ONTARIO

SUPERIOR COURT OF JUSTICE

(COMMERCIAL LIST)

COURT FILE NO.: 08-CL-7440
DATE: 201207018

BETWEEN:

THE INVESTORS REPRESENTED ON THE PAN-CANADIAN INVESTORS COMMITTEE FOR THIRD-PARTY STRUCTURED ASSET-BACKED COMMERCIAL PAPER LISTED IN SCHEDULE "B" HERETO
Applicants

– and –

METCALFE & MANSFIELD ALTERNATIVE INVESTMENTS II CORP., METCALFE & MANSFIELD ALTERNATIVE INVESTMENTS III CORP., METCALFE & MANSFIELD ALTERNATIVE INVESTMENTS V CORP., METCALFE & MANSFIELD ALTERNATIVE INVESTMENTS XI CORP., METCALFE & MANSFIELD ALTERNATIVE INVESTMENTS XII CORP., 4446372 CANADA INC., 6932819 CANADA INC.
Respondents

Jonathan C. Lisus and Shaun Laubman for the Moving Party, BlackRock Asset Management Canada Limited

Jeffrey S. Leon and Jason W.J. Woycheshyn, for Citibank, N.A.

Mario Forte, for Caisse de dépôt et placement du Québec

HEARD: May 17, 2012

C. CAMPBELL J.

REASONS FOR DECISION

[ 1 ] The Moving Party BlackRock seeks Advice and Directions and any appropriate declaratory relief arising from a Plan of Arrangement and Compromise and a Plan Implementation Order of this Court dated January 12, 2009 (“the Plan”).

[ 2 ] BlackRock is supported in its position by certain noteholders who filed a factum including Caisse de depot et placement du Quebec, ATB Financial, Desjardins Group and National Bank of Canada and other noteholders who did not participate.

[ 3 ] Citibank NA (CBNA) a noteholder of certain long term notes opposes the relief sought.

[ 4 ] This matter was heard by the Court on two occasions. First, on March 15, 2012 when following argument it was adjourned for clarification of the context of the parties’ negotiation. Further submissions were heard on May 17, 2012.

[ 5 ] The Plan in issue approved a compromise and arrangement of the third party (non-bank) asset backed commercial paper (ABCP) market in Canada and involved numerous parties of differing interests. The Plan reconstituted shorter term notes for notes of various and longer terms utilizing what are referred to as Managed Asset Vehicles (MAVs) administered by BlackRock for that purpose.

[ 6 ] Paragraph 52 of the Plan Implementation Order contains the following language pursuant to which this Application proceeds. “In the event of any dispute or issue in connection with, or related to the interpretation, application or affect out this Plan, such dispute shall be subject to the exclusive jurisdiction of the CCAA Court.”

[ 7 ] In order to implement the Plan a series of very technical, complex and interrelated agreements were entered into by the various and numerous participants in the ABCP market including both BlackRock as Asset Manager and the responding party on this motion CBNA as a dealer holding notes.

[ 8 ] Some of the numerous agreements necessary to implement the Plan contained language with respect to correction of errors including circumstances for amendment or waiver.

[ 9 ] Put at each most simplistic, BlackRock seeks confirmation that the underlying agreements and in particular two of them, the Omnibus Agreement and the Administrative Agreement (AMA) permits it when necessary to make payments from collateral to effect terminations of credit default swaps (CDS) [1].

[ 10 ] This motion calls on the Court to provide advice and direction regarding the ability of BlackRock to undertake risk management for what it says is the benefit of all stakeholders of two of the three (MAVs) – the MAVs subject to Omnibus Agreements relating to CDSs with counterparties. The issue before the Court is whether the Plan and its enabling agreements, in respect of MAV I and MAV II, construed as a whole and in their unique factual matrix, permit BlackRock to:

(a) cause termination payments to be made from collateral in connection with the consensual termination of credit default swap transactions that are governed by the Omnibus Agreements when deemed advisable by it as a risk management measure; and

(b) apply the payments owing by a Master Asset Vehicle (MAV) pursuant to such terminations as the measure of “realized losses” from the transaction for the purposes of calculating the Realized Losses Cap.

[ 11 ] BlackRock further asserts that to the extent the wording of the agreements in question, read in context, explicitly or implicitly do not permit resort to collateral, that the Court should grant corrective directions to reflect the parties’ intentions.

[ 12 ] CBNA does not challenge BlackRock's discretion to engage in consensual terminations of swap transactions, provided that the termination is effected in accordance with, and pursuant to, the terms of the Omnibus Agreements and Administration Management Agreement (AMA). However, CBNA does not agree that, in the case of the early consensual termination of CDS’s the cash settlement payment due is "usually" based on a formula in the CDS which would permit access to collateral for that purpose.

[ 13 ] Rather, CBNA asserts it is uncommon for parties to a CDS to prescribe contractual terms for the early consensual termination of a particular CDS. The terms of CDS unwinds (according to CBNA) are usually a product of negotiation between the parties and seldom formalized into a contract. Therefore it is asserted there is no industry standard.

[ 14 ] CBNA submits that the contractual terms using the plain and ordinary wording of the agreements does not permit swap unwinds to the extent that termination payments are necessary except in a negotiated consensual manner as between affected parties.

[ 15 ] It is not necessary for resolution of this dispute to recite the full history of the restructuring of the ABCP market in Canada. Much of that history is set out in the earlier decisions in 2008 (see ATB Financial v Metcalf & Mansfield) [2] leave to appeal to SCC denied and none of which is contested.

[ 16 ] The parties concur with the object of the Plan contained in the constituent agreements. The Plan’s constituent agreements implement the common purpose “to provide Noteholders with the opportunity to receive repayment of their original investment over time.” (Section 2.1 of the Plan.) The Omnibus Agreements provide guidelines and protocols for the affairs of the MAVs generally (other than with respect to certain assets that are not subject to the Omnibus Agreements). The AMAs confer specific powers to administer the MAVs and improve the potential for value recovery. Their purpose is accomplished, in part, through the implementation and use of the various risk management strategies available to BlackRock pursuant to the AMAs in its capacity as the MAVs’ administrator and asset manager.

[ 17 ] BlackRock was pursuant to the Plan appointed administrator and asset manager of each of the MAV’s. BlackRock asserts that:

i) Provisions in the AMAs authorize BlackRock to manage the credit risk of the MAVs’ assets by employing, in its discretion, the risk management tools provided for in the Plan. The AMAs also impose limits and conditions on BlackRock’s discretion.

ii) The AMAs oblige BlackRock to manage the MAVs’ assets with reasonable care and in good faith, using the same degree of skill, diligence and attention that it would exercise with respect to comparable assets that it manages for itself, its affiliates, and others. In order to minimize risk and maximize return for all Noteholders, provisions in the AMAs authorize BlackRock to make use of various risk management tools to respond to changing market forces and changes to the risk profiles of each MAV’s asset portfolio.

iii) A significant risk facing the MAVs is the potential for credit events to occur in the reference portfolio for one or more of the CDSs that form a substantial portion of the MAVs’ assets. Exceeding a specific level of losses due to such events in a given CDS reference portfolio will trigger a MAV’s obligation to pay a potentially very substantial cash settlement to a Dealer.

[ 18 ] Much of the argument turns on the meaning to be accorded one part of the AMA the relevant portions of which are set out in Appendix “A” hereto.

[ 19 ] It is BlackRock’s position that among the conditions for BlackRock’s authority to terminate Transactions under Swap Agreements pursuant to Section 3(g)(iv) of the AMAs, the most significant are (a) a limitation imposed upon the notional amount of Transactions terminated in any given year (the “5% Limit”), and (b) a cap imposed upon the quantum of aggregate losses which may be realized from and after the Plan implementation date as a consequence of the disposition or termination of certain Moving MAV assets (including Transactions under Swap Agreements) contemplated by Section 3(g) of the AMAs (the “Realized Losses Cap”) before seeking the consent of parties to the Omnibus Agreement and rating agency approval.

[ 20 ] As to the 5% Limit, BlackRock says discretionary terminations of Transactions under Swap Agreements that may be effected under Section 3(g)(iv) of each AMA in any one year (with each year commencing on January 21) are limited to 5% of the aggregate notional amount of all Transactions under Swap Agreements as of the first business day of the relevant year.

[ 21 ] BlackRock goes in to say in respect of the Realized Losses Cap, that the parties to the Omnibus Agreements negotiated for the inclusion of an additional provision in Section 3(g) of the AMAs which would operate to require, generally speaking, the approval of (i) 2/3 (by number and relative collateral entitlements) of the Dealers, (ii) 2/3 (by commitment amount) of non-Dealer lenders providing margin funding to the relevant Moving MAV and (iii) DBRS (in its capacity as the rating agency), for any sale or termination of certain Moving MAV assets contemplated by Section 3(g) of the AMAs where such sale would generate realized losses which, when aggregated with all realized losses generated by sales or terminations of such Moving MAV assets since the date of implementation of the Plan, are in excess of 50% of the original principal amount of the Class B and C Notes of the relevant Moving MAV.

[ 22 ] Given the express language referred to above BlackRock takes the position that no consent is necessary for situations where there is resort to collateral that does not engage the thresholds referred to.

[ 23 ] The CBNA position is set out in paragraphs 6 and 7 of its factum. CBNA does not dispute that BlackRock has the discretion to manage the credit risk of the MAV’s assets, which includes entering into early consensual unwinds of CDS’s. However, where early termination results in payment out of the MAV, the Agreements do not allow BlackRock to unilaterally make those payments. This it is urged consistent with CBNA’s evidence on this motion that it is not common to contractually prescribe payment terms for early consensual unwinds of CDS’s. Rather, the manner in which payments are made out of a conduit is a product of negotiation between the affected parties, including the counterparties to the CDS’s.

[ 24 ] Contrary to BlackRock’s suggestion CBNA says again plain reading of the Agreements does not render the Plan, or any portion of it, nugatory. BlackRock can still effect early consensual terminations of unwinds; however, to the extent that termination payments are necessary, it must engage in a negotiation process with the affected parties.

[ 25 ] CBNA resists BlackRock’s request to the Court for clarifying advice and direction among other grounds on the basis that there is no evidence of a consensual termination not occurring due to lack of clarity in the agreements. It asserts that the unchallenged evidence is that Noteholders of the MAVs and Dealers have expressed ongoing interest in negotiating the consensual termination of certain CDSs presenting material risk to the MAVs. CBNA claims that the MAVs and agreeable Dealers have been prevented from doing so due to BlackRock’s concern over an apparent gap in the agreements due to inadvertent drafting, which is sought to be addressed on this motion.

[ 26 ] During the course of the argument the court was advised that the parties did have a background of negotiation to resolve the impasse. At the Courts suggestion the motion was adjourned a) to permit preparation of a Supplementary Record to provide a context history of the negotiations and b) to permit continuation of the same. Needless to say the discussion between the parties did not provide a final resolution.

[ 27 ] Part of the resolution of this dispute between BlackRock as MAV administrator and CBNA, a dealer, concerns the scope and extent of the jurisdiction of the court supervising a CAAA Plan.

[ 28 ] The full provision of paragraph 52 of the Plan Implementation Order of January 2009 contains the following language:

This Court orders that the Applicants may from time to time apply to this Court for advice and directions concerning further amendments to the Plan.

This Court orders that any of the Monitor, the Applicants, the Respondents or the Administrator may from time to time apply to this Court for advice and directions concerning the implementation of the Plan or the discharge of their rights, powers and duties under the Plan, the transactions and agreements to be entered into in connection with the Plan, or this Order.

[ 29 ] The CBNA position is that the collaborative, negotiated approach for determining payments of collateral out of the MAVs accords with the compromising nature of the Plan. The parties are at liberty to structure this payment process in the manner that they, as the parties affected by the termination, deem appropriate. This, according to CBNA includes, if necessary, adhering to a transparent auction process which could ensure that the economic interests of all affected parties, particularly the Noteholders, are preserved.

[ 30 ] Further, according to CBNA, a transparent auction process would lift the veil of secrecy inherent in a bilateral termination and permit all Dealers to submit bids to step into the shoes of the terminating Dealer. This process would ensure that the MAV pay the lowest termination payment to effect the early consensual termination of a particular CDS and thus minimize the liquidation of collateral from the MAV. An auction process can be incorporated into the Agreements on a consensual basis and in a manner that is beneficial to both Dealers and, most importantly, the Noteholders (the intended beneficiaries under the Plan).

[ 31 ] BlackRock submits that the Plan language in paragraphs 52 and 53 of the Plan Order allows the court to exercise a broad purposive approach to interpretation of the various agreements in a manner to give effect to the underlying purpose of the Plan namely to restore the ABCP market.

[ 32 ] The CBNA position is that the scope of the court’s jurisdiction in this situation is limited to construing the terms of the carefully and exhaustively negotiated comprehensive contracts that contain a limited basis for amendment.

[ 33 ] Section 11 of the Omnibus Agreement contains a number of comprehensive provisions for amendment including how they may be implemented.

[ 34 ] The hallmark of section 11 is to enable the Administrator (BlackRock in this case) to affect any amendment permitted under section 11 within the terms of the various subsections otherwise amendments require consent of the parties.

[ 35 ] Relevant to the issue now before the court is section 11 in part as follows:

11.2 (a) Any Secured Creditor may deliver a written request to the Administrator for the amendment or waiver of any provision in any Transaction Document if such amendment or waiver is of a formal, minor or technical nature or is to cure any ambiguity, correct typographical, clerical and other manifest or (to the reasonable satisfaction of the Administrator, acting in good faith) proven errors or to correct inconsistencies in such Transaction Document, together with details of the proposed amendment or waiver.

(b) Upon receipt of such request, the Administrator shall as soon as practical, and in any event within five Business Days, send notice of the proposed amendment or waiver to each other party to this Agreement and the Rating Agency.

[ 36 ] Section 11.4 contains detailed language for circumstances under which consent is required for amendments to Transaction Document.

[ 37 ] Section 11. 6 of the MAV Omnibus Agreement allows BlackRock and the relevant dealer to procure termination of Transactions provided that such terminations are pursuant to the terms of the MAV Administration Agreement.

[ 38 ] BlackRock asserts that in order to manage the assets under its control it may be necessary from time to time to react to market conditions and arrange an early termination of a CDS prior to its maturity and for this purpose draw on collateral and the question then becomes whether it is collateral ascribed to a particular trade or whether it is collateral more generally for all trades.

[ 39 ] BlackRock asserts that it should not be required to resort to dealer consent broadly when it resorts to collateral beyond that of a particular trade in responding to a situation of early termination of a CDS.

[ 40 ] CBNA on the other side is of the view that since the notes it holds as dealer are at the longer end of the notes reconstituted under the Plan it would be adversely affected if its consent were not sought when there was resort to collateral beyond that of a particular trade when early termination is being affect it.

[ 41 ] BlackRock relies variously on the broad powers it asserts are available under section 52 of the Plan Implementation Order to correct any ambiguity or gap created by the lack of a specific provision to permit non-consensual early termination or finally it is permitted as it comes within the manifest error provision of section 11. 2 (above)

[ 42 ] In summary, BlackRock asserts Section 3 (g) (iv) of the Administration Agreement empowers BlackRock to terminate Transactions where it deems advisable provided that:: (i) any such discretionary determinations do not exceed 5% of the notional amount of all Transactions (with all Dealers) in any calendar year; (ii) subject to Section 3(b)(iv) i.e. with the relevant Dealers consent; and (iii) subject to the third-to-last paragraph of Section 3 (g) (iv) i.e. only with the consent of majority creditors and the Administrator unless certain realized losses do not exceed 50% of the original principal amount of the Notes.

[ 43 ] The realized losses referred to in section 3(g)(iv) are stated to be in respect of “sales” of assets. The submission on behalf of BlackRock contends that this should also refer to any realized losses from terminations of swaps on the basis that such terminations are specifically referred to in the third line of this provision and that Sections 3(g) (iv) and (v) are also specific referred to in respect of other dispositions of assets, as well as sales.

[ 44 ] In effect BlackRock seeks what it says is necessary certainty in respect of how “realized losses” are determined with respect to any swap terminations to be payable by the Asset Administrator to any dealer.

[ 45 ] It is to be noted that this suggested interpretation or clarification that the court is asked to correct is the very one that the parties were not able to agree on during their “negotiations”. The Amendments to the extent they require consent under 11.4 were not obtained presumably due to the lack of consent of CBNA as an “affected dealer”.

[ 46 ] BlackRock seeks clarification such that payments upon termination under section 3(g)(iv) can be funded from all collateral and not just that related to the specific trade.

[ 47 ] This clarification is said to be necessary in essence because in one portion of clause (vi) of section 3(g) reference is made to “sale, termination or novation” whereas in a later paragraph of the same section 3(g)(vi) dealing with disposition of Credit Risk Assets and calculation of realized losses reference is only made to an “sale”.

[ 48 ] The argument of BlackRock is that the reference in the relevant portion of 3(g)(vi) incorporates section 3 (g) (iv) dealing with terminations and novations which make them subject to the discretion of the Administrator as long as they do not exceed 5% per year.

[ 49 ] The position of BlackRock is that based on the language of the various subsections of section 3 it should not be required to seek consent with respect to termination of swap transactions except when they exceed 5% of all transactions in any one year.

[ 50 ] BlackRock asserts that to the extent the court cannot grant a declaration confirming its interpretation, the court should make a clarifying order pursuant to the power of amendment provided for in section 11. 2 to the same effect.

Does the language of the Plan Implementation Order permit the “clarification” or “correction” sought by BlackRock.

[ 51 ] I agree with the comments of Blair J. (as he then was) in Red Cross [3] with respect to the broad purposive approach of a plan under the CCAA to permit the restructuring of a business, in this case of a market. This was accepted in ATB Financial. [4]

[ 52 ] This motion does not deal with the Plan itself or implementation of the Plan as a whole but rather with several highly complicated contracts negotiated by sophisticated parties who provided for a number of specific events and agreed on a procedure for amendment should the need arise and the parties could not agree.

[ 53 ] I conclude that for resolution of the issue which arises on this motion it is not appropriate to invoke or rely on the broad powers under the CCAA to make the Plan work. I accept that were it not for the agreements that followed the Plan Order such power would exist. See Ted Leroy [Century Services] Ltd. [5]

[ 54 ] The ability to “clarify” or “correct” arises under the provisions of the agreements themselves and the principles of contract interpretation but not in my view under the general scheme of the CCAA. The broad power is appropriately employed when there are unforeseen circumstances and no contractual framework to make the Plan work.

[ 55 ] One then asks is there a “manifest error” or other “proven error” under section 11. 2(a) of the Administration Agreement sufficient to enable the court to grant relief under section 11. 2(d). It is to be noted that section 11. 2 envisages a party other than the Administrator proposing an amendment.

[ 56 ] It is also noted that negotiations between the dealers and BlackRock both before and after the first court hearing on the issue failed to resolve an impasse as to whether the Administrator should be enabled to utilize collateral as part of early termination of CDS’s.

[ 57 ] It is now firmly established in Canadian law that contracting parties are presumed to intend the legal consequences of their words. In Eli Lily & Co. v. Novopharm Ltd. 1998 791 (SCC), [1998] 2 S.C.R.129 at paragraph 56 it is said: “However, to interpret a plainly worded document in accordance with the true contractual intent of the parties is not difficult, if it is presumed that the parties intended the legal consequences of their words.”

[ 58 ] It might well be argued that “plain” doesn’t easily apply to the provisions of the agreements in question and while common words were used, one does have to understand them in the context of the entire agreement and the purpose of the agreements. However, I assume the parties intend the legal consequences of the words used.

[ 59 ] In his text Canadian Contractual Interpretation Law (second edition-LexisNexis) the author Geoff Hall comments on the limitation to be accorded context where parties have chosen their own words. At page 92 he notes:

“The presumption that parties intend the legal consequences of their words might be questioned on the bases that it emphasizes one aspect of the interpretive process (text) over the other (context). However, the presumption seems reasonable where parties have bothered to put words into a contract intending to be legally bound by them. Thus the presumption generally serves to further the overarching goal of contractual interpretation, being to achieve interpretive accuracy.”

[ 60 ] I have reviewed with some care the argument of BlackRock with respect to contract interpretation particularly that which suggests that consensual terminations are only contemplated in limited circumstances.

[ 61 ] I have considered the argument that the reference to “sales” in the 3rd to last paragraph of Section 3(g)(iv) must be read in conjunction with the opening paragraph of Section 3(g)(iv).

[ 62 ] What is lacking in the BlackRock argument and what one would have expected given the otherwise comprehensive provisions of the Agreements is that if BlackRock were free to terminate a CDS and adversely affect the collateral of a particular noteholder that if the noteholders consent was not necessary the agreements would so provide. They do not.

[ 63 ] The contractual interpretation argument of BlackRock that by implication consent is not required, therefore in my view fails. It is entirely logical that resort to collateral for early termination would require the consent of Dealers holding notes that would be adversely affected and the consent of a particular percentage of dealers depending on the specific thresholds referred to in the agreements.

[ 64 ] The second argument of BlackRock is that given the very precise langue of the agreements in question the failure of them to address the question of consent except in specific circumstances render them ambiguous and therefore resort to the relief provided for in section 11.2 of the Omnibus Agreement appropriate. I disagree.

[ 65 ] The language in the various sections although complex is precise. It covers very specific circumstances. The parties chose the language. There is a mechanism for amendments which has been agreed upon. I do not find that the issue raised falls within the manifest error provisions of section 11.2.

[ 66 ] The agreements, as they are, work and make sense. One can understand on both sides why BlackRock should feel it should not require specific consent beyond these circumstances provided for and on the other side why CBNA believes it should.

[ 67 ] Absent agreement there is no reason to conclude that the Agreements either do not or will not work if consent in the manner outlined above is required. I do not accept the CBNA position of an industry standard requiring consent or the BlackRock assertion that to require consent where a termination requires resort to collateral would result in an absurdity.

[ 68 ] One can readily understand why a very specific consent threshold would be required (2/3 as the Agreements provide) when greater than 5% of collateral is resorted to in terminations in any one year prior.

[ 69 ] One can also understand that where one or more group of dealers may be particularly at risk with respect to collateral in the existence of early termination that they would have the expectation of being consulted.

[ 70 ] How the balance between risk to one group, the Administrator (BlackRock), and the other affected dealers on behalf of noteholders was to be determined was not provided for the Agreements. The efforts of counsel for BlackRock to constrain the language to read in favour of consent being unnecessary does not accord with the language of the Agreements overall.

[ 71 ] In my view, it is perfectly consistent with the language of the Agreements that resort to collateral on early termination would be made, absent reaching the 5% ceiling, on a case by case basis. The reasonable expectation absent specific language to the contrary would be that consent would not unreasonably be withheld. The Court should not be expected to re-write an agreement for the parties.

[ 72 ] It was left to the parties to work out the specifics of consent for terminations involving collateral associated with a specific trade. There has on the evidence only one instance since 2008 that the issue has arisen. This fact supports, in my view, a case by case approach to consensual termination and consent to resort to collateral beyond that of a specific trade.

[ 73 ] I agree with the applicable legal principles cited by BlackRock in the following quotations:

The importance of interpreting commercial terms in context was highlighted by the Ontario Court of Appeal in Kentucky Fried Chicken Canada v. Scotts Food Services Inc.:

Where, as here, the document to be construed is a negotiated commercial document, the court should avoid an interpretation that would result in a commercial absurdity. Rather, the document should be construed in accordance with wound commercial principles and good business sense. Care must be taken, however, to do this objectively rather than from the perspective of one contracting party or the other, since what might make good business sense to one party would not necessarily do so for the other. (See 1998 4427 at para. 27.)

The United Kingdom Supreme Court emphasized the importance of “business common sense” as an interpretive aid. In choosing between competing interpretation, the Court held:

There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties (Ibid. at para. 25 (quoting Lord Steyn, “Contract Law: Fulfilling the reasonable expectations of honest men”, in 113 LQR 433, at p. 441)).

[ 74 ] When I have regard to the language of the Agreements and the context including the negotiations before and during the currency of this dispute I find it was the reasonable expectation of the parties that absent agreed on financial considerations there be consultation between the immediate affected parties and a more formalized consent process when the 5% cap was exceeded. A less formalized consent process is entirely consistent with the agreements and the parties’ expectations.

[ 75 ] To do otherwise is to read in words that I do not find any clear meaning sought by BlackRock.

[ 76 ] In this case I conclude that the text does not in its plain and ordinary meaning eliminate consent in the circumstances of this motion. Neither does the context of unilateral action without explicit language make sense particularly where the parties have failed to reach agreement after negotiation.

[ 77 ] For the foregoing reasons the motion of BlackRock is dismissed. If the parties cannot agree on the issue of costs counsel may make written submissions on a timetable to be agreed within 30 days.

C. CAMPBELL J.

Released: July 18, 2012

Appendix “A”

(iv) subject to Section 3(b)(iv) and satisfaction of the conditions in the third to last paragraph of this Section 3(g), terminate or novate Transactions under Swap Agreements where deemed advisable by the Administrator in its discretion; provided that such discretionary terminations or novations in any one year (with the first year beginning on the Closing Date) shall not exceed 5% of the notional amount of Transactions under Swap Agreements as of the first Business Day of such year.

(g) With respect to dispositions of Credit Risk Assets pursuant to clause (ii) and other assets pursuant to classes (iii), (iv) or (v) above and, unless the Rating Agency Condition is satisfied, Sections 3(d)(iii) and 3(d)(v), the Administrator will not effect any such sales, terminations or novations without the consent of the Majority Secured Creditors (other than for these purposes where Royal Bank of Canada is both an LSS CDS Counterparty and a Lender, royal Bank of Canada in its capacity as LSS CDS Counterparty), the required Parties, the required Senior Purchasers, the Required Lenders and satisfaction of the Rating Agency Condition unless the realized losses since the Closing Date in respect of such sale (being the difference between Acquisition Cost and Sale Proceeds, when aggregated with all other such realized losses of Credit risk Assets pursuant to clause (ii) and sales pursuant to clauses (iii), (iv) and (v) above and, unless the rating Agency Condition is satisfied, Sections 3(d)(iii) and 3(d)(v)), do not exceed 50% of the original principal amount of Class B Notes and Class C Notes.

SCHEDULE “B” to the Title of Proceedings

Applicants

ATB Financial
Caisse de Dépôt et Placement du Québec
Canaccord Capital Corporation
Canada Mortgage and Housing Corporation
Canada Post Corporation
Credit Union Central Alberta Limited
Credit Union Central of British Columbia
Credit Union Central of Canada
Credit Union Central of Ontario
Credit Union Central of Saskatchewan
Desjardins Group
Magna International Inc.
National Bank Financial Inc./National Bank of Canada
NAV Canada
Northwater Capital Management Inc.
Public Sector Pension Investment Board
The Governors of the University of Alberta