall maintain with responsible companies, at its own expense, a
blanket Fidelity Bond, with broad coverage on all officers, employees or other
persons acting in any capacity requiring such persons to handle funds, money,
documents or papers relating to the Mortgage Loans ("Servicer
Employees").
Any
such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the
form of the Mortgage Banker's Blanket Bond and shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of such Servicer Employees. Such Fidelity
Bond
also shall protect and insure the Servicer against losses in connection with
the
release or satisfaction of a Mortgage Loan without having obtained payment
in
full of the indebtedness secured thereby. No provision of this
Section 2.11
requiring such Fidelity Bond shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such Fidelity Bond shall be at least equal to the corresponding
amounts required by Accepted Servicing Practices. Upon the request of the
Company, the Servicer shall cause to be delivered to the Company a certified
true copy of such Fidelity Bond and a statement from the surety that such
Fidelity Bond shall in no event be terminated or materially modified without
thirty (30) days' prior written notice to the Company. In the event that
the surety charges the Servicer a fee for providing such evidence, the Company
shall reimburse the Servicer for the reasonable expense incurred by the Servicer
in furnishing such evidence.
|
2.12
|
Inspections
|
The
Servicer shall inspect the Mortgaged Property as often as deemed necessary
by
the Servicer to assure itself that the value of the Mortgaged Property is being
preserved, the whole in accordance with Accepted Servicing Practices. The
Servicer shall keep a written report of each such inspection.
-13-
|
2.13
|
Restoration
of Mortgaged Property
|
The
Servicer need not obtain the approval of the Company prior to releasing any
Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied
to
the restoration or repair of the Mortgaged Property if such release is in
accordance with the applicable Mortgage Loan File. The Servicer shall comply
with the CMHC Guide and the NHA and, to the extent they do not contravene
the CMHC Guide and NHA, with the following conditions in connection with
any such release of Insurance Proceeds or Condemnation Proceeds:
|
2.13.1
|
the
Servicer shall receive satisfactory independent verification of completion
of repairs and issuance of any required approvals with respect
thereto;
|
|
2.13.2
|
the
Servicer shall take all steps necessary to preserve the priority
of the
lien securing the Mortgage Loan, including, but not limited to, requiring
waivers or releases with respect to mechanics' and materialmen's
liens or
legal hypothecs in favour of the persons having taken part in the
renovation of the Mortgaged
Property;
|
|
2.13.3
|
the
Servicer shall verify that the Mortgage Loan is not in default;
and
|
|
2.13.4
|
pending
repairs or restoration, the Servicer shall place the Insurance Proceeds
or
Condemnation Proceeds in the Escrow
Account.
|
If
the
Company is named as an additional mortgagee, the Servicer shall, in accordance
with CMHC Guide and the NHA, endorse any loss draft issued in respect of
such a claim in the name of the Company.
|
2.14
|
Title,
Management and Disposition of
REO Property
|
In
the
event that title to any Mortgaged Property is acquired in foreclosure or by
deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Company.
The
Servicer shall manage, conserve, protect and operate each REO Property for
the Company solely for the purpose of its prompt disposition and sale (unless
otherwise directed in writing by the Company). The Servicer, either itself
or
through an agent selected by the Servicer and reasonably acceptable to the
Company and CMHC, shall manage, conserve, protect and operate the
REO Property in accordance with Required Servicing Practices and to the
extent it does not contravene the Accepted Servicing Practices, in the same
manner that it manages, conserves, protects and operates other foreclosed
property for its own account, and in the same manner that similar property
in
the same locality as the REO Property is managed.
The
Servicer shall use its best efforts to dispose of the REO Property as soon
as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property (unless otherwise directed
by CMHC or otherwise directed in writing by the Company). If a period longer
than one (1) year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Servicer shall report monthly to
the Company as to the progress being made in selling such
REO Property.
-14-
The
Servicer shall also maintain on each REO Property fire and hazard insurance
with extended coverage in an amount which is at least equal to the maximum
insurable value of the improvements which are a part of such property, liability
insurance and, to the extent required and available, flood insurance in the
amount required above.
The
disposition of REO Property shall be carried out by the Servicer at such
price, and upon such terms and conditions, as the Servicer deems appropriate
(subject to approval by CMHC and the Company). The proceeds of sale of the
REO Property shall be promptly deposited in the Custodial Account. As soon
as practical thereafter the expenses of such sale shall be paid and the Servicer
shall reimburse itself pursuant to Section 2.5.3
hereof,
as applicable, for any related unreimbursed Servicing Advances, unpaid Servicing
Fees and unreimbursed advances made pursuant to this Section, and on the
Remittance Date immediately following the Due Period in which such sale proceeds
are received the net cash proceeds of such sale remaining in the Custodial
Account shall be distributed to the Company; provided that such distribution
shall, in any event, be made within ninety (90) days from and after the
closing of the sale of such REO Property.
In
addition to the Servicer's obligations set forth in this
Section 2.14,
the
Servicer shall deliver to the Company, upon request, whenever title to any
Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure
copies of all notices transmitted to, and received from, CMHC with respect
thereto, together with a copy of the appraisal, if any, of the related Mortgaged
Property obtained by the Servicer on or prior to the date of such acquisition.
Notwithstanding anything to the contrary contained herein, the Company may,
at
the Company's sole option, terminate the Servicer as servicer of any such
REO Property without payment of any Termination Fee with respect thereto,
provided that (i) the Company gives the Servicer notice of such termination
within ten (10) Business Days of receipt of said copies of notices from the
Servicer which termination shall be effective no more than fifteen (15)
Business Days from and after the date of said notice from the Company and (ii)
the Servicer shall on the date said termination takes effect be reimbursed
by
Company for any unreimbursed advances of the Servicer's funds made pursuant
to
Section 3.2
and any
unreimbursed Servicing Advances in each case relating to the Mortgage Loan
underlying such REO Property. In the event of any such termination, the
provisions of Section 8.6
hereof
shall apply to said termination and the transfer of servicing responsibilities
with respect to such REO Property to the Company.
With
respect to each REO Property, the Servicer shall deposit all funds
collected and received in connection with the operation of the REO Property
in the Custodial Account. The Servicer shall cause to be deposited on a daily
basis upon the receipt thereof in the Custodial Account all revenues received
with respect to the conservation and disposition of the related
REO Property.
|
2.15
|
Permitted
Withdrawals with respect to
REO Property
|
For
so
long as the Servicer is acting as servicer of any Mortgage Loan relating to
any
REO Property, the Servicer shall withdraw funds on deposit in the Custodial
Account with respect to each related REO Property necessary for the proper
operation, management and maintenance of the REO Property, including the
cost of maintaining any hazard insurance pursuant to Section 2.9
and the
fees of any managing agent acting on behalf of the Servicer. The Servicer shall
make monthly distributions on each Remittance Date to the Company of the net
cash flow from the REO Property (which shall equal the revenues from such
REO Property net of the expenses described in Section 2.14
and of
any reserves reasonably required from time to time to be maintained to satisfy
anticipated liabilities for such expenses).
-15-
|
2.16
|
Real
Estate Owned Reports
|
For
so
long as the Servicer is acting as servicer of any Mortgage Loan relating to
any
REO Property, the Servicer shall submit to the Company all reports with
respect to such Mortgaged Property which it is obligated to submit to the CMHC
pursuant to Required Servicing Practices.
|
3.
|
PAYMENTS
TO THE COMPANY
|
|
3.1
|
Remittances
|
On
each
Remittance Date, the Servicer shall remit by wire transfer of immediately
available funds to the Company:
|
(a)
|
all
amounts deposited in the Custodial Account as of the close of business
on
the Determination Date, minus
|
|
(b)
|
any
amounts payable to the Servicer under Article 2
of
this Agreement.
|
With
respect to any remittance received by the Company after the fifth day following
the Business Day on which such payment was due, the Servicer shall pay to the
Company a "late charge" in an amount equal to 5% of such late payment. Such
late
charge shall be deposited in the Custodial Account by the Servicer on the date
such late payment is made for each day/week which such payment remains
outstanding. Such late charge shall be remitted along with the distribution
payable on the next succeeding Remittance Date. The payment by the Servicer
of
any such late charge shall not be deemed an extension of time for payment or
a
waiver of any Event of Default by the Servicer.
|
3.2
|
Statements
to the Company
|
Not
later
than the fifteenth day of each month, the Servicer shall furnish to the Company
in a mutually-acceptable format the reports required by the Company, together
with a Monthly Remittance Advice showing the scheduled payments of principal
and
interest, the principal prepayments and the prepayment penalties.
In
addition, the Servicer shall furnish to the Company an annual statement in
accordance with the requirements of applicable income tax laws as to the
aggregate of remittances for the applicable portion of such year. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the governmental taxing authority as from time
to time are in force.
-16-
The
Servicer shall prepare and file, with respect to each Mortgage Loan, any and
all
tax returns, information statements or other filings required to be delivered
to
any governmental taxing authority or to the Company pursuant to any applicable
law with respect to the Mortgage Loans and the transactions contemplated hereby.
In addition, the Servicer shall provide the Company with such information
concerning the Mortgage Loans as is necessary for the Company to prepare any
applicable income tax returns as the Company may reasonably request from time
to
time.
|
4.
|
GENERAL
SERVICING PROCEDURES
|
|
4.1
|
Transfers
of Mortgaged Property
|
The
Servicer shall be required, consistent with Required Servicing Practices, to
enforce on behalf of the Company any "due-on-sale" provision contained in any
Mortgage Loan File and to deny assumption by the person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or
by
contract of sale, whether or not the Mortgagor remains liable on the Mortgage
Loan. When the Mortgaged Property has been conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such conveyance, exercise
its
rights on behalf of the Company to accelerate the maturity of such Mortgage
Loan
under the "due-on-sale" clause applicable thereto, provided, however, that
the
Servicer shall not exercise such rights if the Servicer determines in good
faith
that it is prohibited by law from doing so or if, subject to written
confirmation of the Company, the exercise of such rights would impair or
threaten to impair any recovery under the related CMHC insurance policy issued
with respect to such Mortgage Loan, if any.
If
the
Servicer reasonably believes it is unable under applicable law to enforce
"due-on-sale" clause, the Servicer, in the Company's name and with the prior
written consent of the Company, shall, to the extent permitted by applicable
law, enter into (i) an assumption and modification agreement with the
person to whom such property has been conveyed, pursuant to which such person
becomes liable under the Mortgage Loan and the original Mortgagor remains liable
thereon or (ii) in the event the Servicer is unable under applicable law to
require that the original Mortgagor remain liable under the Mortgage Note and
the Servicer has the prior consent of the CMHC and the Company, a substitution
of liability agreement with the purchaser of the Mortgaged Property pursuant
to
which the original Mortgagor is released from liability and the purchaser of
the
Mortgaged Property is substituted as Mortgagor and becomes liable under the
Mortgage Loan. In connection with any such assumption, neither the mortgage
interest rate borne by the related Mortgage Loan, the term of the Mortgage
Loan
nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To
the
extent that any Mortgage Loan is assumable, the Servicer shall inquire
diligently into the creditworthiness of the proposed transferee, and shall
use
the underwriting criteria for approving the credit of the proposed transferee
which are used by CMHC with respect to underwriting mortgage loans of the same
type as the Mortgage Loans. If the credit of the proposed transferee does not
meet such underwriting criteria, the Servicer diligently shall, to the extent
permitted by the Mortgage Loan File and by applicable law (and unless otherwise
directed by the Company), accelerate the maturity of the Mortgage
Loan.
-17-
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4.2
|
Satisfaction
of Mortgages and Release of Mortgage
Files
|
Upon
the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the Company in the Monthly Remittance
Advice as provided in Section 3.2
and may
request the release of any Mortgage Loan File from the Company in accordance
with this Section 4.2
hereof.
The Servicer shall obtain discharge of the related Mortgage Loan as of record
within any related time limit required by applicable law.
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4.3
|
Servicing
Compensation
|
As
consideration for servicing the Mortgage Loans hereunder, the Servicer shall
deduct the Servicing Fee with respect to each Mortgage Loan from payments as
received from Mortgagors and shall remit the net balance into the Custodial
Account.
Additional
servicing compensation in the form of Ancillary Income shall be retained by
the
Servicer as and when collected. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement thereof except as specifically
provided for herein.
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4.4
|
Annual
Statement as to Compliance
|
The
Servicer shall deliver to the Company, on or before March 1st of each year
beginning March 1, 2002, an Officer's Certificate, stating that (i) a
review of the activities of the Servicer during its preceding fiscal year and
of
performance under this Agreement has been made under such officer's supervision,
and (ii) the Servicer has complied in all material respects with the
provisions of Article 2
and
Article 3,
and
(iii) to the best of such officer's knowledge; based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout
such
year or part thereof, or, if there has been a default in the fulfilment of
any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by the Servicer to cure
such default.
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4.5
|
Annual
Independent Chartered Accountants Servicing
Report
|
On
or
before March 1 of each year, beginning with March 1, 2002, the
Servicer at its expense shall cause a firm of independent chartered accountants
(who may also render other services to the Servicer or any affiliate thereof)
which is a member of the "Ordre
des comptables agréés du Québec"
(Corporation of the Chartered Accountants of Québec) to furnish a report to the
Company to the effect that such firm has, in addition to their examination
of
the financial statements of the Servicer, performed specified auditing
procedures to financial information, other than financial statements relating
to
Mortgage Loans serviced by the Servicer in accordance with the requirements
of
the Chapter 9100 of the Canadian Institute of Chartered Accounts Handbook
and that, as the results of applying the procedures, any exceptions were
disclosed.
-18-
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4.6
|
Right
to Examine Servicer
Records
|
The
Company shall have the right to examine and audit any and all of the books,
records, or other information of the Servicer, whether held by the Servicer
or
by another on its behalf, with respect to or concerning this Agreement or the
Mortgage Loans.
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5.
|
SERVICER
TO COOPERATE
|
|
5.1
|
Provision
of Information
|
During
the term of this Agreement, the Servicer shall furnish to the Company such
periodic, special, or other reports or information, whether or not provided
for
herein, as the Company shall request. The Servicer shall execute and deliver
all
such instruments and take all such action as the Company may reasonably request
from time to time, in order to effectuate the purposes and to carry out the
terms of this Agreement.
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6.
|
TERMINATION
|
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6.1
|
Agency
Suspension
|
Should
the Servicer at any time during the term of this Agreement have its right to
service temporarily or permanently suspended by CMHC or otherwise cease to
be an
approved servicer of conventional residential mortgage loans for CMHC, then
the
Company may immediately terminate this Agreement without assessment of any
termination fee.
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6.2
|
Damages
|
The
Company shall have the right at any time to seek and recover from the Servicer
any damages or losses suffered by it as a result of any failure by the Servicer
to observe or perform any duties, obligations, covenants or agreements herein
contained, or as a result of the Servicer's failure to remain an approved CMHC
mortgage servicer.
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6.3
|
Termination
|
The
respective obligations and responsibilities of the Servicer shall terminate
upon:
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6.3.1
|
the
earlier of the final payment or other liquidation (or any advance
with
respect thereto) of the last Mortgage Loan serviced by the Servicer,
the
remittance of all funds due hereunder or the first anniversary of
this
Agreement; or
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|
6.3.2
|
by
mutual consent of the Servicer and the Company in writing, unless
earlier
terminated pursuant to this
Agreement.
|
-19-
|
6.4
|
Termination
without Cause
|
The
Company, may, at its sole option, upon not less than sixty (60) days' prior
written notice to the Servicer terminate any rights the Servicer may have
hereunder with respect to any or all of the Mortgage Loans, without cause,
upon
written notice, provided that the Servicer shall have an additional period
of
not more than sixty (60) days from and after the date of said notice from
the Company within which to effect the related transfer of servicing. Any such
notice of termination shall be in writing and delivered to the Servicer as
provided in Section 12.1
of this
Agreement. In the event of such termination, the Servicer shall be entitled
to a
termination fee, equal to the product of 0.0002% of the then current aggregate
unpaid principal balance of the related Mortgage Loans and the number of months
remaining until the first anniversary of this Agreement, provided, however,
that
the successor servicer is not an affiliate of the Servicer.
|
7.
|
BOOKS
AND RECORDS
|
|
7.1
|
Possession
of Servicing Files
|
The
contents of each Servicing File are and shall be held by the Servicer for the
benefit of the Company as the owner thereof. The Servicer shall maintain in
the
Servicing File a copy (which may be in microfiche form) of the contents of
each
Mortgage Loan File and the originals of the required documents in each Mortgage
Loan File not delivered to the Company. The possession of the Servicing File
by
the Servicer is at the will of the Company for the sole purpose of servicing
the
related Mortgage Loan, pursuant to this Agreement, and such retention and
possession by the Servicer is in its capacity as Servicer only and at the
election of the Company. The Servicer shall release its custody of the contents
of any Servicing File only in accordance with written instructions from the
Company or other termination of the Servicer with respect to the related
Mortgage Loans, unless such release is required as incidental to the Servicer's
servicing of the Mortgage Loans pursuant to this Agreement.
The
Servicer shall be responsible for maintaining, and shall maintain, a complete
set of books and records (including electronic records) for each Mortgage Loan
which shall be marked clearly to reflect the ownership of each Mortgage Loan
by
the Company. In particular, the Servicer shall maintain in its possession,
available for inspection by the Company during normal business hours, and shall
deliver to the Company upon reasonable notice, evidence of compliance with
all
federal, provincial and local laws, rules and regulations, and requirements
of
CMHC, documentation evidencing insurance coverage and eligibility of any
condominium project for approval by CMHC and periodic inspection reports as
required by Section 2.12
and
Accepted Servicing Practices.
To
the
extent that original documents are not required for purposes of realisation
of
Liquidation Proceeds or Insurance Proceeds, documents maintained by the Servicer
may be in the form of microfilm or microfiche so long as the Servicer complies
with the requirements of Accepted Servicing Practices.
The
Servicer shall keep at its servicing office books and records (including
electronic records) in which, subject to such reasonable regulations as it
may
prescribe, the Servicer shall note transfers of Mortgage Loans. No transfer
of a
Mortgage Loan may be made unless such transfer is in compliance with the terms
hereof. For the purposes of this Agreement, the Servicer shall be under no
obligation to deal with any person with respect to this Agreement or the
Mortgage Loans unless the books and records show such person as the owner of
the
Mortgage Loan. The Company may, subject to the terms of this Agreement, sell
or
transfer one or more of the Mortgaged Loan. The Company also shall advise the
Servicer of the transfer. Upon receipt of notice of the transfer, the Servicer
shall record the ownership of the Mortgage Loans of such assignee in its books
and records, and shall release the Company from its obligations hereunder with
respect to the Mortgage Loans sold or transferred.
-20-
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8.
|
iNDEMNIFICATION
AND ASSIGNMENT
|
|
8.1
|
Indemnification
|
The
Servicer agrees to indemnify and hold the Company harmless from any liability,
claim, loss or damage (including, without limitation, any reasonable legal
fees,
judgements or expenses relating to such liability, claim, loss or damage) to
the
Company directly or indirectly resulting from the Servicer's failure to observe
and perform any or all of Servicer's duties, obligations, covenants, agreements,
warranties or representations contained in this Agreement or the Servicer's
failure to comply with all applicable requirements with respect to the transfer
of servicing rights as set forth herein.
The
Servicer shall notify the Company as soon as reasonably possible if a claim
is
made by a third party with respect to this Agreement.
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8.2
|
Limitation
on Liability of Servicer and
Others
|
Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Company for any action taken or
for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgement, provided, however, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in material compliance with any standard of care set forth in this Agreement,
or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of
any
kind prima
facie
properly
executed and submitted by any person with respect to any matter arising
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties
to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may involve it in any expense or liability, provided, however, that
the
Servicer may, with the prior written consent of the Company, undertake any
such
action which it may deem necessary or desirable in respect to this Agreement
and
the rights and duties of the parties hereto. In such event, the Servicer shall
be entitled to reimbursement from the Company of the reasonable legal expenses
and costs of such action.
-21-
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8.3
|
Limitation
on Registration and Assignment by
Servicer
|
The
Company has entered into this Agreement with the Servicer in reliance upon
the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. Therefore, the Servicer shall not
(i) assign this Agreement or the servicing hereunder or (ii) delegate
any substantial part of its rights or duties hereunder without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
conditioned provided that (a) any delegation of such rights or duties shall
not release the Servicer from its obligations hereunder and the Servicer shall
remain responsible hereunder for all acts and omissions of any delegee as if
such acts or omissions were those of the Servicer and (b) any such assignee
or designee shall satisfy the requirements for a successor or surviving person
set forth in Section 8.5
and
Section 8.6
hereof.
The Servicer shall notify the Company in writing at least 30 days prior to
selling or otherwise disposing of all or substantially all of its assets and
receipt of such notice shall entitle the Company to terminate this Agreement,
without payment of any termination fee, except as set forth in
Section 8.5
hereof.
The
Servicer shall not resign from the obligations and duties hereby imposed on
it
except by mutual consent of the Servicer and the Company or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced
by
an opinion of counsel of the Servicer to such effect delivered to the Company
which opinion of counsel shall be in form and substance acceptable to the
Company. No such resignation shall become effective until a successor approved
by the CMHC shall have assumed the Servicer's responsibilities and obligations
hereunder in the manner provided in Section 8.6.
Without
in any way limiting the generality of this Section 8.3,
in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or
(ii) the prior written consent of the Company, then the Company shall have
the right to terminate this Agreement as set forth in Section 6.4,
without
any payment of any penalty or damages and without any liability whatsoever
to
the Servicer (other than with respect to accrued but unpaid Servicing Fees
and
Servicing Advances remaining unpaid) or any third party.
|
8.4
|
Assignment
by the Company
|
The
Company shall have the right, without the consent of the Servicer, to assign,
in
whole or in part, its interest under this Agreement with respect to some or
all
of the Mortgage Loans and designate any person to exercise any rights of the
Company hereunder, by executing an assignment and assumption agreement and
the
assignee or designee shall accede to the rights and obligations hereunder of
the
Company with respect to such Mortgage Loans. All references to the Company
in
this Agreement shall be deemed to include its assignee or designee.
|
8.5
|
Merger
or Consolidation of the
Servicer
|
The
Servicer will keep in full effect its existence and rights as a bank under
the
laws of its jurisdiction of incorporation except as permitted
herein.
-22-
Any
person into which the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that the
successor or surviving person shall be (i) obligated to service the
Mortgage Loans in accordance with this Agreement and Required Servicing
Practices, (ii) an institution whose deposits are insured by CDIC and
(iii) a CMHC-approved servicer in good standing.
|
8.6
|
Successor
to the Servicer
|
Prior
to
termination of Servicer's responsibilities and duties under this Agreement
pursuant to Sections 2.14,
6.1,
6.4,
8.3
or
11.1,
the
Company shall appoint a successor which shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of the Servicer under this
Agreement. In connection with such appointment and assumption, the Company
may
make such arrangements for the compensation of such successor out of payments
on
Mortgage Loans as it and such successor shall agree. In the event that the
Servicer's duties, responsibilities and liabilities under this Agreement should
be terminated pursuant to the aforementioned sections, the Servicer shall
discharge such duties and responsibilities during the period from the date
it
acquires knowledge of such termination until the effective date thereof with
the
same degree of diligence and prudence which it is obligated to exercise under
this Agreement, and shall take no action whatsoever that might impair or
prejudice the rights or financial condition of its successor. The resignation
or
removal of Servicer pursuant to the aforementioned Sections shall not become
effective until a successor shall be appointed pursuant to this
Section 8.6
and
shall in no event relieve the Servicer of the representations, warranties and
covenants made pursuant to and the remedies available to the Company with
respect thereto, it being understood and agreed that the provisions of
Article 10
shall be
applicable to the Servicer notwithstanding any such resignation or termination
of the Servicer, or the termination of this Agreement.
Any
successor appointed as provided herein shall execute, acknowledge and deliver
to
the Servicer and to the Company, an instrument accepting such appointment,
whereupon such successor shall become fully vested with all the rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer, with
like
effect as if originally named as a party to this Agreement. Any termination
of
this Agreement pursuant to Sections 2.14,
6.1,
6.4,
8.3
or
11.1
shall
not affect any claims that the Company may have against the Servicer arising
prior to any such termination or resignation.
The
Servicer shall timely deliver to the successor the funds in the Custodial
Account and the Escrow Account and the Mortgage Loan Files and related documents
and statements held by it hereunder and the Servicer shall account for all
funds. The Servicer shall execute and deliver such instruments and do such
other
things all as may reasonably be required to more fully and definitely vest
and
confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer. The successor shall make
arrangements as it may deem appropriate to reimburse the Servicer for amounts
the Servicer actually expended pursuant to this Agreement which the successor
is
entitled to retain hereunder and which would otherwise have been recovered
by
the Service pursuant to this Agreement but for the appointment of the successor
servicer.
Upon
a
successor's acceptance of appointment as such, the Servicer shall notify by
mail
the Company of such appointment.
-23-
|
9.
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE
COMPANY
|
As
of the
date hereof, the Company warrants and represents to, and covenants and agrees
with, the Servicer as follows:
|
9.1
|
Due
Organization and Authority
|
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Maryland. The Company has the full corporate power and
authority to execute and deliver this Agreement and to perform in accordance
therewith; the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby have been
duly and validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of the Company; and all requisite corporation action
has
been taken by the Company to make this Agreement valid and binding upon the
Company in accordance with its terms.
|
9.2
|
No
Conflicts
|
Neither
the execution and delivery of this Agreement, nor the fulfilment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Company's charter or by-laws or any legal restrictions or any agreement or
instrument to which the Company is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or
result in the violation of any law, rule, regulation, order, judgement or decree
to which the Company or its property is subject.
|
9.3
|
Ability
to Perform
|
The
Company does not believe, nor does it have any reason or cause to believe,
that
it cannot perform each and every covenant made by it in this
Agreement.
|
9.4
|
No
Litigation Pending
|
There
is
no action, suit proceeding or investigation pending or threatened against the
Company, before any court, administrative agency or other tribunal asserting
the
invalidity of this Agreement, seeking to prevent the consummation of any of
the
transactions contemplated by this Agreement or which, either in any one instance
or in the aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Company, or in
any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted, or in any material liability on the
part of the Company, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Company contemplated herein.
-24-
|
9.5
|
No
Consent Required
|
No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Company
of,
or compliance by the Company with, this Agreement as evidenced by the
consummation of the transactions contemplated by this Agreement, or if required,
such approval has been obtained prior to the date hereof.
|
10.
|
REPRESENTATIONS
AND WARRANTIES OF SERVICER
|
As
of the
date hereof, the Servicer warrants and represents to, and covenants and agrees
with, the Company as follows:
|
10.1
|
Qualification
as a REIT
|
The
Servicer shall not take any action which would cause the Company not to qualify
as a REIT under the Internal
Revenue Code of 1986,
as
amended.
|
10.2
|
Due
Organization and Authority
|
The
Servicer is a Canadian chartered bank duly organized, validly existing and
in
good standing under the laws of Canada, and is licensed, qualified and in good
standing in each jurisdiction where a Mortgaged Property is located if
applicable laws require licensing or qualification in order to conduct business
of the type conducted by the Servicer, and in any event the Servicer is in
compliance with the laws of any such jurisdiction to the extent necessary to
ensure the enforceability of the related Mortgage Loan in accordance with the
terms of this Agreement; the Servicer has the full corporate power and authority
to execute and deliver this Agreement and to perform in accordance herewith;
the
execution, delivery and performance of this Agreement (including all instruments
of transfer to be delivered pursuant to this Agreement) by the Servicer and
the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, legal, binding and enforceable
obligation of the Servicer subject to bankruptcy laws and other similar laws
of
general application affecting rights of creditors, including those respecting
the availability of specific performance, none of which will materially
interfere with the realisation of the benefits provided thereunder, and all
requisite corporate action has been taken by the Servicer to make this Agreement
valid and binding upon the Servicer in accordance with its terms.
|
10.3
|
Ordinary
Course of Business
|
The
consummation of the transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
|
10.4
|
No
Conflicts
|
Neither
the execution and delivery of this Agreement, nor the fulfilment of or
compliance with the terms and conditions of this Agreement, will conflict with
or result in a breach of any of the terms, conditions or provisions of the
Servicer's charter or by-laws or any legal restriction or any agreement or
instrument to which the Servicer is now a party or by which it is bound, or
constitute a default or result in an acceleration under any of the foregoing,
or
result in the violation of any law, rule, regulation, order, judgement or decree
to which the Servicer or its property is subject, or impair the ability of
the
Company to realize on the Mortgage Loans, impair the value of the Mortgage
Loans, or impair the ability of the Company to realize the full amount of any
mortgage insurance benefits accruing pursuant to this Agreement.
-25-
|
10.5
|
Ability
to Service
|
The
Servicer is an approved servicer of CMHC residential mortgage loans in
accordance with the NHA, with the facilities, procedures and experienced
personnel necessary for the sound servicing of mortgage loans of the same type
as the Mortgage Loans. The Servicer is duly qualified, licensed, registered
and
otherwise authorized under all applicable federal, provincial and municipal
laws, regulations and by-laws, if applicable, and is in good standing to
enforce, originate, sell mortgage loans to, and service mortgage loans in the
jurisdictions wherein the Mortgaged Properties are located and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with either CMHC eligibility
requirements or which would require notification to CMHC.
|
10.6
|
Ability
to Perform
|
The
Servicer can and shall perform each and every covenant contained in this
Agreement.
|
10.7
|
No
Litigation Pending
|
There
is
no action, suit, proceeding or investigation pending or threatened against
the
Servicer, before any court, administrative agency or other tribunal asserting
the invalidity of this Agreement, seeking to prevent the consummation of any
of
the transactions contemplated by this Agreement or which, either in any one
instance or in the aggregate, may result in any material adverse change in
the
business, operations, financial condition, properties or assets of the Servicer,
or in any material impairment of the right or ability of the Servicer to carry
on its business substantially as now conducted, or in any material liability
on
the part of the Servicer, or which would draw into question the validity of
this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement.
|
10.8
|
No
Consent Required
|
No
consent, approval, authorization or order of any court or governmental agency
or
body is required for the execution, delivery and performance by the Servicer
of
or compliance by the Servicer with this Agreement or the servicing of the
Mortgage Loans as evidenced by the consummation of the transactions contemplated
by this Agreement, or if required, such approval has been obtained prior to
the
date hereof.
-26-
|
10.9
|
No
Untrue Information
|
Neither
this Agreement nor any statement, tape, diskette, form, report or other document
furnished or to be furnished pursuant to this Agreement or in connection with
the transactions contemplated hereby contains any untrue statement of fact
or
omits to state a fact necessary to make the statements contained therein not
misleading.
|
10.10
|
Reasonable
Servicing Fee
|
The
Servicer acknowledges and agrees that the Servicing Fee represents reasonable
compensation for performing such services and that the entire Servicing Fee
shall be treated by the Servicer, for accounting and tax purposes, as
compensation for the servicing and administration of the Mortgage Loans pursuant
to this Agreement.
|
10.11
|
Conflict
of Interest
|
The
Servicer agrees that it shall service the Mortgage Loans hereunder solely with
a
view toward the interests of the Company, and without regard to the interests
of
the Seller or its other affiliates.
|
10.12
|
Confirmation
of Original Servicing
Agreement
|
The
Servicer represents and warrants that all the Mortgage Loans assigned by the
Purchaser in favour of the Company on or before the date hereof have been
serviced and administered by the Servicer in accordance with the terms and
conditions of the Original Servicing Agreement and that it has fulfilled all
of
its obligations under the Original Servicing Agreement up to and including
the
date hereof.
|
11.
|
DEFAULT
|
|
11.1
|
Events
of Default
|
The
following shall constitute an Event of Default under this Agreement on the
part
of the Servicer:
|
11.1.1
|
any
failure by the Servicer to remit to the Company any payment required
to be
made under the terms of this Agreement which continues unremedied
for a
period of five (5) Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall
have been
given to the Servicer by the Company;
or
|
|
11.1.2
|
the
failure by the Servicer to duly observe or perform in any material
respect
any other of the covenants or agreements on the part of the Servicer
set
forth in this Agreement which continues unremedied for a period of
thirty (30) days (except that such number of days shall be
fifteen (15) in the case of a failure to pay any premium for any
insurance policy required to be maintained under this Agreement)
after the
date on which written notice of such failure, requiring the same
to be
remedied, shall have been given to the Servicer by the Company;
or
|
-27-
|
11.1.3
|
a
decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a receiver or liquidator in any
insolvency, bankruptcy, similar proceedings, or for the winding-up
or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged
or
unstayed for a period of sixty (60) days;
or
|
|
11.1.4
|
the
Servicer shall consent to the appointment of a receiver or liquidator
in
any insolvency, bankruptcy, or similar proceedings of or relating
to the
Servicer of or relating to all or substantially all of its property;
or
|
|
11.1.5
|
the
Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit
of its creditors, or voluntarily suspend payment of its obligations;
or
|
|
11.1.6
|
the
Servicer loses temporarily or permanently its qualification as an
approved
lender under the NHA.
|
|
11.1.7
|
the
Servicer, without the consent of the Company (other than as permitted
by
Sections 8.3
or
8.5
hereof), attempts to assign this Agreement or the servicing
responsibilities hereunder or to delegate any substantial part of
its
duties hereunder or any portion thereof;
or
|
|
11.1.8
|
the
Servicer fails to maintain its licence to do business or service
residential mortgage loans in any jurisdiction where the Mortgaged
Properties are located and such failure results in a material adverse
effect on the Mortgage Loans, the servicing of the Mortgage Loans,
or the
Company's rights with respect to the Mortgage
Loans.
|
|
11.1.9
|
The
Servicer carries out servicing, administration or other duties and
obligations imposed on it under this Agreement without first seeking
and
obtaining, in writing, instructions, directions or confirmation from
the
Company as required by Section 2
of
this Agreement.
|
In
each
and every such case, so long as an Event of Default shall not have been
remedied, in addition to whatsoever rights the Company may have at law or equity
to damages, including injunctive relief and specific performance, the Company,
by notice in writing to the Servicer, may terminate without compensation or
reimbursement (other than Servicing Fees previously earned but remaining unpaid
and Servicing Advances remaining unreimbursed) all the rights and obligations
of
the Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof.
Upon
receipt by the Servicer of such written notice, all authority and power of
the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant
to
Section 8.6.
Upon
written request from the Company, the Servicer shall prepare, execute and
deliver any and all documents and other instruments reasonably requested by
the
Company, place in such successor's possession all Mortgage Loan Files (to the
extent not properly delivered to the Company by the Servicer previously), and
do
or accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents, or
otherwise, at the Servicer's sole expense. The Servicer agrees to reasonably
cooperate with the Company and such successor in effecting the termination
of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to such successor for administration by it of all
cash
amounts which shall at the time be credited by the Servicer to the Custodial
Account or Escrow Account or thereafter received with respect to the Mortgage
Loans.
-28-
|
11.2
|
Waiver
of Defaults
|
The
Company may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so
waived.
|
12.
|
MISCELLANEOUS
PROVISIONS
|
|
12.1
|
Notices
|
All
notices, requests, demands and other communications which are required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given upon the delivery or mailing thereof, as the
case
may be, sent by registered or certified mail, return receipt
requested:
|
12.1.1
|
If
to the Company to:
|
NB
CAPITAL CORPORATION
00
Xxxx -
00xx Xxxxxx
Xxx
Xxxx,
XXX XXXX 00000
X.X.X.
Attention:
Chairman of the Board and President
-29-
|
12.1.2
|
If
to the Servicer to:
|
NATIONAL
BANK OF CANADA
000
xx Xx
Xxxxxxxxxxx Xxxxxx Xxxx
Xxxxxxxx,
Xxxxxx
X0X
0X0
Attention:
Vice-President and Chief Accountant
|
12.2
|
Waivers
|
Either
the Servicer or the Company may upon consent of all parties, by written notice
to the others:
|
12.2.1
|
waive
compliance with any of the terms, conditions or covenants required
to be
complied with by the others hereunder;
and
|
|
12.2.2
|
waive
or modify performance of any of the obligations of the others
hereunder.
|
The
waiver by any party hereto of a breach of any provisions of this Agreement
shall
not operate or be construed as a waiver of any other subsequent
breach.
|
12.3
|
Entire
Agreement — Amendment
|
This
Agreement constitutes the entire agreement between the parties with respect
to
servicing of the Mortgage Loans. This Agreement may be amended and any provision
hereof waived but, only in writing signed by the party against whom such
enforcement is sought.
|
12.4
|
Execution
— Binding Effect
|
This
Agreement may be executed in one or more counterparts and by different parties
hereto on separate counterparts, each of which, when so executed, shall be
deemed to be an original; such counterparts, together, shall constitute one
and
the same agreement. Subject to Sections 8.3
and
8.4,
this
Agreement shall inure to the benefit of and be binding upon the Servicer and
the
Company and their respective successors and assigns.
|
12.5
|
Headings
|
Headings
of the Articles and Sections in this Agreement are for reference purposes only
and shall not be deemed to have any substantive effect.
|
12.6
|
Governing
Law
|
This
Agreement shall be governed by and construed in accordance with the laws of
the
Province of Québec and the obligations, rights and remedies hereunder shall be
determined in accordance with the substantive laws of the Province of
Québec.
-30-
Each
of
the parties hereto irrevocably and unconditionally submits, for itself and
its
property, to the non exclusive jurisdiction of the Quebec courts, and any
appellate court thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement in the courts
of any jurisdiction. Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection they may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in the courts
of the Province of Quebec. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defence of an inconvenient forum
to
the maintenance of such action or proceeding in any such court. The Company
hereby irrevocably appoints National
Bank Trust Inc.,
0000 Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxx, Xxxxxx, X0X 0X0
("Company's
Process Agent"),
as
its agent to receive, on behalf of the Company, service of copies of the summons
and complaint and any other process that may be served in any such action or
proceeding. Any such service may be made by mailing or delivering a copy of
such
process, in care of the Company's Process Agent at the Company's Process Agent's
above address. The Company hereby irrevocably authorizes and directs its agent
to accept such service on its behalf. The parties hereto hereby agree that
the
final judgment in any such action or proceeding shall be conclusive and may
be
in force in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
|
12.7
|
Relationship
of Parties
|
Nothing
herein contained shall be deemed or construed to create a partnership or joint
venture between the parties. The duties and responsibilities of the Servicer
shall be rendered by it as a provider of services and not as a general purpose
agent of the Company. The Servicer shall have full control of all of its acts,
doings, proceedings, relating to or requisite in connection with the discharge
of its duties and responsibilities under this Agreement.
|
12.8
|
Quebec
Sales Tax and Goods and Services
Tax
|
The
Servicer shall collect from the Company the Goods and Services Tax
("GST")
and
the Quebec Sales Tax ("QST")
on the
Servicing Fee, and shall remit them to the appropriate tax authorities, if
applicable.
|
12.9
|
Severability
of Provisions
|
If
any
one or more of the covenants, agreements, provisions or terms of this Agreement
shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no
way
affect the validity or enforceability of the other provisions of this
Agreement.
-31-
|
12.10
|
Recordation
of Assignments of Mortgage
|
Until
the
Company or its assignee registers its title to the Mortgage Loans, the Seller
will hold the registered title to the Mortgage Loans for and on behalf of the
Company and its assignee. Notwithstanding any provision herein to the contrary,
in the event that any of the issued and outstanding senior, unsecured
indebtedness of National Bank of Canada is rated "Baa3," or less, by Xxxxx'x
Investors Service, Inc., or "BBB-," or less, by Standard & Poor's Ratings
Services, the Servicer will promptly cause any mortgage loans to which the
Servicer holds title on behalf of the Company, to be registered in the name
of
the Company.
|
12.11
|
Exhibits
|
The
exhibits to this Agreement are hereby incorporated and made a part hereon and
are integral parts of this Agreement.
|
12.12
|
English
Language
|
The
parties hereto confirm that the present Agreement has been drawn up in the
English language at their request. Les parties aux présentes confirment que la
présente convention a été rédigée en langue anglaise à leur
demande.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
NB
CAPITAL CORPORATION
By:
/s/ Xxxxx Xxxxx
Xxxxx Xxxxx
XXXXXXXX
XXXX XX XXXXXX
By:
/s/ Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
-32-
EXHIBIT 1
Custodial
Account Certification
_______________________________,
l
National
Bank of Canada hereby certified that it has established the account described
below as a Custodial Account pursuant to Section 2.4
of the
Servicing Agreement, dated as of l,
l.
| Title of Account: | National Bank of Canada., in trust for NB Capital Corporation, and various Mortgagors | |
| Depository: | ||
| Account Number: |
Address
of Depository at which the Account is maintained:
| NATIONAL BANK OF CANADA | |||
| By: | |||
|
|
|||
| Name: | |||
|
|
|||
| Title: | |||
|
|
EXHIBIT 2
Custodial
Account Letter Agreement
_______________________________,
l
To: __________________________________________________
(the "Depository")
As
Servicer under the Servicing Agreement dated as of l,
l
(the "Agreement"),
we
hereby authorize and request you to establish an account, as a Custodial Account
pursuant to Section 2.4
of the
Agreement, to be designated as "National Bank of Canada, in trust for
NB Capital Corporation and various Mortgagors". All deposits in the account
shall be subject to withdrawal therefrom by order signed by National Bank of
Canada. This letter is submitted to you in duplicate. Please execute and return
one original to us.
| NATIONAL BANK OF CANADA | |||
|
By:
|
|||
|
|
|||
| Name: | |||
|
|
|||
|
Title:
|
|||
|
|
The
undersigned, as Depository, hereby certified that the above described account
has been established under Account Number _______________________________,
at
the office of the Depository indicated above, and agrees to honour withdrawals
on such account as provided above.
| DEPOSITORY | |||
|
By:
|
|||
|
|
|||
| Name: | |||
|
|
|||
|
Title:
|
|||
|
|
EXHIBIT 3
Escrow
Account Certification
_______________________________,
l
National
Bank of Canada hereby certified that it has established the account described
below as an Escrow Account pursuant to Section 2.6
of the
Servicing Agreement, dated as of l,
l.
| Title of Account: | National Bank of Canada., in trust for NB Capital Corporation, and various Mortgagors | |
|
Depository:
|
||
|
Account
Number:
|
Address
of Depository at which the Account is maintained:
| NATIONAL BANK OF CANADA | |||
| By: | |||
|
|
|||
| Name: | |||
|
|
|||
| Title: | |||
|
|
EXHIBIT 4
Escrow
Account Letter Agreement
_______________________________,
l
To: __________________________________________________
(the "Depository")
As
Servicer under the Servicing Agreement dated as of l,
l
(the "Agreement"),
we
hereby authorize and request you to establish an account, as an Escrow Account
pursuant to Section 2.6
of the
Agreement, to be designated as "National Bank of Canada, in trust for
NB Capital Corporation and various Mortgagors". All deposits in the account
shall be subject to withdrawal therefrom by order signed by National Bank of
Canada. This letter is submitted to you in duplicate. Please execute and return
one original to us.
|
NATIONAL BANK OF CANADA
|
|||
|
By:
|
|||
|
|
|||
| Name: | |||
|
|
|||
| Title: | |||
|
|
The
undersigned, as Depository, hereby certified that the above described account
has been established under Account Number _______________________________,
at
the office of the Depository indicated above, and agrees to honour withdrawals
on such account as provided above.
|
DEPOSITORY
|
|||
|
By:
|
|||
|
|
|||
| Name: | |||
|
|
|||
| Title: | |||
|
|
